A misguided piece of legislation currently before the California Legislature would severely harm consumers, small and independent businesses, and nonprofit organizations throughout the state and must be fixed.

Senate Bill 362, if enacted, would allow Californians or their authorized agents to delete all personal information retained by companies defined as “data brokers” with the click of a button. The result would be a massive ripple of unintended consequences on people’s everyday lives and California’s entire economy.

Specifically, the bill as currently written would:

Undermine consumer fraud protections. SB 362 would limit the ability of financial institutions, online stores, and other companies to protect customers from fraud and identity theft. Fraud prevention efforts rely heavily on consumer data provided by data brokers to verify the identity of their customers rather than fraudsters pretending to be the customer when they communicate or transact with various kinds of businesses. For example, data such as, what high school you attended, the year and model of a previously owned car, an old mailing address – if deleted, this information would no longer be available for companies to use to confirm people’s identities, making it easier for scammers to gain access to other people’s accounts.

Limit small businesses’ ability to compete. Small and independent businesses, a growing number of which are minority- and women-owned, rely on consumer data provided by data brokers to find, reach, and attract new customers and grow their businesses. Without this data, these business owners will be cut off from the information they need to remain competitive with larger companies. The legislation would force these companies to do business with entrenched social media platforms and search engines which maintain massive troves of consumer data they collect themselves and won’t be impacted by SB 362’s mass data deletion mechanism. This will drive up the costs of marketing and advertising for businesses of all types and sizes and make it less feasible to use traditional avenues such as direct mail and targeted advertising.

Harm mission-driven nonprofits. Similarly, nonprofits and mission-driven entities rely on data that enables them to reach new donors and volunteers with their important messages. SB 362’s deletion mechanism will remove data from the marketplace and hinder the ability of nonprofits and cause-driven entities to further their missions.

Empower authorized agents at consumers’ expense. SB 362 would allow third parties to request deletion of data on behalf of consumers. Without proper guardrails, this could give an unfair market advantage to those not defined as data brokers. The bill has no controls to define a so-called authorized agent. For example, a large tech company could create a self-serving marketplace where it controls all data. This could incentivize a cottage industry of groups that could mislead consumers into paying for services they don’t understand.

SB 362 has no consumer education component, so many consumers will not fully understand the severe downsides of deleting their information. The bill is also completely unnecessary, as consumers already have the right and ability to request that businesses delete their personal information under the California Consumer Privacy Act – something that Californians voted on and approved through a ballot initiative in 2020.

Finally, something that hasn’t been discussed publicly is that SB 362 is being driven by a Silicon Valley investor named Tom Kemp, who writes on his website that he is the citizen co-author of the legislation. Kemp also has blogged that he is “very active” in the amendments process with the bill’s sponsor.

Meanwhile, Kemp stands likely to benefit financially from SB 362’s passage, as one of his portfolio companies, Atlas Privacy, is an authorized third-party agent in the business of personal data removal from websites and data broker databases. Before this legislation moves any further, California consumers deserve to know there are advocates of SB 362 whose support in the name of consumers may be financially motivated.

CDIA strongly opposes SB 362 in its current form and favors pausing the bill for a full and transparent discussion around the unintended consequences this legislation would have for all Californians.