Data privacy laws across the globe are evolving rapidly, creating both opportunities and risks for businesses. Among the most significant challenges is the concept of a private right of action, which allows individuals to sue companies directly for alleged violations of data privacy laws. This has led to a surge in lawsuits, particularly in jurisdictions with robust privacy regulations. Understanding the nuances of these laws and their enforcement mechanisms is critical for businesses aiming to avoid costly litigation and maintain compliance.
The Private Right of Action: What Can You Be Sued For By an Individual?
A private right of action empowers individuals to take legal action against companies that violate specific provisions of data privacy laws. While many privacy laws rely on regulatory authorities to enforce compliance, the private right of action introduces a direct and often expensive risk to businesses. Lawsuits filed under this provision can result in significant financial penalties, reputational damage, and operational disruptions. California has found two privacy laws that are driving a ton of litigation driven by law firms like Swigart and Pacific Trial Attorneys who are filing suits related the California Invasion of Privacy Act (CIPA) violations and VPPA over video sessions played on a website. Even though webmasters don’t realize they are violating privacy laws they are still liable to be sued for millions of dollars.
Key Privacy Laws with Private Right of Action Provisions
California Consumer Privacy Act (CCPA) and California Privacy Rights Act (CPRA)
The CCPA was the first major U.S. privacy law to grant individuals a private right of action, albeit in a limited context. Specifically, it allows lawsuits for data breaches resulting from a company’s failure to implement reasonable security measures. The CPRA, which expanded the CCPA, retained this provision while establishing the California Privacy Protection Agency (CPPA) to oversee compliance.
Businesses face significant liability risks under the CCPA and CPRA due to their broad scope and strict requirements. Lawsuits under these laws often result in settlements or judgments running into millions of dollars.
General Data Protection Regulation (GDPR)
The GDPR in the European Union does not explicitly grant a private right of action but allows individuals to seek compensation for damages caused by non-compliance. Individuals can either pursue claims directly or through data protection authorities, making it a dual enforcement system. The GDPR’s high penalties—up to €20 million or 4% of annual global turnover—have made compliance a top priority for businesses operating in the EU. The privacy team here put together a list of all the violations and fines for GDPR in a single repository so you can tally up for yourself and see the billions of dollars in fines for non-compliance.
Brazil’s General Data Protection Law (LGPD)
Brazil’s LGPD includes a provision for individuals to seek damages for violations of their data privacy rights. While enforcement is primarily handled by Brazil’s National Data Protection Authority (ANPD), the private right of action adds another layer of accountability for companies processing personal data in Brazil.
Virginia Consumer Data Protection Act (VCDPA) and Utah Consumer Privacy Act (UCPA)
The VCDPA and UCPA are state-level privacy laws in the U.S. that focus on regulatory enforcement rather than private litigation. Neither law explicitly grants a private right of action, relying instead on state attorneys general to oversee compliance. However, the absence of this provision does not diminish the importance of adhering to these laws, as regulatory penalties can still be severe.
Private Right of Action Lawsuits: The California Experience
As mentioned above California has become a hotspot for private right of action lawsuits, thanks to laws like the California Invasion of Privacy Act (CIPA) and the Video Privacy Protection Act (VPPA).
California Invasion of Privacy Act (CIPA)
CIPA prohibits the recording or interception of confidential communications without consent. Businesses using customer support tools or analytics platforms that capture communications without proper disclosure have been hit with lawsuits. Violations can result in statutory damages of $5,000 per incident, which can quickly add up in class-action cases. One common tactic has been to force an arbitration and ask for $30,000 per plaintiff for a CIPA violation.
Video Privacy Protection Act (VPPA)
The VPPA restricts companies from disclosing personally identifiable information about consumers’ video viewing habits without consent. With the rise of video streaming and analytics, VPPA lawsuits have surged, targeting companies for sharing data with third parties like advertisers. Settlements in VPPA cases have reached tens of millions of dollars, creating a significant financial burden for businesses.
The Financial Impact on Businesses
Lawsuits under CIPA, VPPA, and similar laws are costing businesses millions of dollars. The lack of a comprehensive compliance strategy often leaves companies vulnerable to these legal risks. Additionally, the rapid increase in lawsuits has created a legal minefield that many companies are ill-equipped to navigate.
Regulatory Authorities: Enforcing Privacy Compliance
While the private right of action is a key enforcement mechanism, regulatory authorities also play a crucial role in ensuring compliance with data privacy laws. Here are some of the most notable authorities:
- California Privacy Protection Agency (CPPA): Oversees compliance with the CCPA and CPRA in California.
- European Data Protection Board (EDPB): Coordinates enforcement of the GDPR across EU member states.
- Brazil’s National Data Protection Authority (ANPD): Enforces the LGPD in Brazil.
- Federal Trade Commission (FTC): Enforces federal privacy laws in the United States.
- State Attorneys General: Oversee compliance with state-level privacy laws like the VCDPA and UCPA.
These regulatory bodies can impose significant fines and penalties, adding another layer of risk for non-compliant businesses.
How to Protect Your Business: Solutions from Captain Compliance
With the growing complexity of data privacy laws and the rising threat of private right of action lawsuits, businesses need robust compliance solutions. The team here of privacy superheroes here at Captain Compliance offers a comprehensive platform that helps businesses:
- Implement and manage cookie consent frameworks.
- Ensure compliance with global and state-level privacy laws.
- Establish audit trails for regulatory and legal defense.
- Monitor ongoing legislative changes to stay ahead of new requirements.
- Push updates dynamically to our software tools so you don’t have to update.
By partnering with Captain Compliance, businesses can mitigate the risk of lawsuits, protect their reputation, and focus on growth without the constant fear of legal repercussions.
Best Practices for Avoiding Private Right of Action Lawsuits
Here are some actionable steps businesses can take to minimize their risk:
- Conduct Regular Privacy Audits: Identify vulnerabilities in data handling processes and address them proactively.
- Implement Robust Security Measures: Protect personal data with encryption, firewalls, and regular security updates.
- Provide Transparent Privacy Policies: Clearly communicate data collection, use, and sharing practices to consumers.
- Obtain Consent: Use consent management platforms to capture and manage consumer permissions effectively.
- Train Employees: Ensure staff understand data privacy laws and their role in maintaining compliance.
Key Features of a Strong Compliance Program
- Automated Monitoring: Track compliance with global and regional laws in real time.
- Centralized Data Management: Store and manage data securely in compliance with legal requirements.
- Consent Tracking: Document consumer consent for legal defense and regulatory audits.
- Incident Response Plans: Develop protocols for handling data breaches to minimize legal exposure.
- Ongoing Education: Stay informed about changes in privacy laws and enforcement trends.
How To Respond to a Private Right of Action Lawsuit
The private right of action has added a new dimension to data privacy compliance, exposing businesses to significant legal and financial risks. Laws like the CCPA, CIPA, and VPPA, combined with global and state-level regulations has created a legal nightmare for business owners. Now specialized laws like CIPA and VPPA, create a challenging environment for companies handling personal data. However, with the right compliance tools and help from us, businesses can navigate these complexities effectively.
We help you to prioritize compliance without the hassle of having to do so. Businesses can not only protect themselves from litigation but also build trust with consumers in an era where data privacy is more critical than ever.
