Will Texas Soon Join the Ranks of States Enacting Privacy Legislation?
Texans like the adage “Everything is Bigger in Texas”. So, as the Lone Star State follows its counterparts and the federal government in discussing broad sweeping privacy protections, legislators introduced two (competing) privacy bills this session: the Texas Consumer Privacy Act and the Texas Privacy Protection Act.
Readers should note that the 2019 Texas Legislative Session is set to end on May 27, 2019, although a special session may be called to address items not resolved during the regular session. If privacy legislation is not passed, state lawmakers would not consider it again until 2021, as the legislature only meets every other year, for 140 days. If either of the bills were to pass this session, the effective date could be as early as September 2020.
Even if neither bill passes this session, which is likely the case given the legislative hurdles that must happen within the limited timeframe, privacy as an issue is not going away in Texas (or anywhere else for that matter). And, given that Texas is the second largest economy in the U.S., any privacy legislation will have a big impact. The current prediction is that Texas will take a back seat to watch how California enacts the CCPA, and (hopefully) learn from some of its pain points in order to adopt legislation in 2020.
Nevertheless, below is an overview of the two pending bills in their current form.
Texas Consumer Privacy Act (“TXCPA”)
The TXCPA is similar to the California Consumer Protection Act (“CCPA”). It provides Texas consumers with rights to:
Know what information is being collected, distributed and sold about them;
Opt-out of sales of their information, including a requirement that businesses include a “Do Not Sell My Information” link on their website; and
Request that their information be deleted.
The TXCPA would also require businesses subject to the act to:
Provide notification of categories of personal information collected and how each category would be used;
Provide methods for consumers to submit data requests and disclose certain information in response to such requests.
It also borrows concepts from the EU GDPR around transparency and notice.
Similar to the CCPA, there are questions about how the bill would define a consumer and whether it would be applied to employees. Like the CCPA, the TXCPA also provides rights to households, but this is currently not well defined. The TXCPA does not establish a business duty to implement and maintain security procedures, nor does it allow a private cause of action for consumers in the event of a breach. The Texas Attorney General would enforce violations, set at an amount up to $2,500 per violation (and $7,500 for intentional violations).
In its current form, the TXCPA would only apply to certain businesses, including those that collect consumer personal information. These types of businesses would also have to meet certain thresholds.
Texas Privacy Protection Act (HB 4390)
The TXPPA distinguishes itself from the TXCPA with applicability and its level of detail. It also does not provide the same consumer rights as the TXCPA. For the TXPPA to apply, a business must be:
Doing business in Texas
Have more than 50 employees
Collect personally identifiable information (“PII”) of more than 5,000 individuals, households or devices (or have this information collected on its behalf); this only applies to the collection of PII over the Internet or digital network, or through a computing device that is associated with a specific end user. This requirement is not only to “Texas residents” meaning an Internet business with only a handful of customers in Texas, but numerous customers elsewhere, may be subject to the law.
Have an annual gross revenue of more than $25 million; or
Derive 50% of more of its annual revenue from the processing of PII.
The traditional PII categories, like social security number, driver’s license number, credit card or financial account information, etc. are expanded under the TXPPA to include biometric information, religious affiliation, racial or ethnic origin information, unique genetic information, physical or mental health information, precise geolocation data and the private communications or other user-created content of an individual that is not publicly available.
The TXPPA requires the explicit permission from the individual from whom the information pertains, unless processing is required by law. A business may only process PII if it is relevant to accomplish the purpose for which it is to be processed, and this must be specified by notice prior to the collection. Processing also may not violate state or federal law or infringe on an individuals’ Constitutional rights or privileges. The TXPPA also gives individuals the right to access their PII and the right to be forgotten.
TXPPA requires impacted businesses to establish and maintain a comprehensive security program that contains safeguards for PII, although there is not a lot of guidance in the current bill on this. Like the TXCPA, there is no private cause of action for a breach of duty to protect PII. Businesses would also be liable when a service provider mishandles their data.
Also like the TXCPA, the Texas Attorney General may bring an action and recover civil penalties, but they are higher under the TXPPA – up to $10,000 per violation, not to exceed a total of $1 million.
Either bill, if passed into law, would keep Texas in line with other states currently enhancing their privacy and security laws to keep up with the California Consumer Privacy Act set to take effect January 1, 2020. Organizations across the United States should be assessing and reviewing their data collection activities, building robust data protection programs, and investing in written information security programs (WISPs).