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In the absence of federal legislation, states are regulating the commercial collection and use of personal data, a new report shows.
In recent years, there has been growing interest in establishing a national data protection law that would apply to a wide range of organizations and go beyond the nation's many sectoral laws, according to a report by the Information Technology and Innovation Foundation. But in the absence of comprehensive federal legislation, many states, including California, Colorado and Virginia, have passed or are enacting data privacy legislation, the report says.
More states are likely to pass similar rules in the coming years, which would create a patchwork of sometimes conflicting privacy laws regulating the commercial collection and use of personal data.
For example, in Colorado, the bill signed by Gov. Jared Polis on July 7 gives residents the right to opt out of data collection, “access, correct or delete” the data, or obtain a portable copy of the collected information. The law also requires companies to clearly communicate what data they collect, what they do with it and how long they store it.
Here are three key findings presented by in the report:
- Without Congress passing national privacy legislation, state privacy laws could impose out-of-state costs of $98 billion to $112 billion annually.
- Over a 10-year period, these out-of-state costs would exceed $1 trillion.
- The burden on businesses would be substantial, with small firms bearing $20 billion to $23 billion in total annually.
Poorly designed data privacy laws can take a toll on the economy through both direct and indirect compliance costs from lower productivity and constraints on innovation. And when multiple states subject businesses to conflicting laws, costs increase, the report contends.
The foundation suggests Congress act promptly to pass comprehensive privacy legislation that preempts state laws, streamlines regulation, sets basic consumer data rights and minimizes the impact on innovation.
“We have these companies that are amassing just gigantic amounts of data about each and every one of us, all day, every day,” Kate Ruane, senior legislative counsel for the First Amendment and consumer privacy at the American Civil Liberties Union, told The New York Times Wirecutter.
To estimate the economic impact state privacy laws have on businesses within and outside of states, the Information Technology and Innovation Foundation designed a model to observe empirical change in the earnings of a state’s industries due to the passage of state laws.
For more information from the report click here.
Andre Claudio is an assistant editor at Route Fifty.
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