Financial Incentives: The Fault in California’s Privacy Framework

In 2018, California became the first state in the nation to enact comprehensive consumer data privacy legislation with its California Consumer Privacy Act. The law provides Californians with several rights regarding their consumer data, as well as a right not to be discriminated against for exercising any of those rights. The law, however, includes an exception by which businesses can offer financial incentives (i.e., differing prices, rates, or quality) if those incentives are correlated to the value provided by the consumer’s data. In this way, the law offers consumers tools to control the collection and use of personal data and promises that consumers will not be discriminated against for using these tools, while simultaneously endorsing business schemes that entice consumers to give their data and punish those who do not. The exception also recklessly marries data valuation with data privacy. This Article argues that the financial incentive exception creates a fundamental conflict within California’s Privacy Framework, which cannot be reconciled with its promise to give consumers stronger privacy protection. Through an examination of the financial incentive exception, this Article offers critiques of data valuation in consumer privacy laws and presents recommendations for future privacy legislation. More fundamentally, this Article argues that data valuation in consumer privacy laws creates and exacerbates societal inequities and undermines consumer privacy