California Estimates $55 Billion Initial Cost for State Businesses to Comply with New Data Privacy Law

FOR IMMEDIATE RELEASE

California Estimates $55 Billion Initial Cost for State Businesses to Comply with New Data Privacy Law

WASHINGTON, D.C. (SEPTEMBER 26, 2019) - A new regulatory impact analysis released by the California Attorney General’s Office has a number of highly troubling findings. The report estimates the initial costs for state businesses to comply with the California Consumer Privacy Act (CCPA) will be $55 billion, equivalent to 1.8% of California Gross State Product in 2018. According to the analysis, between 15,643 and 570,066 businesses in California will be covered by the CCPA. The report estimates that additional costs to comply with just the new regulations still to be issued by the state Attorney General can run as high $16.454 billion over the next decade.

Because the analysis did not consider the law’s impact on covered businesses outside of California that collect data on consumers in the state, the report’s estimates represent a fraction of the costs that will impact every state. Furthermore, CAG’s assessment found that business will be required to “take a number of compliance actions that go beyond standard business practices” and that legal fees incurred in preparing for the CCPA “can be quite large.”

Ominously, the CAG found that small businesses “are likely to face a disproportionately higher share of compliance costs relative to larger enterprises,” and that this “will present real challenges for small businesses in the short term.” Finally, the assessment states that, for firms operating within California, the CCPA “will provide a competitive disadvantage relative to firms that operate only outside of the state.”

“It is clear from this impact analysis that the CCPA potentially will have a very significant negative impact on California’s business community and economy,” said Dan Jaffe, Group Executive Vice President of government relations for the Association of National Advertisers. “The report’s wide-ranging estimates of future costs reflect the substantial uncertainty and potential disruption the law presents for businesses, regulators, and consumers.”

The state’s release of the regulatory impact analysis comes as the California Attorney General continues to develop regulations to provide needed guidance to businesses and as activists are announcing plans to file a new California ballot initiative for next year to expand substantially the scope of CCPA. Jaffe stated that “these changes in the law, without the concrete knowledge of how the California Consumer Privacy Act is in fact impacting businesses and consumers, are clearly premature and even reckless." 

Jaffe stated that “ANA strongly believes that Congress must enact a single comprehensive data privacy law that protects consumers and establishes clear, enforceable standards that apply nationwide.” Jaffe concluded “Through our support of the Privacy for America coalition, ANA continues to advocate for a federal law that will make personal data less vulnerable to breach or misuse and avoid disruptive inconsistent state regulations, while preserving the benefits that come from responsible use of data.”

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ABOUT THE ANA:
The ANA (Association of National Advertisers) makes a difference for individuals, brands, and the industry by driving growth, advancing the interests of marketers, and promoting and protecting the well-being of the marketing community. Founded in 1910, the ANA provides leadership that advances marketing excellence and shapes the future of the industry. The ANA’s membership includes more than 1,600 companies and organizations with 20,000 brands that engage almost 100,000 industry professionals and collectively spend or support more than $400 billion in marketing and advertising annually. The membership is comprised of more than 1,100 client-side marketers and nonprofit organizations as well as more than 700 marketing solutions provider members, which include leading marketing data science and technology suppliers, ad agencies, law firms, consultants, and vendors. Further enriching the ecosystem is the work of the nonprofit ANA Educational Foundation (AEF), which has the mission of enhancing the understanding of advertising and marketing within the academic and marketing communities.

MEDIA CONTACT:
Dan Jaffe, ANA Group EVP Government Relations
Office: 202.296.2359
Mobile: 646.369.4886
Email: djaffe@ana.net