The California Consumer Privacy Act (CCPA), enacted in June 2018, made California the first U.S. state to have a comprehensive privacy law. With enforcement underway, one of the areas that businesses must observe is the relationship between the non-discrimination and financial incentives provisions of the CCPA. As described below, the non-discrimination provision provides a blanket prohibition, subject to an exception for lawful financial incentive programs.
The CCPA is explicit that businesses shall not discriminate against consumers for exercising any of the rights granted them by the CCPA, such as the right to opt-out of data sales. Discrimination envisioned by the CCPA includes, but is not limited to, denying services and charging different prices (by way of increasing the price or giving a discount) because consumers assert any of their data rights under CCPA.
Lawful financial incentives
The CCPA’s lawful financial incentives, an exception to the non-discrimination provision, allows businesses to offer different service or pricing levels because of consumer’s invocation of data rights without running afoul of the law. Generally, the price or service difference must be reasonably related to the value of the consumer’s data collected as a part of the transaction. For example, a business validly selling consumer data to a third party for $1 per consumer account cannot impose a $100 surcharge on consumers who exercise their CCPA right to opt-out of data sales. A $1 per month surcharge on those same users, however, would not be a discriminatory practice under the CCPA.
The exception is subject to restrictions. If the business cannot calculate the value of the consumer’s data, then any price or service difference would be considered discriminatory. Further, the business must obtain the consumer’s consent prior, opt-in consent to the price or service difference. For valid consent to be obtained, the consumer must be informed of the estimated value of both the price or service difference and their data.
Complying with the restrictions of the lawful financial incentives exception may prove difficult. Businesses potentially covered by the CCPA should plan carefully with counsel prior to the implementation of data collection.