In a historic enforcement action, California has ordered the shutdown of a data broker that failed to comply with the state’s Delete Act, marking a major move in the state’s crackdown on unregulated data collection.
The California Privacy Protection Agency (CPPA) announced Thursday that Background Alert, a California-based company that compiles and sells personal data, must cease operations for three years after failing to register as required under the law.
This first-of-its-kind action signals California’s increasing efforts to rein in the data brokerage industry. Background Alert agreed to the settlement terms but did not respond to requests for comment.
A Data Broker Built on Public Records
Background Alert built its business by aggregating billions of public records to create detailed personal profiles, drawing inferences about individuals and their associates. The company openly promoted its services with the unsettling slogan:
“It’s scary how much information you can dig up on someone.”
The CPPA highlighted that the company marketed itself as detecting “alarming patterns” to generate inferences, which regulators deemed especially invasive.
“Seemingly innocuous data points, when combined with other data points, can be exploited to infer highly personal characteristics about people,” the CPPA stated in its settlement order.
Regulators warned that these data inferences could be misused to identify immigrants, veterans, or individuals seeking reproductive healthcare services, raising significant privacy and security concerns.
California’s Crackdown on Unregistered Data Brokers
California has been intensifying enforcement against non-compliant data brokers as part of its broader push for consumer privacy protections.
The Delete Act, passed in 2023, requires data brokers to register with the state annually and pay a fee. These fees will fund the development of a consumer-friendly tool allowing individuals to request data deletion from all registered brokers with a single click.
“California, along with states like Texas, has been at the leading edge of reining in the data brokerage industry and tackling its myriad harms to people’s privacy, safety, and security,” said Justin Sherman, a data broker expert and scholar at the Electronic Privacy Information Center.
With this enforcement action, California is setting a precedent for other states seeking to regulate the mass collection, sale, and exploitation of personal data—a multi-billion-dollar industry that thrives on consumer information.
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