Definitions

The TDPSA provides definitions for terms, including biometric data, consent, de-identified data, personal data, processing, pseudonymous data, sale of personal data, profiling, targeted advertising, and precise geolocation data.

Among the notable, 'consumer' is defined as an individual who is a resident of Texas acting only in an individual or household context. The term does not include an individual acting in a commercial or employment context. 'Controller,' on the other hand, is defined as an individual or other person that, alone or jointly with others, determines the purpose and means of processing personal data.

In line with other US privacy laws, 'personal data' is defined as any information, including sensitive data, that is linked or reasonably linkable to an identified or identifiable individual. The term includes pseudonymous data when the data is used by a controller or processor in conjunction with additional information that reasonably links the data to an identified or identifiable individual. The term does not include de-identified data or publicly available information.

Following from the above, sensitive data is defined as including:

• personal data revealing racial or ethnic origin, religious beliefs, mental or physical health diagnosis, sexuality, or citizenship or immigration status;
• genetic or biometric data that is processed for the purpose of uniquely identifying an individual;
• personal data collected from a known child; or
• precise geolocation data.

'Child' is considered to be an individual younger than 13 years of age.

Notably, the TDPSA defines a decision that produces a legal or similarly significant effect concerning a consumer as a decision made by the controller that results in the provision or denial by the controller of:

• financial and lending services;
• housing, insurance, or health care services;
• education enrollment;
• employment opportunities;
• criminal justice; or
• access to basic necessities, such as food and water.

Scope

The TDPSA applies to persons that:

• conduct business in Texas or produce a product or service consumed by residents in Texas;
• process or engage in the sale of personal data; and
• are not a small business as defined by the U.S. Small Business Administration, except to the extent that organizations are exempt as provided for under the TDPSA.

Organizations that are not subject to the TDPSA include:

• a state agency or political subdivision of Texas;
• financial institutions or data subject to the Gramm-Leach Bliley Act (GLBA);
• entities or business associates governed by the privacy, security, and breach notification rules under the Health Insurance Portability and Accountability Act (HIPAA) and Health Information Technology for Economic and Clinical Health Act;
• non-profit organizations;
• institutions of higher education; or
• electricity utilities, power generation companies, or retail electric providers.

In addition, information exempt from the TDPSA includes, among others:

• protected health information under HIPAA;
• health records;
• identifiable private information;
• personal data regulated by the Family Educational Rights and Privacy Act;
• personal data collected, processed, sold, or disclosed in compliance with the Farm Credit Act; or
• data processed or maintained in the course of an individual applying to, employed by, or acting as an agent or independent contractor of a controller, processor, or third party, to the extent that the data is collected and used within the context of that role.

Notably, the TDPSA does not apply to the processing of personal data by a person in the course of a purely personal or household activity.

Data subject rights

Consumers under the TDPSA are entitled to exercise their consumer rights at any time by submitting a request to a controller specifying the consumer rights the consumer wishes to exercise. Regarding the processing of personal data belonging to a known child, a parent or legal guardian may exercise their consumer rights on behalf of the child.

Pursuant to the above, the consumer rights under the TDPSA include the right to:

• confirm whether a controller is processing the consumer's personal data and accessing the personal data;
• correct inaccuracies in the consumer's personal data, taking into account the nature of the personal data and the purposes of processing;
• delete personal data provided by or obtained about the consumer;
• if data is available in a digital format, obtain a copy of the consumer's personal data that the consumer previously provided to the controller in a portable and, to the extent technically feasible, readily usable format that allows the consumer to transmit the data to another controller without hindrance; or
• opt-out of the processing of personal data for the purposes of:
  • targeted advertising;
  • the sale of personal data; or
  • profiling in furtherance of a decision that produces a legal or similarly significant effect concerning the consumer.

Specifically, regarding deletion requests, a controller that has obtained personal data about a consumer from a source other than the consumer is considered in compliance with a consumer's deletion request by: (i) retaining a record of the deletion request and the minimum data necessary for the purpose of ensuring the personal data remains deleted from the business's records and not using the retained data for any other purpose; or (ii) opting the consumer out of the processing of the personal data for any purpose other than a purpose that is exempt under the TDPSA.

Responding to consumer requests

Data controllers must comply with consumer requests without undue delay, which may not be later than 45 days after receipt of the request. The response period may be extended by another 45 days where reasonably necessary, taking into account the complexity and number of the consumer's request, so long as the controller informs the consumer of the extension within the initial 45-day response period, together with the reason for the extension.

Further, if a controller declines to take action regarding a consumer's request, the controller must inform the consumer without undue delay, which may not be later than 45 days after the receipt of the request, of the justification for declining to take action and instructions on how to appeal the decision.

