Small businesses in the Mountain State are hurting. In addition to rising inflation, labor shortages and shrinking consumer confidence, small companies face another glaring issue: compliance with a “patchwork” of state-level data privacy laws that threaten their ability to operate efficiently and compete with larger, well-resourced companies.
Since 2018, 34 states have passed or introduced 72 bills regulating how businesses handle, store and utilize consumer data. California, Colorado, Connecticut, Utah and Virginia have recently passed comprehensive state privacy laws to this effect. The trend of increasing red tape means entrepreneurs must prioritize costly legal requirements instead of serving their customers.
To address the issue, Congress is now taking action to establish a uniform federal data privacy standard to protect consumers’ personal information and provide businesses with much-needed guidance. The legislation currently being discussed, the American Data Privacy and Protection Act (ADPPA), would eliminate the growing patchwork of state laws.
The ADPPA would grant expansive protections to all consumers, including my constituents in West Virginia. Consumers would have more certainty about what to expect when interacting with companies across state lines. What’s more, the current bill would focus obligations and enforcement on large companies that are most likely to pose risks to the public. Small businesses would be exempt from the private right of action provision, protecting them from abusive and frivolous litigation tactics.
Congress’ consideration of this legislation marks a critical first step to having a uniform standard that protects all American consumers and works for business. It also helps mitigate the considerable costs that small businesses would incur to comply with a tangled web of varying, often duplicative regulations. Mom-and-Pop shops, unlike large corporations, cannot support a staff of attorneys and data scientists to comply with privacy laws.
In fact, the Information Technology and Innovation Foundation (ITIF) estimates that a state-level data privacy patchwork will cost our economy $1 trillion over the next decade if left unaddressed. Small businesses alone will lose $200 billion in reduced productivity, legal fees, unrealized growth potential, and other unnecessary compliance costs without a federal privacy law.
If Congress fails to pass a federal privacy bill, states will continue to enact laws that worsen the problem. If all 50 states were to establish individual, overlapping privacy laws, West Virginia companies would incur $600 million in losses over the next ten years. Firms can’t afford to absorb those losses, so they will inevitably pass them on to consumers. That’s the last thing West Virginians need right now.
While additional improvements should be made to the ADPPA to make it practical and workable for small businesses, eliminating the patchwork of state laws is most important. Without small business voices represented and swift action from Congress, entrepreneurs will continue to face barriers to growth. Business owners across our state could tell you that their priority is providing quality service and safeguarding the trust of their customers. As a West Virginia state delegate, it is my duty to advocate for an economy that encourages small business success by eliminating needless regulation.
The importance of a uniform privacy law to consumers and small businesses is clear. Yet, some members of Congress and state agencies want to maintain the status quo. Your representatives need to hear from you. Urge them to pass the American Data Privacy and Protection Act to provide a single legal standard for small businesses across the United States.
— Mike Honaker represents the 42nd District in the West Virginia House of Delegates.