California’s “Shine the Light” Law: Is Your Company in Compliance?

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In the past month, plaintiffs’ lawyers have filed a number of class action lawsuits alleging that companies’ websites fail to provide notices regarding disclosure of personal information under California’s “Shine the Light” law. None of these suits allege that the companies are misusing personal information. All simply assert that the companies fail properly to identify a method for obtaining a disclosure of how the company shares information. The costs of non-compliance could be substantial—the statute provides for penalties of $500 or $3,000 per violation, depending on whether the violation is willful, plus attorney’s fees. Given that plaintiff’s lawyers appear to be looking through websites looking for violations, it is time for companies to do a quick check of their statutory compliance.

California’s “Shine the Light” law (Section 1798.83 of the California Civil Code) regulates the sharing of personal information about California customers with affiliated or unaffiliated third parties for third-party direct marketing purposes. The law is not limited to personal information collected online, making it necessary to consider data sharing practices with respect to customer data collected offline as well as online. A covered business must comply with detailed notice requirements under the Shine the Light law, unless it has made a commitment in its privacy policy either to (a) obtain a customer’s opt-in consent to disclose his or her personal information to affiliates or other “third parties” for their direct marketing purposes (an “Opt-In Approach”) or (b) allow customers to opt out from such disclosures of their personal information (the “Opt-Out Approach”). The Shine the Light law became effective on January 1, 2005, although enforcement actions have been rare until now.

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Published In: Business Organization Updates, Consumer Protection Updates, Privacy Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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