Texas Data Privacy and Security Act
Texas’s Data Privacy and Security Act (TDPSA) most closely follows the Washington Privacy Act model with some distinct variations. Notably TDSPA includes specific notification obligations for certain types of data sales, circumstances where pseudonymous data is considered personal information, and a tie to the U.S Small Business Administration’s standards. Business’s must comply with the TDPSA starting on July 1, 2024.
What you need to know about the TDPSA:
The TDPSA applies to for-profit entities that:
- Conduct business or provide products or services to residents of Texas (consumers), and
- Processes or engages in the sale of PI, and
- Is not a small business under the definition of a small business by the U.S. Small Business Administration. (Exception: Under TDSPA, small businesses may not engage in the sale of sensitive personal information without consumer consent.)
Exempt Entities: Exempt entities include:
- Non-profits;
- State government entities;
- Higher education Institutions;
- HIPAA-covered entities;
- GLBA-covered entities;
- Certain state defined electric utilities.
Exempt Data: Texas exempts a long list of personal information, including but not limited to:
- Protected Health Information (PHI) under HIPAA;
- Data covered by the Gramm-Leach-Bliley Act;
- Various federally and internationally protected health and patient information, including that protected by the Common Rule, human subject data, and more;
- Various forms of credit data regulated by the Fair Credit Reporting Act; and
- Data covered by a wide variety of other federal laws including Family Educational Rights, Farm Credit Act, and Privacy Act, and Driver’s Privacy Protection Act.
Exempt Use Cases: The TDPSA is not applicable in some circumstances, such as:
- Processing PI in an employment or commercial (B2B) context;
- Processing PI for emergency contact purposes; and
- Processing PI of an individual in relation to the provision of benefits.
- In addition, Texas specifies that its law should not be construed to restrict a business’s collection, use, or retention of PI for:
- Conducting internal research for development, improvement, and repair of products, services, and technology (R&D);
- Product recalls;
- Identifying and repairing technical errors that impair existing or intended functionality; and
- Performing internal operations.
Key Components of TDPSA
The TDPSA covers “personal data,” or PI, which Texas defines as any information that is linked or reasonably linkable to an identified or identifiable individual.
The definition exempts de-identified and information made publicly available by government records, the media, or the consumer. However, pseudonymous data combined with information that can reasonably link it to an identified or identifiable individual is covered as PI.
Texas’s definition of sensitive PI consists of:
- Racial or ethnic origin;
- Religious beliefs;
- Mental or physical diagnosis;
- Sexuality (Note: most states refer to sex life or sexual orientation);
- Citizenship or immigration status;
- PI about a known child;
- Precise geolocation data; and
- Genetic or biometric data processed for identification purposes.
Where a controller processes de-identified data, Texas requires it to take reasonable measures to ensure the data cannot be associated with an individual, publicly commit to maintaining such data without an attempt to re-identify it, and contractually obligate any recipients of the data to comply with the TDPSA.
Additionally, Texas exempts pseudonymous data from access, correction, and deletion rights requests where the controller can show it keeps information that would allow the data to be re-identified separate and subject to technical and organizational controls that prevent its use for re-identification.
In a word: YES!
Parental consent is required to process PI about a known child (under 13) in accordance with COPPA.
Consent is also required prior to processing PI for purposes that are not reasonably necessary to or compatible with the business purpose for which the information was collected and notified to the consumer.
Under TDPSA privacy notice must include:
- Categories of PI, including categories of sensitive PI, processed;
- Business purpose for processing PI;
- Privacy rights;
- Methods for a consumer to exercise their privacy rights (see below) and appeal a rights decision;
- Categories of PI shared with third parties; and
- Categories of third parties with which PI is shared.
Specific notifications around sale of PI: Texas has unique notification requirements for businesses that sell PI.
- Businesses that sell sensitive PI must include the following notice: “NOTICE: We may sell your sensitive personal data.”
- Businesses that sell biometric data must include the following notice: “NOTICE: We may sell your biometric personal data.”
Texas follows defines “sale” to include exchange for monetary or other valuable consideration.
