Colorado Privacy Act

What these U.S. state laws have in common is the implementation of a notice and opt-out choice regime. A “notice and opt-out choice regime” means that business can process most types of data as long as there is a consumer-facing privacy notice that describes the intended use of data, and the consumer (data subject) is provided with the opportunity to opt-out of certain uses of such data (e.g., profiling, sale, targeted ads).
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What makes the Colorado Privacy Act unique?

Like California’s CCPA/CPRA, the CPA is supplemented by a set of regulations. A regulation is a rule or order that is issued by a government agency to implement a law. The Colorado attorney general crafted the CPA regulations with some input from the public, including the business community. Regulations are usually more specific than laws, and they provide guidance on how to comply with the law. 

The Colorado Privacy Act (CPA) goes into effect on July 1, 2023 and will be enforced by the Colorado Attorney General. It’s notable that certain obligations don’t go into effect until January 1, 2024 and there’s a 60-day right to cure most violations until January 1, 2025.

The CPA applies to companies that conduct business in Colorado and/or produce or deliver commercial products or services that are intentionally targeted to Colorado residents and that either:

The CPA defines “consumers” to mean Colorado residents acting only in an individual or household capacity. It does not include Colorado residents acting in a commercial or employment capacity.

Key Concepts in the Colorado Privacy Act

Broad definition of personal information
Like most privacy and data protection laws promulgated over the past five years, Colorado has adopted a broad definition of personal information. It is designed to cover pseudonymous personal data (e.g., IP address, Mobile Advertising ID (MAID), Hashed Email (HEM)) and identifiable personal data (e.g., email or postal address, telephone number). There are exemptions for “public” information and “de-identified” data.
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Consumer Choice / Consent
Colorado mostly has a notice and opt-out choice regime. That means that you can process most types of data, so long as:

• There’s a privacy notice provided that describes the intended use of the data, and
• The data subject is provided with the opportunity to opt-out of certain uses of such data (e.g., profiling, sale, targeted ads)

But be careful! Colorado’s guidance requires consent if your use of data is outside the scope of the privacy policy under which the data was initially collected (i.e., a secondary use of data). Also, Colorado requires opt-in consent for the processing of “sensitive information” (see below).  

Data Subject Access Requests
A data subject access request (DSAR) is a formal request from an individual (the data subject) to a company, requesting a copy of their personal data stored with the company. The CPA provides consumers with the right to see the data that companies have on them (including pseudonymous data, in many instances). Consumers then have the right to correct and/or delete that information.

Sensitive Data
The CPA has created a new category of data called “Sensitive Data.” Sensitive Data is modeled on “special category” data in EU data protection law. It includes personal data revealing racial or ethnic origin, religious beliefs, a mental or physical health condition or diagnosis, sex life or sexual orientation, or citizenship or citizenship status; (b) genetic or biometric data that may be processed for the purpose of uniquely identifying an individual; or (c) personal data from a known child. 

Colorado requires opt-in consent prior to processing sensitive data. More importantly, the CPA Guidance’s inclusion of inferences and derivative data indicates that “health conditions” and other forms of sensitive data should be construed broadly. Collecting potentially sensitive data will likely require some adjustments to many companies’ data taxonomy and data governance ruleset.

Controller / Processor
The CPA utilizes the GDPR terms for controller (i.e., controls the means of processing) and processor (i.e., takes direction from the controller). Moreover, the CPA requires processors to offer controllers an opportunity to object to the use of sub-processors and provides certain rights for controllers to audit the privacy practices of their processors.

Data Governance
Like some other states, Colorado places guard rails around how companies may process data. The expectation is for companies to only collect data that is absolutely necessary (“data minimization”) and to store it for as little time as possible (“data retention”).
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Privacy Impact Assessment
Another concept borrowed from EU data protection law, Colorado requires companies to complete Privacy Impact Assessments (PIAs): systematic evaluations of their data collection and use practices with an eye towards identifying risks and minimizing or eliminating those risks. The Colorado AG’s guidance provides a roadmap for what the AG expects to see within a privacy impact assessment.
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Data Processing Agreements
The CPA suggests a data processing agreement (DPA) between controllers and processors. The purpose of a DPA is to outline how the parties plan to ensure that their intra-party data transfers are compliant with privacy laws, and to specify the permitted uses of the data.
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The Price of Non-Compliance:
Regulatory Fines Across U.S. State Privacy Laws

While GDPR ushered in a new era of large privacy and compliance fines, a few of the U.S. State Privacy Laws also incorporated some fairly aggressive fine structures. The first CCPA fine was $1.2 million. Fines are often determined by the number of violations–which is often dependent on the number of records in your database. Needless to say, those numbers can add up quickly if you’re working with millions of consumers in one of the states–and the fines typically don’t include legal fees or injunctive relief.

Here’s a thumbnail of the fine structures across various U.S. states, including Colorado:

With the Ketch Trust by Design Platform, you can:

• Use our “clicks-not-code” interface to create policies for how data is handled throughout your data ecosystem, leveraging our templates for Colorado-specific compliance
• Create customized, jurisdictionally-aware privacy notices for your customers
• Deploy Ketch data mapping and discovery tools to find and classify sensitive and personal data in every internal and external system
• Assign data processing purposes (like analytics or targeted advertising) and permissions to data, so you know exactly how your data may be used, sold, and/or shared
• Use our drag-and-drop DSR workflow tool to create automated, end-to-end DSR fulfillment processes that replace internal stakeholder tasks with automated execution of access and deletion requests 

When you automate these processes, you enable your internal stakeholders: 

• Your developers and marketers can do their jobs without fretting about regulations
• Your legal team can set guidelines for notice and consent, secure in the knowledge that any changes they make will ripple through your whole data ecosystem (including vendors or third-party companies using your data!)