In 2018, the California legislature passed and Governor Brown signed the California Consumer Privacy Act (CCPA). The law was well-intended: to help consumers protect their online privacy. But as its implementation date nears (January 1, 2020), that good goal has been usurped by its price tag and unreasonable burdens on California businesses.
As CEO of the Hispanic Chamber of Commerce, I am very concerned that the draft CCPA implementation regulations issued by Attorney General Xavier Becerra could disproportionately hurt California Latino-owned businesses.
Many newly formed Latino-owned companies are more vulnerable to substantial new operational requirements, and any new business costs impact these businesses more. Statistically, a report from the California Latino Economic Institute (CLEI) found that while nearly one-quarter of all California firms are Latino-owned, businesses owned by Latinos are smaller and generate less revenue than businesses run by whites or Asian owners.
For all of these reasons, most Latino business owners are focused on keeping their doors open, not on politics. So, it came as no surprise that as I traveled through the state this year talking about the CCPA, I found most businesses were unaware of the CCPA, and they are certainly not prepared to comply with the law. In fact, a recent survey of all California business owners found about one in five (22%) did not know about the CCPA, and about half (58%) are “educating themselves.” Only about one in five businesses considered themselves “aware.” Only eight percent were “prepared to comply,” and only about one-third (34%) said they would be prepared to comply by January 1st.
As written, the law and draft regulations create confusion for business and consumers, impose costs that are too high, and layer additional requirements beyond what is already in the CCPA , all of which heighten the difficulty for small and medium size business to develop in good faith a compliance regiment in a very narrow window of time given the complexity of the CCPA.
Because the CCPA is a conflicting and complex law, compliance costs are projected to be astronomical. A report prepared for the Attorney General suggests 75 percent of California businesses will be impacted by the CCPA, with compliance costs for the new law estimated at $55 billion dollars, and up to $16.9 billion to comply with the implementing rules.
For small companies with fewer than 20 employees, CCPA compliance costs are projected to average around $50,000 per company. Companies with between 20 and 100 employees will bear $100,000 in initial CCPA compliance costs, and companies with more than 100-500 employees face $450,000 in initial CCPA compliance costs. Successful California companies with more than 500 employees are looking at $2 million or more in initial CCPA compliance costs. These are costs that cannot be “easily absorbed” by Latino-owned businesses, or any other small or medium size enterprise.
Additionally, we are concerned that the CCPA and regulations will severely curtail the ability of Latino small businesses to use inexpensive tailored digital advertising to communicate with customers. A recent survey found 78% of small businesses use online advertising for their businesses. Compliance requirements under the CCPA may force small business to discontinue cost-efficient advertising, hurting their ability to market their products and services and grow their establishments.
Attorney General Becerra is accepting comments on the proposed regulations through December 6, 2019. For the sake of California’s Hispanic small businesses community, we urge the Attorney General to revise the regulations to protect people’s personal information without adding a costly and confusing regulatory structure.
Julian Canete is president and chief executive officer of the California Hispanic Chamber of Commerce, representing the interests of more than 800,000 Hispanic business owners in California