High school student using a laptop
A woman using a laptop. Photo via Pixabay

In startup circles, the mantra “move fast and break things” sums up the mentality that entrepreneurs use to disrupt the status quo. One key is the willingness to make — and learn from — mistakes. 

In policymaking, however, mistakes don’t just impact shareholder value. They can cause serious problems in people’s everyday lives. And “breaking” things can be very difficult or impossible to fix. 

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Yet, the California Legislature, in its closing days, threw caution to the wind by rushing through Senate Bill 362, a seriously flawed bill known as “the Delete Act.” The bill, if signed by Governor Newsom would allow California consumers — or third parties that may charge — to delete all personal information held by “data broker” companies with one click.

This would cause far-reaching unintended consequences for consumers, small businesses, mission-driven nonprofits, and California’s economy. 

Perhaps the most worrisome, SB 362 would weaken protections against identity theft and inadvertently undermine safeguards against consumer fraud. Many financial institutions and online retailers, for example, rely on data provided by data brokers to verify the identities of their customers, protecting them from fraudulent activities and scammers. Deleting certain personal information, such as past addresses or other historical data, could prevent consumers from accessing their bank accounts and countless others. 

Further, small and independent businesses, many of which are owned by minorities (27.3%) and women (43.1%), depend on consumer data to engage with potential customers. Removing access to this data puts these businesses at a disadvantage compared to larger corporations that can absorb the cost of non-targeted marketing. Small businesses would have to rely on the social media and search engine giants, which the bill exempts. 

Worse still, SB 362 would solidify the big platforms’ data dominance and choose large companies as marketplace winners over small businesses. The bill conveniently leaves out social media companies and search engines that collect massive quantities of personal information they use to sell billions in advertising. 

The legislation would also hurt charitable and humanitarian organizations. Nonprofits with important missions rely on data to connect with potential donors and volunteers effectively. SB 362’s data deletion provision could hinder these organizations’ outreach by reducing the availability of data.

Next, SB 362 would empower third parties to request data deletion on behalf of consumers, potentially creating an uneven playing field. Without clear guardrails on who qualifies as an “authorized agent,” there is a risk of unfair competition and potential confusion. Consumers may not know what data they are authorizing a third party to delete. 

Concerningly, SB 362 would keep consumers in the dark about the potential downsides of deleting their data since it lacks a consumer education requirement. It’s essential to ensure that consumers are well-informed about their choices. 

Finally, consumers already have the right to request businesses to delete their information under the California Consumer Privacy Act, a law that Californians approved three years ago through a ballot initiative. 

So why is SB 362 on the fast track to the governor’s desk despite so many potential unintended consequences? It may have to do with the financial interests of those beating the drum for its passage. 

At least one of the most vocal citizen supporters and “co-authors” of the bill, Silicon Valley investor Tom Kemp, has invested in a company that specializes in personal data deletion (Atlas Privacy) and would likely be among the companies offering to delete consumers’ data…for a fee. Though consumers could take action themselves, many may be willing to pay companies like Atlas to do it for them. We’ve seen this happen in other contexts with serious harm to consumers. 

When crafting public policy, it’s far more important to get things right than to act fast, especially to please special interests. That is especially true when legislation poses potential harm to every Californian, small business, and nonprofit. 

Let’s invest the time to get consumer data right and strike the right balance for California’s consumers and its economy.

Dan Smith is president and CEO of the Consumer Data Industry Association in Washington, DC.