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Does the CCPA Apply to Companies Outside California?

Paige Harris Mar 23, 2022 8:00:00 AM

In this digital era, data has become an important source of revenue, especially for online businesses. The increasing demand for consumer information also led to the misuse of personal data, exposing people to all kinds of attacks. That’s why the state of California passed the California Consumer Privacy Act of 2018 (CCPA).

This act requires all businesses engaging in transactions with residents of California to be more responsible with the personal information they collect about their customers. Many companies want to know if the CCPA compliance for California apply if they are located outside California. Others want to know if the provisions of the CCPA apply to employees

Do the Requirements Apply to Businesses Outside of California?

Companies that don’t have a physical location in California often assume that the act doesn’t affect them. However, this assumption is wrong and an inadvertent mistake can easily lead to an investigation by authorities and monetary penalties. The CCPA applies to any business that transacts with California residents for the purpose of making a profit. If you sell goods or services to Californians, the CCPA still applies to you, assuming you meet one or more of the following thresholds:

  • Your annual gross revenue is more than $25 million.
  • You buy, sell, receive or share personal information about 50,000 or more California residents for the purpose of making a profit.
  • 50% or more of your annual revenue comes from selling personal information collected from Californians.

It’s almost impossible to operate an online business in the United States entirely outside a large state like California. When you set up an online business in the U.S. you should expect to get orders from customers living in California, even if you don’t have a storefront there. The bottom line is that if your business is large and/or growing, you need to come up with a strategy for complying with the CCPA. It’s ideal to have yourself fully compliant with the regulations before you need to be, that way you save yourself any potential future headaches. 

Another common question that gets asked is: What does the CCPA mean for advertisers? The act is very clear on this issue. If your business shares branding with another company that is subject to the CCPA, then the act applies to your business as well regardless of your revenues.

In brief, your business is subject to the CCPA if it has any commercial interactions with residents of California and is large enough that it meets certain conditions. Smaller businesses may still be subject to the CCPA if the bulk of their business comes from the state. Whether your business is located in California or not, you are expected to comply with the act if your business meets the criteria. Not doing so can mean heavy fines and other financial penalties, so if you think you might be transacting at a level where the CCPA is relevant to your business, it’s best to hire an expert to look further into the matter.

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