The digital age has brought about an overwhelming amount of personal data exchange, prompting states to enact stronger privacy regulations. One such groundbreaking development is the Colorado Privacy Act (CPA). Officially signed into law on July 7, 2021, the CPA marks Colorado as the third U.S. state to implement comprehensive privacy legislation, following California and Virginia. With its enforcement beginning on July 1, 2023, the CPA delivers a robust set of rights and responsibilities for both consumers and businesses.
The CPA is designed to give Colorado residents more control over their personal data while also outlining key obligations for businesses handling such data. It applies to entities that either operate in Colorado or provide products or services that are intentionally targeted to Colorado residents and meet certain thresholds.
Key Provisions of the Colorado Privacy Act
The CPA outlines several vital provisions that distinguish it from other state privacy laws:
- Consumer Rights: Under the CPA, Colorado residents have five main rights — the right to access, correct, delete, and obtain a copy of their personal data, and the right to opt out of data processing for targeted advertising, sale of personal data, or profiling.
- Controller and Processor Responsibilities: Businesses acting as “controllers” of data are responsible for determining the purpose and means of processing personal data. They must implement reasonable data protection measures and conduct data protection assessments for certain processing activities.
- Data Minimization and Purpose Limitation: Businesses must collect only the data necessary to fulfill a specified purpose and should refrain from using data for new purposes without consumer consent.
- Universal Opt-Out Mechanism: By July 1, 2024, controllers will be required to allow consumers to opt out of data collection through a universal mechanism, such as a browser setting or global privacy control.
Who Must Comply with the CPA?
The CPA applies to any entity conducting business in Colorado or offering services/products to Colorado residents, and that meets one of the following criteria:
- Controls or processes personal data of at least 100,000 consumers annually
- Derives revenue or receives a discount from selling personal data of 25,000 or more consumers
There are specific exemptions for certain types of data and entities, including government institutions, financial institutions subject to the Gramm-Leach-Bliley Act, and entities covered by HIPAA.
Enforcement and Penalties
Unlike California’s CCPA/CPRA which allows for private rights of action, enforcement of the CPA lies solely with the Colorado Attorney General and district attorneys. Upon its initial rollout, businesses were given a 60-day cure period to address any violations after being notified. However, this cure period will expire on January 1, 2025, after which immediate enforcement will apply and non-compliant businesses may face civil penalties of up to $20,000 per violation, with a cap of $500,000 in aggregate penalties.
Impact on Businesses and Consumers
The CPA raises the bar for privacy compliance and encourages companies to reevaluate their data governance strategies. For consumers, it marks a significant gain in transparency and control. Businesses must tailor their data management processes, update privacy policies, and implement consumer request procedures to meet CPA requirements.
While influenced by similar laws like the GDPR and California’s CPRA, the CPA has its own unique characteristics. Organizations operating in multiple states may face the challenge of adapting to multiple regulatory environments, but the CPA is widely seen as part of a growing trend toward nationwide privacy standards.
Frequently Asked Questions (FAQ)
- What types of data are protected under the CPA?
The CPA covers “personal data,” defined as any information that is linked or reasonably linkable to an identified or identifiable individual. This includes names, email addresses, IP addresses, and behavior data. - Does the CPA apply to small businesses?
Only if they meet the threshold of processing data from more than 100,000 consumers or sell data from over 25,000 consumers. Many small businesses may fall outside the CPA’s scope. - Are there any exemptions to the CPA?
Yes, there are exemptions for certain entities like government bodies, nonprofits, national security institutions, and regulated data under HIPAA or the Fair Credit Reporting Act. - How can consumers exercise their rights?
Consumers can submit data requests to businesses subject to the CPA. Companies must make clear, accessible methods available for consumers to request access, deletion, or correction of their personal data. - What should businesses do to prepare for the CPA?
Businesses should perform a data inventory, update privacy notices, train staff, review vendor contracts, and ensure mechanisms are in place for handling consumer data requests and opt-outs.
The Colorado Privacy Act reflects a significant evolution in U.S. data privacy standards and speaks volumes about the state’s commitment to digital rights. As more states follow suit, businesses will need to adopt a privacy-by-design approach to remain compliant and build consumer trust.