AI is no longer on the horizon; it’s already woven into everyday business tools. However, most companies aren’t prepared for the compliance aspect of AI. In California, the CPRA already regulates how personal data is collected and used, including data handled by AI systems. This means that if your business uses AI for hiring, lead scoring, customer service, or even marketing analytics, you may already be creating risk without realizing it.
This isn’t just about avoiding fines. It’s about protecting your business, brand, and employees. Most companies believe compliance is a concern only for large enterprises, but small and mid-sized businesses are quickly finding themselves in the crosshairs of regulation, litigation, or even negative publicity from unintentional misuse of AI.
I will explore this further next month when I speak on ‘AI in Business: From Compliance to Competitive Advantage.’ We will examine what’s changing, what to watch for, and how forward-thinking businesses can use AI safely and strategically to stay ahead.
I look forward to seeing you there.
– James Nagy, Sprocket Websites – EVCEAC Technology Chair
The CPRA, or California Privacy Rights Act, is a data privacy law that amends and expands the earlier California Consumer Privacy Act (CCPA). It went into effect on January 1, 2023, and significantly strengthens California residents’ privacy rights while increasing business compliance requirements.
Here’s what you need to know, especially in the context of AI and business operations:
What CPRA Does:
- Creates the California Privacy Protection Agency (CPPA):
This new enforcement agency has the authority to issue fines, conduct audits, and create regulations related to data privacy.
- Introduces New Rights for Consumers:
These include:
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- The right to correct personal data
- The right to limit use of “sensitive personal information” (e.g., precise geolocation, race, health data)
- Expanded rights to opt out of automated decision-making (especially relevant for AI)
- Expands the Definition of “Personal Information”:
Now includes things like inferred data, which is especially important when businesses use AI or algorithms to generate profiles or make predictions.
- Places Stricter Rules on Data Sharing:
This is especially true regarding third-party vendors and data brokers, which applies if you’re using AI platforms, martech, or HR tools that process personal data.
- Requires Risk Assessments and Data Minimization:
Businesses must limit data collection to what’s necessary and perform formal risk assessments if they engage in “automated decision-making,” a direct nod to AI use.
Why It Matters to Your Audience:
If anyone in the room uses AI for hiring, marketing, lead generation, or employee monitoring, their tools may be making automated decisions or collecting sensitive data. Under CPRA, that triggers new responsibilities they can’t ignore, including documentation, opt-outs, and updated privacy notices.
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The California Privacy Rights Act (CPRA), enacted through Proposition 24 in November 2020, enhances and amends the earlier California Consumer Privacy Act (CCPA). It became fully effective on January 1, 2023, with enforcement beginning July 1, 2023. The CPRA introduces significant changes to California’s data privacy framework, bringing it closer in alignment with the European Union’s General Data Protection Regulation (GDPR).