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Data broker registry bill presses forward

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The Data Act forges on after Rep. Krista Griffith revised the bill to include key definitions and to excuse the banking sector from registering. | FILE PHOTO

DOVER — Key amendments to the Data Act bill waives financial services companies from registering and narrows in on data sellers, but Delaware businesses are still opposed to it as it stands.

House Bill 262, drafted and amended by Rep. Krista Griffith (D-Fairfax), sailed out of the House Appropriations Committee last week. But the Delaware State Chamber of Commerce, and many other business associations, are still pushing for further concessions before it moves further through the process.

“We respectfully submit that additional amendments are necessary to accomplish the goal of providing transparency for consumers and accountability for entities which sell or license consumer data, while avoiding duplicative or unnecessary regulation, or undue civil liability for responsible actors,” DSCC President Michael Quaranta wrote to Griffith on April 13. 

The letter is cosigned with the Central Delaware Chamber of Commerce, the Consumer Data Industry Association, the Delaware Alliance for Nonprofit Advancement, the Delaware Business Roundtable, the Delaware Restaurant Association, the Georgetown Chamber of Commerce, the Internet Coalition, the New Castle County Chamber of Commerce, Rehoboth Beach-Dewey Beach Chamber of Commerce, State Privacy and Security Coalition and TechNet.

HB 262 would require the state Department of Justice to create a registry of data brokers, or businesses that collect or maintain data from at least 500 or more consumers or those who sell or license information to businesses. That registry would include companies’ privacy policies, opt-out information and more that Delawareans could search on their own.

Registration fees would range between $10 to $500, and be based on the company’s activities and how fast they sell or license the data. Those who fail to register will be fined $50 each day to not exceed a total of $10,000 for each year.

After some concerns from the banking sector as well as some technology trade associations, Griffith amended the bill to eliminate the private right of action in certain situations. The private right of action will still apply in the case of brokered information is aquired for fraud, stalking or unlawful discrimination.

It was also clarified that financial institutions or financial firms that fall under the Gramm-Leach-Bliley Act would not be asked to register.

Delaware businesses that collect information — for market research, email list serves or reward programs — have expressed concerns that HB 262 would cause undue burden on what is a routine practice. To answer those criticisms, the bill reworks key definitions.

“Selling” information entails transferring brokered personal information from a business to a third party for money. Third-party brokers are defined as those who receive information about consumers who they have no direct relationship with, such as investor, donor, subscriber or user.

It is difficult to estimate how many companies would have to register.

Assuming an average registration fee of $200, it is possible that this act could generate an average of $400,000 annually starting in Fiscal Year 2024, according to the state’s financial analysis. Fees and future civil fines would be sent to the Internet Privacy Protection Fund (IPPF), established from this legislation.

It would cost $100,000 to establish the registration system at the Department of Justice website, and it would cost an additional $175,725 per year for two new staff members to manage the site. Gov. John Carney has not set aside funding for these expenses for FY 2023.

In the letter sent to Griffith, Quaranta argued that people are compelled to share information to drive, practice law, or work in trade specific fields. However, if a customer doesn’t like data practices of one business, they can go elsewhere.

“Rarely does a piece of legislation impact so many sectors of our business and nonprofit communities,” he wrote. “This legislation would affect small businesses, some in the financial services industry, the health care sector, nonprofit organizations, the tech industry, the credit reporting industry, political parties, political campaign committees, political action committees and others.”

During the Appropriations Hearing, Rep. Ruth Briggs King (R-Georgetown) announced she would sponsor HB 262 making her the first Republican to do so. She noted that today with smartphone apps, people think they are “getting something for nothing,” because the legal phrasing in the terms of conditions signs their information away.

“It’s no wonder they [ads] are hounding you, this is how they’re doing it,” Briggs King said on April 13. “Many times they’re taking advantage of people and rightfully so those people should read the agreements, but I’d ask how many people here read the disclaimer before they clicked on an app or clicked on something.”

“It’s unfortunate that we’ve come to these kinds of means,” she added. “But we need to have some higher degree of consumer protection, particularly when this starts when you’re 18 and it can have severe ramifications.”

Editor’s note: An earlier piece mistated that HB 262 would eliminate private right of action and mispelled Rep. Ruth Briggs KIng’s name. We regret the error.

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