The Ecommerce Innovation Alliance (EIA) wants to bring to your attention a critical legislative effort underway in California that directly impacts the future of our small and mid-sized ecommerce members: Senate Bill 690 (SB 690). The EIA is a dedicated advocate for creating a predictable and fair legal environment for the ecommerce industry, and SB 690 is a prime example of our work in action.

Understanding the Threat: Misuse of CIPA

Our member companies, like many of you operating online and serving California consumers, are facing a troubling surge in lawsuits filed under the California Invasion of Privacy Act (CIPA). Originally enacted in 1967 to prevent the unauthorized recording of telephone calls, CIPA is now being aggressively used by trial lawyers to target standard online business activities. These lawsuits claim that the use of common website tracking technologies like cookies and pixels – often essential for marketing, analytics, and customer engagement – constitute illegal “pen registers” or “trap and trace” devices if explicit opt-in consent wasn’t obtained for data collection during internet use.

This interpretation of CIPA is problematic for several key reasons:

• It circumvents the CCPA: The California Consumer Privacy Act (CCPA) is the comprehensive data privacy law in California, requiring businesses to disclose their data practices and provide consumers with opt-out rights regarding the sale of their personal information. Businesses have invested significant resources to comply with the CCPA’s framework.
• It targets standard business practices: The online activities being targeted are fundamental to modern ecommerce. Small and mid-sized businesses rely on these technologies to operate effectively.
• It leads to “shakedown lawsuits”: Many of these claims result in demand letters with threats of costly litigation and potential statutory damages of $5,000 per violation. Faced with the prospect of expensive legal battles, businesses are often pressured to settle, incurring significant and often unaffordable costs.
• It contradicts the intent of CIPA: CIPA was designed to address telephone wiretapping, not the complexities of today’s internet and online business practices.

SB 690: A Common-Sense Solution

The EIA strongly supports SB 690, introduced by Senator Anna M. Caballero. This bill offers a common-sense solution by clarifying that business activities already regulated by the CCPA are not within the scope of CIPA. Specifically, SB 690 seeks to exempt commercial business purposes from CIPA, narrowly defining these purposes to include standard internal business operations (tied to the CCPA’s definition) and activities subject to the CCPA’s opt-out requirements.

Why SB 690 Matters to EIA Members

• Provides Legal Certainty: SB 690 will provide much-needed clarity and legal certainty for California’s ecommerce businesses, allowing them to operate without the constant threat of meritless CIPA litigation.
• Protects CCPA Compliance: The bill ensures that businesses complying with the CCPA are not penalized under an outdated statute.
• Fosters Innovation: By reducing the burden of frivolous lawsuits, SB 690 allows ecommerce businesses to focus on innovation and serving consumers.
• Supports Small and Mid-Sized Businesses: SB 690 will help protect these businesses from exploitative lawsuits and unaffordable litigation costs.

EIA’s Advocacy in Action

The EIA has been actively engaged in supporting SB 690. As President & CEO David Carter articulated in a letter to the Senate Committee on Public Safety:

Our efforts include:

• Educating Policymakers: The EIA is working to educate policymakers on the real-world impact of the current CIPA litigation on ecommerce businesses. We are highlighting how this misuse of an outdated law creates an uneven playing field and stifles economic growth.
• Articulating Member Concerns: We are ensuring that the voices and concerns of our small and mid-sized ecommerce members are heard by legislators. The alarming increase in CIPA lawsuits and demand letters is a significant burden on our community.
• Advocating for a Fair Balance: The EIA consistently strives for a fair balance that protects consumers while also allowing ecommerce brands to thrive. SB 690 is a crucial step in achieving this balance in California.

Moving Forward

The EIA strongly urges the California Legislature to pass SB 690. This legislation represents a vital step in protecting California’s ecommerce ecosystem from predatory litigation and ensuring that the CCPA remains the intended governing framework for data privacy.

Your Membership Matters

By joining the EIA, you amplify our collective voice and strengthen our ability to advocate for common-sense policies like SB 690 that directly benefit your business. Together, we can create a more predictable and fair legal environment for e-commerce innovation.