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Saturday, Feb 24, 2024

Here’s How Privacy Law Will Hurt

I see it every day and I was happy to read some numbers to back it up: the San Fernando Valley is thriving in many ways. A recent report done for the Business Journal’s Economic Forecast Breakfast by California Lutheran University’s Center for Economic Research and Forecasting shows that the Valley’s economy grew an average of more than 4 percent annually between 2014 and 2018. That’s better than Ventura, Los Angeles and Orange counties. But I’m concerned by signs that our middle class – the heart of the Valley – is declining. According to the same report, “Many hundreds of thousands of employees in retail trade, leisure and hospitality and education and health services are finding it increasingly difficult to live in the Valley.” We already know that affordable housing and reliable rail service are essential to maintain strong San Fernando Valley communities. Our region has traditionally been an affordable place for middle class families. And to support our strong communities, we need a healthy business climate, with steady household incomes to spur consumer spending and economic growth. You’ve heard me say it so many times: economic vitality requires jobs. When the jobs dry up, middle class residents go with them. Unfortunately, last year California rushed through a new privacy law which imposes unreasonable new burdens on businesses, especially in two of the Valley’s largest industries: retail and hospitality. To support Valley businesses and the individuals who work there, the problems in the privacy law must be addressed by the Legislature now, before the law goes into effect next January. The intent of the new law is good: to protect sensitive online consumer data. But it goes too far, setting onerous new regulations with unhelpfully vague definitions which don’t actually help to protect consumers. It requires businesses that use the internet for marketing, sales or business operations to compile “personal information” on individual consumers, safely store that data, provide to it consumers when asked (up to twice a year), and delete it upon request. But the law’s definition of “personal information” is so vast and vague that it covers virtually all information, whether sensitive (like a credit card number) or irrelevant (like a de-identified IP address). As president of an organization that relies on digital marketing myself, I know that very few smaller businesses are set up to fulfill this requirement. A quick Google search confirms that the California privacy law will be a boon for legal and technology experts, with hundreds of firms offering consulting services to companies confused about their compliance obligations. I am sure that you’d rather put the money you’ll be spending on compliance consultants on salaries, and I’m sure most of your employees would, as well. And for those business that make an honest mistake? They will face stiff fines, and an even worse newly introduced bill (Senate Bill 561) would allow lawsuits against any business that did not comply fully or correctly with the data collection requirements, without giving the business the opportunity to fix the problem first. I’m also worried that smaller companies may lose their ability to connect with customers through digital advertising. When consumers choose to opt-out from data sharing under the new “right to be forgotten,” they prevent any tailored information from reaching them. Smaller businesses, for whom digital marketing is a cost-effective option, could be forced to revisit how they reach new consumers. The majority of Valley businesses just can’t afford options like TV ads, so the loss of digital advertising will be particularly harmful to their ability to attract and retain customers. Limit businesses’ ability to get customers through the door and their sales are hurt – that means fewer jobs, especially in smaller retail and hospitality businesses. And we know that smaller companies are the backbone of the San Fernando Valley economy. Happily, the Legislature recognizes that the flaws in the new privacy law and is working to address them. Assembly Bill 873 clarifies that the definition of “de-identified” under CCPA is limited to information that does not reasonably identify or link, directly or indirectly, to a particular consumer. This change will relieve small business from costly and time-consuming actions that don’t actually protect consumer privacy. Senate Bill 753 would allow businesses to continue to rely on low-cost advertising but limits the use of the information to advertising purposes. Both of these measures will help to protect Valley businesses and employees operating under the new privacy law – an important step in preventing further middle-class exodus from the San Fernando Valley. Stuart Waldman is president of the Valley Industry & Commerce Association which works to enhance the economic vitality of the greater San Fernando Valley region by advocating for a better business climate and quality of life.

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