Data controllers must also provide information in response to a consumer request free of charge, at least twice annually per consumer. Where consumer requests are manifestly unfounded, excessive, or repetitive, the controller may charge the consumer a reasonable fee to cover the administrative costs of complying with the request or decline to act on the request. If a controller is unable to authenticate the request using commercially reasonable efforts, the controller is not required to comply with a consumer request and may request the consumer provide additional information reasonably necessary to authenticate the consumer and their request.

Controllers must establish two or more secure and reliable methods to enable consumers to submit requests, and must take into account:

• the ways in which consumers normally interact with the controller;
• the necessity for secure and reliable communications of those requests; and
• the ability of the controller to authenticate the identity of the consumer making the request.

When exercising consumer rights, consumers must not be required to create a new account but may require consumers to use an existing account. Controllers that maintain an internet website must provide a mechanism to submit consumer requests on the website, while controllers who operate exclusively online and have a direct relationship with the consumer from whom they collect information are only required to provide an email address for consumer requests.

Appeals

Notably, data controllers must establish a process for consumers to appeal the controller's refusal to take action on a consumer request. The appeal process must be conspicuously available and similar to the process for initiating action to exercise consumer rights, while controllers must also inform consumers in writing of any action taken or not taken in response to an appeal no later than 60 days after receipt of the request of the appeal, including a written explanation of the reason for the decision.

Authorized agents

Finally, consumers may designate another person to serve as their authorized representative and act on their behalf to opt out of the processing of the consumer's personal data. Specifically, a consumer may designate an authorized agent using a technology, including a link to an internet website, an Internet browser setting or extension, or a global setting on an electronic device, that allows the consumer to indicate the consumer's intent to opt out of the processing. Controllers may comply with the opt-out request received if the controller is able to verify, with commercially reasonable effort, the identity of the consumer and the authorized agent's authority to act on the consumer's behalf.

A technology as described above must:

• not unfairly disadvantage another controller;
• not make use of a default setting, but must require the consumer to make an affirmative, freely given, and unambiguous choice to indicate the consumer's intent to opt out of any processing of a consumer's personal data; and
• be consumer-friendly and easy to use by the average consumer.

Controllers are not required to comply where:

• the authorized agent does not communicate the request in a clear and unambiguous manner;
• the controller is not able to verify, with reasonable commercial effort, that the consumer is a resident of Texas;
• the controller does not possess the ability to process the request; or
• the controller does not process similar or identical requests that the controller receives from consumers for the purpose of complying with similar or identical laws or regulations of another state.

However, such a provision does not enter into effect until January 1, 2025.

Controller obligations

Transparency

Data controllers must limit the processing of personal data to what is adequate, relevant, and reasonably necessary in relation to the purpose of processing, as disclosed to the consumer. For the purposes of confidentiality, integrity, and accessibility, controllers must establish, implement, and maintain reasonable administrative, technical, and physical data security that is appropriate to the volume and nature of personal data.

Controllers must not:

• process personal data for a purpose other than that which is neither reasonably necessary nor compatible with the disclosed purposes, unless the controller has consumer consent, unless otherwise provided in the TDPSA;
• process personal data in violation of state and federal laws that prohibit discrimination;
• discriminate against consumers for exercising their consumer rights under the TDPSA; or
• process sensitive data of a consumer without obtaining consumer consent, or in the case of a known child, without processing data in accordance with the Children's Online Privacy Protection Act (COPPA).

Furthermore, the TDPSA provides that a controller or processor that complies with the verifiable parental consent requirements under COPPA with respect to data collected online is considered to be in compliance with any requirement to obtain parental consent under the TDPSA.

Privacy notice

The TDPSA also outlines that data controllers must provide a privacy notice, with required information such as:

• the categories of personal data to be processed, including, if necessary, any sensitive data;
• the purpose of the processing;
• how consumers can exercise their data subject rights, including the appeal process;
• the categories of data shared with third parties;
• the categories of third parties with whom data is shared; and
• a description of the methods through which consumers can submit requests to exercise their consumer rights under the TDPSA.

If controllers engage in the sale of personal data that is sensitive data and/or biometric data, the controller must include the following notices respectively, in the same location and in the same manner as the privacy notice described above:

• "NOTICE: We may sell your sensitive personal data."
• "NOTICE: We may sell your biometric personal data."

If controllers sell personal data to third parties or process personal data for targeted advertising, the controller must clearly and conspicuously disclose that process and the manner in which a consumer may exercise the right to opt out of that process.

Consumer rights under the TDPSA and controller obligations do not apply to pseudonymous data in cases in which the controller is able to demonstrate any information necessary to identify the consumer is kept separately and is subject to effective technical and organizational controls that prevent the controller from accessing the information.

Data Protection Assessments

Controllers must conduct a Data Protection Assessment (DPA) for activities involving personal data, including where.

