Honda’s Settlement with the CPPA: Lessons in CCPA Compliance and Risk Mitigation
Professionals navigating the U.S. privacy landscape now have new guidance from a high-profile enforcement action: the California Privacy Protection Agency (CPPA) recently reached a settlement with American Honda Motor Co., Inc. (“Honda”) over alleged California Consumer Privacy Act (CCPA) violations. Stemming from an industry-wide investigation into the data practices of connected vehicle manufacturers, the settlement requires Honda to pay $632,500 in civil penalties and to adopt revised privacy protocols. Below, we dissect the settlement’s key components and propose best practices for businesses subject to the CCPA.
Background of the CPPA’s Investigation
In July 2023, the CPPA initiated a broad review of privacy practices among connected vehicle manufacturers, focusing on how companies collect, use, and share consumers’ personal information. After scrutinizing Honda’s procedures, the CPPA concluded that the company’s compliance efforts fell short in three discrete areas, each involving core CCPA requirements on data collection and disclosure.
Primary CCPA Violations
a. Excessive Information Requests for Opt-Out
Under the CCPA, businesses cannot obligate consumers to complete identity verification when the sole request is to opt out of the sale or sharing of personal information—or to limit the use of sensitive personal information. The CPPA found that Honda was demanding details such as name, address, email, phone number, and vehicle identification number (VIN) for opt-out requests, effectively treating them like full-scale access or deletion inquiries. This practice, according to the CPPA, placed an undue burden on consumers and contravened CCPA rules mandating streamlined opt-out procedures.
Additionally, Honda required further confirmation from consumers who relied on authorized agents—a step the CPPA deemed impermissible, given the CCPA’s prohibition on verification for opt-out and “limit” requests.
b. Asymmetrical Choices for Cookie Consent
The investigation concluded that Honda’s cookie management platform made opting out of advertising cookies more cumbersome than opting in—violating the CCPA requirement that opt-in and opt-out mechanisms be equally accessible. Non-essential cookies were enabled by default, and opting out involved toggling multiple categories followed by a “confirm” action. In contrast, opting back in demanded only a single click on an “Allow All” button. The CPPA regarded this disparity as a noncompliant practice that discouraged consumers from effectively exercising their privacy rights.
c. Deficient Agreements with Advertising Technology Providers
The CPPA also objected to Honda’s data-sharing arrangements with third-party advertising technology companies. Under the CCPA, businesses must secure written agreements with service providers or third parties that limit the use of personal information, impose confidentiality obligations, and ensure overall compliance with CCPA requirements. Honda failed to produce contracts meeting these standards, leaving the CPPA to conclude that personal data had been shared without the appropriate legal safeguards.
Settlement Terms and Compliance Mandates
In resolving these alleged violations, Honda agreed to pay $632,500 in penalties and undertake several remedial measures to align its privacy practices with the CCPA. Specifically, Honda must:
Revise Its Opt-Out Mechanisms: Implement simplified processes that refrain from requesting unnecessary consumer data and remove any verification steps not explicitly allowed by the CCPA.
Equalize Cookie Consent Procedures: Provide an equally user-friendly experience for both opting in and opting out of cookie-based tracking or advertising.
Strengthen Vendor Contracts: Update its agreements with advertising technology providers to include required CCPA provisions, thereby restricting data usage, ensuring confidentiality, and reinforcing compliance obligations.
Enhance Employee Training: Provide privacy training to employees responsible for consumer data handling and for overseeing compliance with CCPA policies.
Engage a User Experience Specialist: Collaborate with a user experience (UX) designer to assess and refine the systems through which consumers exercise their privacy rights, ensuring a streamlined interface.
Key Takeaways for Businesses
a. Trim Down Information Requirements for Opt-Out Requests
Companies should solicit only the minimal data necessary to execute an opt-out request. Requiring consumers to verify identity in scenarios where the law does not mandate it may trigger regulatory scrutiny and potential penalties.
b. Maintain Symmetry in Consumer Choice
Whether opting in or opting out, consumers must receive an equivalent level of convenience. From cookie consent mechanisms to data sharing preferences, an excessively cumbersome opt-out process can invite enforcement actions under the CCPA’s fairness principles.
c. Validate Vendor Agreements Regularly
Robust written contracts with service providers and other third parties are crucial. Ensure these agreements specify permissible uses of personal information, impose confidentiality duties, and contain language consistent with CCPA requirements. Missing or outdated clauses expose businesses to liability if a third party misuses the data.
Strategic Implications
The CPPA’s action against Honda represents a broader trend: regulators continue to demonstrate that they will vigorously pursue CCPA noncompliance. In addition, the settlement underscores that user-centric design (e.g., straightforward interfaces and transparent data workflows) is becoming an expectation rather than an optional best practice. By minimizing friction in consumer rights processes and systematically reviewing vendor agreements, companies can mitigate enforcement risk and promote consumer trust in their data-privacy posture.
For further guidance on CCPA compliance and best practices for managing data privacy, stakeholders should consult experienced counsel. Proactive measures today can prevent costly enforcement actions down the line.