New data privacy law a blow to retailers
Retailers are calling California's new data privacy law "deeply flawed" and a potential blow to customer service.
The law, which takes effect in 2020, gives consumers sweeping control over their personal data. It grants them the right to know what information companies like Facebook and Google are collecting, why they are collecting it, and who they are sharing it with. Consumers will have the option of barring tech companies from selling their data, and children under 16 must opt into allowing them to even collect their information at all.
The law prohibits retailers from treating customers who opt out of data sharing any differently from those who do not, a provision that could put an end to retail loyalty programs that offer discounts to members. Consumers could also demand that their information be erased, and retailers are concerned by other provisions involving data breach requirements, definitions of personal information, transparency and consumer access to data.
“This law is objectionable on many levels,” NRF Senior Vice President for Government Relations David French said. “This is a deeply flawed measure aimed more at lining the pockets of attorneys than protecting consumers. It will expose businesses to unwarranted lawsuits while potentially taking away many of the innovations and special services consumers have come to expect.”
NRF was among 29 states and national business groups that sent a letter to members of the California Assembly and Senate yesterday calling the legislation “a serious threat to the California economy.”
Under this new legislation, companies housing data of more than 50,000 people will be required to let consumers view the data they have collected, request deletion of data, and opt out of having the data sold to third parties. Although it will affect most major businesses, large technology firms who play a large role in online communication and commerce that will be most affected. These data breaches will affect Facebook Inc, Uber Technologies Inc and other companies that are generating increased public pressure for regulator to step in.
This follows shortly after the announcement of the European Union (EU) General Data Protection Regulation (GDPR), which implemented similar data-breach regulations on companies and gives consumers more control over what data is collected by these major corporations. These regulations are similar to those expected to be implemented in California in 2020, and are currently being implemented within countries within the EU.
“Retailers strive to protect their customers’ data, but data is the backbone of any good retail business,” French said. “Knowing how often your customers shop, what brands and styles they prefer and how much they can afford to spend helps you serve their needs. Whether it’s a preview sale on new offerings, letting them know you have their size back in stock or loyalty programs that offer discounts, these are all services that shoppers value. Under this law, those services could go away, and California’s consumers will want to know who’s to blame.”