There are limits on the definition of “sale” to ensure that certain business functions are not unintentionally impeded by this law. Examples of activities deemed not to be a sale include: the disclosure of PI to provide a product or service requested by the consumer, the disclosure of PI to an affiliate, disclosure of PI intentionally made public, and the disclosure of PI as part of a merger. For more, see the statue.
The Texas attorney general (AG) has sole enforcement authority, and the TDPSA obligates the office to create an online complaint mechanism. The AG may bring an enforcement action after providing a 30-day notice and an opportunity for the business to cure the alleged violation(s); the cure period has no sunset. Actions can be brought that seek injunctive relief (the company must stop certain behaviors) and/or civil penalties with fines up to $7,500 per violation, plus attorney’s fees, investigative costs, and any other relief the court determines appropriate.
Privacy Rights
If TDPSA applies to your business, you must provide the following privacy rights to consumers:
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- Right to know whether a business is processing your PI;
- Right to access PI;
- Right to correct inaccuracies in PI;
- Right to delete PI about them;
Right to obtain a copy of PI (data portability); and
Right to opt out of the sale of personal, processing for targeted advertising, or profiling in furtherance of decisions that produce legal or similarly significant effects concerning the consumer.
Texas requires that controllers have at least two methods for consumers to make privacy rights requests. Businesses must respond to privacy rights requests within 45 days of receipt of the request, with a permissible 45-day extension in limited circumstances. Responses must be provided free of charge once a year. If the business cannot authenticate a request or declines to take a requested action for another reason, the business must notify the consumer in writing, including the reason for the declination and instructions for appeal.
The appeals process must be conspicuously available to consumers and similar to the process for submitting and initial privacy rights request. Businesses must respond to appeals within 60 days of receipt and, if denying an appeal, must provide the consumer with an online method to file a complaint with the attorney general.
Universal Opt Out
Starting January 1, 2025, Texas requires that controllers recognize universal opt out signals. Universal opt-out, or global privacy control, is a technical standard that enables users to automatically communicate their privacy preferences, such as opting out of the sale of their personal information, to websites through their web browser or other technologies.
Privacy Impact Assessments
TDPSA requires that covered organizations conduct data protection impact assessments, or privacy impact assessments (PIAs), for certain high-risk processing.
TDPSA requires assessments for activities that present a heightened risk of harm, specifically including:
- Processing for targeted advertising;
- Processing sensitive data;
- Selling PI;
- Processing for the purposes of profiling if it presents a ‘reasonably foreseeable risk’ of
- Unfair or deceptive treatment or unlawful disparate impact on consumers;
- Financial, physical or reputational injury to consumers;
- Physical or other intrusion on the solitude or seclusion, or private affairs or concerns, which would be offensive to a reasonable person; or
- Other substantial injury.
Vendor Contracts
Texas requires controllers to have a contract in place with vendors that dictates obligations with respect to processing PI. Contracts must include:
- Instructions for processing PI;
- The nature and purpose of processing;
- Type of data that is subject to processing;
- The duration of processing;
- A duty of confidentiality for individuals who process the PI;
- Obligation to delete or return all PI at the controller’s direction or when it has completed the services, unless retention of the PI is required by law;
- Obligation to make available all information necessary to demonstrate the vendor’s compliance with its obligations;
- Compliance with audits by the controller or independent auditor and to provide a report of the assessment to the controller; and
- Pass along obligations to any subcontractor in a written contract.
Data Minimization
Texas limits the collection of PI “to what is adequate, relevant, and reasonably necessary in relation to the purposes for which that personal data is processed, as disclosed to the consumer.” Where processing is not necessary or compatible with the purpose for collection, organizations must obtain consumers’ consent for the processing.
Data Privacy is Just Good Business
Managing privacy compliance with all these new state privacy laws popping up in the U.S., might seem like a daunting task. But just because the task appears daunting, it doesn’t mean that it’s impossible to handle.
You don’t have to go at it alone! With the right support, you can make data privacy measures a sustainable part of your daily operations. That’s where Red Clover Advisors comes in – to deliver practical, actionable, business-friendly privacy strategies to help you achieve data privacy compliance and establish yourself as a consumer-friendly privacy champion that customers will appreciate.
