Strategies to Mitigate Privacy Litigation Risks

In recent years, privacy litigation, particularly class actions, has surged, often leveraging outdated laws predating the Internet, according to an article by Risk Management Magazine. One such law is the Video Privacy Protection Act (VPPA) of 1988, originally aimed at preventing the unauthorized sharing of video rental history. It has resurfaced in lawsuits related to the Meta Pixel plugin, embedded in websites to track user browsing for targeted ads, potentially violating VPPA.

California Invasion of Privacy Act (CIPA) claims pose another risk, expanded by Ninth Circuit precedent to include recording and transcribing online conversations with chat functions, opening companies to statutory damages of up to $5,000.

Despite ongoing investments in data protection, companies often overlook the impact of well-crafted website terms and privacy policies. Mitigating data privacy litigation risk involves considerations such as:

• Affirmative Consent Provisions: Utilize clear, affirmative, and voluntary user consent mechanisms, favoring “click-wrap” policies requiring explicit actions before accessing the website.
• Class Action Waivers: Include waivers in contracts to deter class actions, making users file individual claims, and potentially reducing the risk of high-dollar settlements.
• Forum Selection Clauses: Choose mandatory or permissive forum selection clauses to control litigation costs and allow businesses to litigate in preferred forums.
• Arbitration Clauses: Employ pre-dispute arbitration agreements to manage liability and control litigation costs, particularly in the context of data breach litigation.
• Limitations on Unnecessary Cookies and Data Collection: Reduce the use of third-party trackers, cookies, and plugins, ensuring they serve a specific organizational purpose. Comply with data minimization principles, auditing and deleting unnecessary data regularly.

Amid evolving data privacy laws and litigation trends, proactive measures in consent, legal agreements, and data practices are vital for companies to navigate and mitigate the risks associated with privacy litigation.