California Attorney General Settles with DoorDash over Alleged Sale of Personal Information

By Andrew Serwin, Lea Lurquin & Kieran de Terra on February 22, 2024

Posted in Data security and breaches, Direct marketing, Enforcement, Uncategorized

Overview

On February 21, 2024, the California Attorney General (CA AG) announced that it had reached a settlement with DoorDash over allegations that the company failed to comply with “sale” requirements under the California Consumer Privacy Act (CCPA) and disclosure requirements under the California Online Privacy Protection Act (CalOPPA). The settlement requires DoorDash to pay a $375,000 civil penalty and comply with specific injunctive terms.

The CA AG’s complaint alleges that DoorDash participated in marketing co-operatives (“co-ops”) that involved the company providing its customers’ personal information (such as names, addresses, and transaction histories) to the co-op without providing its customers with notice or an opportunity to opt-out of the sale. Upon receiving DoorDash’s customer personal information, the co-op would combine DoorDash’s customer data with the customer data of other third-party co-op members, analyze the data, and allow members to send mailed advertisements to potential leads. The CA AG considered such data disclosure a “sale” of personal information under the CCPA’s broad definition of that term. Specifically, DoorDash received “valuable consideration” in exchange for disclosing its customer data to the co-op, namely the “opportunity to advertise its services directly to the customers of the other participating companies.”

The CA AG’s second cause of action invoked CalOPPA, a 20-year-old California privacy law that imposes transparency obligations on companies that operate websites for commercial purposes and collect personally identifiable information from Californians. The complaint alleged violations of CalOPPA by DoorDash due to the company’s failure to disclose in its privacy policy that it would share its customers’ personally identifiable information with other third-party businesses (e.g., marketing co-op members) for those businesses to contact DoorDash customers with ads.

Key Takeaways

This settlement serves as a critical reminder of the importance of compliance with current and emerging state privacy laws, emphasizing the broad definition of “sale” under the CCPA and the strict requirements for transparency and consumer choice. Additionally, we expect the California Privacy Protection Agency, another California privacy regulator (vested with full administrative power, authority, and jurisdiction to implement and enforce the CCPA) to ramp up its own investigative and enforcement efforts this year. Thus, businesses should consider the following:

“Selling” is Broader than Cookies – companies should re-assess how their data disclosure activities may be considered “selling” under the CCPA. Many companies focus on the use of third-party ad and analytics cookies on their websites as the main trigger for “sale” compliance obligations under the law. This settlement makes clear that companies should broaden their review and assessment of their marketing department’s use of personal information to consider non-cookie related data disclosures.
Review and Update Privacy Policies – an outdated, unfair and deceptive, or misleading privacy policy serves as an online billboard announcing a company’s non-compliance with state privacy laws as well as state unfair competition laws (such as for example California’s Unfair Competition Law (UCL)). As this settlement demonstrates, this can be a magnet for consumer complaints and regulatory scrutiny (including at the federal level under Section 5 of the Federal Trade Commission Act). Companies should continually review and update their privacy policies if they materially change how they handle personal information. Under the CCPA, privacy policies must be updated at least annually.
Opt-Out Mechanisms. Companies should ensure that compliant opt-out mechanisms, including an interactive webform and a “Do Not Sell or Share My Personal Information” or “Your Privacy Choices” link, are in place. Opt-out mechanisms must also recognize and respond to universal opt-out preferences signals, such as the Global Privacy Control (GPC) signal.
Don’t Forget the Apps – the complaint noted that both the DoorDash website and mobile application (App) failed to inform consumers about the sale of their personal information and their right to opt-out. Companies that collect personal information via an App and engage in “backend” selling of personal information should ensure that the App includes sufficient CCPA disclosures and a mechanism for users to easily opt-out of the sale of their personal information (see here for the CA AG’s previous announcements of an investigative sweep focused on violations of CCPA in the App context).
Marketing Co-Ops – this enforcement action makes clear the California regulators consider a company’s participation in a marketing co-operative to be a “sale” under the CCPA. Companies participating in marketing co-ops and other third-party data sharing engagements should carefully review their agreements with the data recipients to ensure they restrict the recipients’ ability to further disclose or sell consumer personal information.

For more information about these developments and the CCPA in general, contact your DLA relationship Partner, the authors of this blog post, or any member of DLA’s Data, Privacy and Cybersecurity team.