The SECURE Data Act is Not a Serious Piece of Privacy Legislation

The federal SECURE Data Act is not a serious consumer privacy bill, and its provisions—if enacted—would be a retreat from already insufficient state protections.

Republicans on the House Energy and Commerce Committee released a draft of the bill late last month without bipartisan support. The bill is weaker than congressional proposals in prior years, as well as most of the 21 state consumer privacy laws already on the books.

The bill could wipe out hundreds of  state privacy protections.

Most troubling for EFF: the bill would preempt dozens, if not hundreds, of state laws that regulate related topics, and it would not allow consumers to sue to protect their own rights (commonly called a private right of action). And it comes nowhere close to banning online behavioral advertising—a practice that fuels technology companies’ always increasing hunt for personal data.

The bill also suffers from many other flaws including weak opt-out defaults, inadequate data minimization requirements, and large definitional loopholes for companies.

Key Provisions

The bill would give consumers some rights to take action to control their personal data— like access, correction, deletion, and limited portability. These rights have become standard in all data privacy proposals in recent years.

The bill would also require companies to obtain your consent before processing your sensitive data, or using any of your personal data for a previously undisclosed purpose. Absent your consent, a company couldn’t do these things.

Further, the bill would allow you to opt out of (1) targeted third-party advertising, (2) the sale of your personal data, and (3) profiling of you that has a legal, healthcare, housing, or employment effect. Unfortunately, a company could keep doing these invasive things to you, unless you opted out.

The bill would also require data brokers that make at least 50 percent of their profits from the sale of personal data to register in a public database maintained by the Federal Trade Commission (FTC).

Preemption of Too Many State Laws

Federal privacy laws should allow states to build ever stronger rights on top of the federal floor. Many federal privacy laws allow this, including the Health Insurance Portability and Accountability Act, the Video Privacy Protection Act, and the Electronic Communications Privacy Act.

The SECURE Data Act would not do that. Instead, it would wipe out dozens, if not hundreds, of existing state privacy protections. Section 15 of the bill would preempt any “law, rule, regulation, requirement, standard, or other provision [that] relates to the provisions of this Act.” This would kill the 21 state consumer privacy laws passed in the past few years. These state bills aren’t strong enough, but they are still better than this federal proposal. For example, California maintains a data broker deletion tool and requires companies to comply with automatic opt-out signals—including one that is built into EFF’s Privacy Badger.

Because the SECURE Data Act has provisions that relate to data privacy and security, it could preempt all 50 state data breach laws and many others. It could also preempt state laws related to specific pieces of sensitive data, like bans on the sale of biometric or location information. Some states like California have constitutional provisions that protect an individual’s right to privacy, which can be enforced against companies. That constitutional provision, as well as state privacy torts, could also be in danger if this bill passed.

No Private Enforcement, A New Cure Period, and Vague Security Powers

Strong consumer privacy laws should allow consumers to take companies to court to defend their own rights. This is essential because regulators do not have the resources to catch every violation, and federal consumer enforcement agencies have been gutted during the current administration.

The SECURE Data Act does not have a private right of action. The FTC, along with state attorneys general, have primary enforcement authority. The law also gives companies 45 days to “cure” any violation with no penalty after they are caught.

Moreover, Section 8 of the bill creates a vaguely defined self-regulatory scheme in which companies can apply to be audited by an “independent organization” that will apply a “code of conduct.” Following this code of conduct would give companies a presumption that they are complying with the law. This provision is an implicit acknowledgement that the bill does not provide regulators with any new resources to enforce new protections.

Section 9 of the bill would give the Secretary of Commerce broad power to “take any action necessary and appropriate to support the international flow of personal data,” including assessing “security interests of the United States.” The scope of this amorphous provision is unclear, but it likely does not belong in a consumer protection bill.

Weak Privacy Defaults

Your online privacy should not depend on whether you have the time, patience, and knowledge to navigate a website and turn off invasive tracking. Good privacy laws build in data minimization requirements—meaning there should be a default standard that prevents companies from processing your data for purposes that are not needed to provide you with the service you asked for.

The SECURE Data Act puts the burden on you to opt out of invasive company practices, like targeted third-party advertising, the sale of your personal data, and profiling. The bill at least requires companies to obtain your consent before processing your sensitive data (like selling your precise location). These consent requirements, however, are often an invitation for companies to trick you into clicking a button to give away your rights in hard-to-read policies. Indeed, few people would knowingly agree to let a company sell their personal data to a broker who turns around and sells it to the government.

Section 3 of the bill uses the term “data minimization,” but it is done in name only. The provision does not limit a company’s processing of data to only what is necessary to provide the customer with the good or service they asked for. Instead, the provision limits processing of data to only what a company “disclosed to the customer”—meaning if it is in the confusing privacy policy that nobody reads, it is okay.

And the bill would not even allow you to restrict certain uses of your data. As companies seek more data for AI systems, many internet users do not want their private personal data to be used to train those models. However, the bill makes clear that “nothing in this Act may be construed to restrict” a company from collecting, using, or retaining your data to “develop” or “improve” a new technology.

Other Flawed Definitions and Loopholes

The bill has numerous loopholes that technology companies would exploit if the bill were to become law. Below is just a sampling:

• Government contractors: Under Section 13(b)(2), government contractors are exempt from the bill, which could be wrongly interpreted to exempt certain data brokers from sale restrictions when those sales are made to the government. This type of exemption could benefit surveillance companies like Clearview AI, which previously argued it was exempt from Illinois’ strict biometric law using a similar contractor exception. This is likely not the authors’ intention, since the definition of sale includes those made “to a government entity.”
  Sale definition: The definition in Section 16(28) is defined too narrowly. A sale should mean any exchange for monetary “or other valuable” consideration, as in some other privacy laws.
• Biometric information definition: The definition in Section 16(4) excludes data generated from a photo or video, and the definition excludes face scans not meant to “identify a specific individual.” This could be wrongly interpreted to allow biometric identification from security camera footage, or biometric use for sentiment or demographic analysis.
• Personal data definition: The definition in Section 16(21) exempts “de-identified data” from the definition of personal data, which could allow companies to do anything with de-identified data because that data is not protected by the law. The problem with de-identified data is that many times it is not.
• Deletion requests: With regard to data that a company obtained from a third-party, Section 2(d)(5) would treat a consumer’s deletion request merely as an opt-out request. And even if a customer requested deletion, a company might be able to retain the data for research purposes under section 11(a)(9)(A).
• Profiling definition: Under the definition in Section 16(25), companies could profile so long as the profiling is not “solely automated.” The flimsiest human review would exempt highly automated profiling.