Back in 2018, California passed a first-in-the-nation law to subject businesses with almost any sort of digital connection to the Golden State to burdensome online privacy regulations. Heavy-handed legislation with little concern for the impact on businesses and taxpayers is almost to be expected from California, but it’s disappointing to see Florida considering a similar measure.
After all, the California Consumer Privacy Act (CCPA) was costly enough, with the state’s own attorney general estimating that the measure would cost California businesses alone $55 billion in upfront compliance costs, on top of $16.5 billion in costs over the next decade. The state didn’t even attempt to model the impact on the thousands of out-of-state businesses that transact with California consumers through the internet.
But even if it did manage to model those out-of-state compliance costs, it still wouldn’t tell the full story. Because aside from the merits of consumer privacy legislation, the underlying issue is that the CCPA’s impact went well beyond California’s borders — if other states decided to follow California’s lead, businesses and consumers risked being subjected to an increasingly confusing patchwork of state consumer privacy laws.
Regulation of internet-based activity is not something that neatly matches physical borders. E-retail businesses selling into California are almost certainly also selling to consumers in the rest of the country as well. The more states that set up rules for how businesses interact with consumer privacy, the more conflicting rules and regulations businesses must comply with.
Florida’s proposed legislation, HB9, is a manifestation of those fears in legislative form. A report by Florida TaxWatch estimates that HB9 would initially cost businesses between $6.2 billion and $21 billion, with a further $4.9 billion to $12.7 in continuing annual compliance costs. Combined with the CCPA’s estimated compliance costs, that would represent an impressive burden coming from just two of the fifty states that could potentially pass similar legislation.
Florida is not the first state to consider following California’s dubious lead; indeed, states like Maine and Nevada have already passed their own laws. But should Florida pass California-copycat legislation governing consumer privacy, it would be the largest state to do so — and its proposed legislation would be the most expansive.
There are a lot of similarities between the CCPA and HB9. The CCPA applies to any business that collects consumers’ information with at least $25 million in gross revenues, buys, shares, sells, or receives the personal information of 50,000 California consumers, or derives 50 percent or more of its annual revenue from the sale of personal information. HB9, meanwhile, maintains the 50 percent and 50,000 thresholds, while adjusting the $25 million threshold to $50 million in global gross revenue.
Those numbers might sound high, but consider how widespread usage of consumer information is for companies with a digital presence. Retailers collect your address to ship you products, ask for your email address to put you on promotional lists, and even keep track of products you may be interested in. Meanwhile, 50,000 Floridians represent just 0.29 percent of the state’s adult population.
$50 million is a significant revenue threshold, of course, and represents an improvement on California’s $25 million level. Yet even there, it’s important to remember that gross revenue is not the same thing as profit, and small-margin businesses can reach that threshold without necessarily being mega-corporations. Those small margins will only get smaller as these businesses are forced to spend time and money ensuring they are complying with an increasingly confusing web of consumer privacy rules.
States need to recognize the difference between what ought to be their responsibility and what is a national issue. If Floridians want regulation of businesses’ use of consumer privacy, the place to get it is in Congress — not in fifty separate state houses.
Andrew Wilford is a policy analyst with the National Taxpayers Union Foundation, a nonprofit dedicated to tax policy research and education at all levels of government.