Understanding Virginia's Consumer Data Protection Act (CDPA) for Technology, Software, and Cloud Companies

 

The Virginia Consumer Data Protection Act (CDPA) is a comprehensive privacy law that went into effect on January 1, 2023. It impacts technology, software, and cloud companies operating in Virginia or handling Virginia residents' personal data.

 

Who Must Comply with Virginia CDPA

 

Your technology, software, or cloud company must comply with CDPA if you:

• Process personal data of at least 100,000 Virginia residents in a calendar year, OR
• Process personal data of at least 25,000 Virginia residents AND derive over 50% of revenue from selling personal data
• Companies of any size can be subject to CDPA (unlike some other state laws with small business exemptions)

 

Key CDPA Terms for Tech Companies to Understand

 

• Personal Data: Any information linked or reasonably linkable to an identified or identifiable natural person (excludes de-identified data and publicly available information)
• Sensitive Data: Includes racial/ethnic origin, religious beliefs, mental/physical health diagnosis, sexual orientation, citizenship status, genetic/biometric data, precise geolocation, and children's data
• Controller: Your company if you determine the purpose and means of processing personal data
• Processor: Your company if you process data on behalf of a controller (common for cloud service providers)

 

Virginia-Specific Consumer Rights Under CDPA

 

Virginia residents have these specific rights for their data that your tech company must honor:

• Right to access: Consumers can confirm if you're processing their data and access that data
• Right to correct: Consumers can correct inaccuracies in their personal data
• Right to delete: Consumers can request deletion of personal data you've collected from them
• Right to data portability: Consumers can obtain a portable copy of their data
• Right to opt-out: Consumers can opt out of data sales, targeted advertising, and profiling with legal effects

 

Tech-Specific CDPA Compliance Requirements

 

1. Data Protection Assessments

 

For technology companies, CDPA requires conducting documented data protection assessments when:

• Processing data for targeted advertising (common in software applications)
• Selling personal data (including data monetization strategies)
• Processing data for profiling that creates risks to consumers (like AI-based decision systems)
• Processing sensitive data (common in health tech, biometric security systems)
• Engaging in processing that presents a heightened risk of harm to consumers

 

2. Technical Safeguards for Virginia Data

 

Your technology company must implement specific safeguards:

• Reasonable administrative, technical, and physical data security practices appropriate to the volume and nature of personal data
• Clear data minimization - collect only what's needed for disclosed purposes
• Limited processing - process only for purposes disclosed to Virginia consumers
• Data retention limits - don't keep data longer than necessary
• Encryption of sensitive personal data when appropriate

 

3. Virginia-Specific Documentation Requirements

 

You must maintain and provide:

• A clear and accessible privacy notice that includes:
  • Categories of personal data processed
  • Purpose for processing
  • How consumers can exercise their rights
  • Categories of data shared with third parties
  • Categories of third parties data is shared with
• Processor contracts with specific requirements for data handling (crucial for cloud providers)
• Records of consent for processing sensitive data (including children's data)
• Data protection assessment documentation that can be requested by the Virginia Attorney General

 

4. Response Requirements for Consumer Requests

 

When Virginia consumers submit requests:

• You must respond within 45 days (with possible 45-day extension)
• You must provide a secure, reliable appeals process for denied requests
• You must authenticate requests without requiring consumers to create new accounts
• You must establish a clear process for Virginia residents to submit requests

 

Special Considerations for Cloud and SaaS Companies

 

• Processor obligations: Cloud providers acting as processors must:
  • Follow controller's instructions
  • Help controllers fulfill consumer requests
  • Assist with security breach notifications
  • Delete or return data after service completion
• Data location considerations: While CDPA doesn't have explicit data localization requirements, cloud providers should be transparent about where Virginia residents' data is stored
• Sub-processor requirements: Cloud providers must have controller consent for engaging sub-processors

 

Enforcement and Penalties for Virginia CDPA Violations

 

• The Virginia Attorney General has exclusive enforcement authority (no private right of action)
• Violations can result in civil penalties up to $7,500 per violation
• Companies receive a 30-day cure period to fix violations before penalties
• The AG can recover reasonable expenses including attorney fees

 

How Virginia CDPA Differs from Other Privacy Laws

 

• Opt-in consent for sensitive data: Unlike CCPA, CDPA requires explicit consent before processing sensitive data
• No private right of action: Unlike some other state laws, consumers cannot directly sue companies for violations
• Higher thresholds: The 100,000 consumer threshold is higher than some other state laws
• Mandatory data protection assessments: More extensive than some other state requirements
• Explicit processor requirements: Clearer obligations for cloud service providers

 

Practical Steps for Technology Companies to Comply

 

• Data inventory: Map all personal data you collect from Virginia residents
• Process implementation: Create systems to handle Virginia consumer requests
• Privacy notice updates: Ensure your privacy policy reflects CDPA requirements
• Consent mechanisms: Implement clear opt-in consent for sensitive data
• Vendor management: Update contracts with processors to include CDPA requirements
• Staff training: Educate your team on Virginia-specific requirements
• Documentation: Maintain records of data protection assessments and compliance efforts