• the processing is for targeted advertising;
• the processing involves the sale of personal data;
• the processing is for the purpose of profiling, and the profiling presents reasonably foreseeable risks of:
  • unfair or deceptive treatment of or unlawful disparate on consumers;
  • financial, physical, or reputational injury to consumers;
  • a physical or other intrusion on the solitude or seclusion, or the private affairs or concerns, of consumers, if the intrusion would be offensive to a reasonable person; or
  • other substantial injury to consumers;
• the processing involves sensitive data; and
• the processing activities involve personal data that presents a heightened risk of harm to consumers.

DPAs must aim to identify and weigh the direct or indirect benefits that may flow from the processing to the controller, the consumer, other stakeholders, and the public, against the potential risks to the rights of the consumer associated with that processing, as mitigated by safeguards that can be employed by the controller to reduce the risks. DPAs must factor in:

• the use of deidentified data;
• the reasonable expectations of consumers;
• the context of the processing; and
• the relationship between the controller and the consumer whose personal data will be processed.

Importantly, a single DPA may address a comparable set of processing operations that include similar activities, and DPAs conducted by a controller for the purpose of compliance with other laws or regulations may constitute compliance with the requirements of the TDPSA if the assessment has a reasonably comparable scope and effect.

DPAs must also be made available to the Texas Attorney General (AG) pursuant to a civil investigative demand.

Deidentified or pseudonymous data

Controllers in possession of deidentified data must:

• take reasonable measures to ensure that the data cannot be associated with an individual;
• publicly commit to maintaining and using deidentified data without attempting to reidentify the data; and
• contractually obligate any recipient of the deidentified data to comply with the provisions of the TDPSA.

However, the TDPSA clarifies that it does not require a controller or processor to:

• re-identify de-identified or pseudonymous data;
• maintain data in an identifiable form, or collect, obtain, retain, or access data or technology, for the purpose of allowing consumers or processors to associate consumer requests with personal data; or
• comply with an authenticated consumer rights request, if it:
  • is not reasonably capable of associating the request with the personal data or it would be unreasonably burdensome for the controller to associate the request with the personal data;
  • does not use the personal data to recognize or respond to the specific consumer who is the subject of the personal data or associates the personal data with other personal data about the same specific consumer; and
  • does not sell the personal data to any third party or otherwise voluntarily disclose the personal data to any third party other than a processor, except as otherwise permitted by the TDPSA.

Controllers that disclose pseudonymous data or deidentified data must exercise reasonable oversight to monitor compliance with any contractual commitments to which the pseudonymous data or deidentified data is subject and shall take appropriate steps to address any breach of the contractual requirements.

Processor obligations

Processors must adhere to the instructions of a controller and assist the controller in meeting their duties or requirements under the TDPSA, including:

• responding to consumer requests by using appropriate technical and organizational measures, as reasonably practicable, taking into account the nature of processing and the information available;
• complying with the security of processing personal data and to the notification of a breach of security of the processor's system; and
• providing necessary information to enable the controller to conduct and document DPAs.

A contract must govern controller and processor procedures and must include:

• clear instructions for processing data;
• the nature and purpose of the processing;
• the type of data subject to processing;
• the duration of the processing;
• the rights and obligations of both parties; and
• a requirement that the processor shall:
  • ensure each person processing personal data is subject to a duty of confidentiality;
  • at the controller's direction, delete or return all personal data to the controller as requested after the provision of the service is complete unless retention is required by law;
  • make available to the controller, on reasonable request, all information in the processor's possession necessary to demonstrate the processor's compliance under the TDPSA;
  • allow, and cooperate with, reasonable assessments by the controller or controller's designated assessor; and
  • engage any subcontractor pursuant to a written contract that requires the subcontractor to meet the requirements of the processor with respect to personal data.

Notwithstanding the above, a processor, in the alternative, may arrange for a qualified and independent assessor to conduct an assessment of its policies and technical and organizational measures in support of the requirements under the TDPSA using an appropriate and accepted control standard or framework and assessment procedure. However, the processor must provide a report of the assessment to the controller on request.

A determination of whether a person is acting as a controller or processor with respect to the specific processing of personal data is a fact-based determination that depends on the context in which personal data is to be processed. Processors that continue to adhere to a controller's instructions with respect to a specific processing activity remain a processor.

Small businesses

The TDPSA specifically prescribes that small businesses must not engage in the sale of sensitive personal data without receiving prior consent from the consumer.

Limitations

The TDPSA outlines a list of items that must not be intended as being restricted by the same, which includes a controller's or processor's ability to:

• comply with federal, state, or local laws, rules, or regulations;
• comply with a civil, criminal, or regulatory inquiry, investigation, subpoena, or summons by federal, state, local, or other governmental authorities;
• investigate, establish, exercise, prepare for, or defend legal claims;
• provide a product or service specifically requested by a consumer or the parent or guardian of a child, perform a contract to which the consumer is a party, including fulfilling the terms of a written warranty, or take steps at the request of the consumer before entering into a contract;
• take immediate steps to protect an interest that is essential for the life or physical safety of the consumer or of another individual and in which the processing cannot be manifestly based on another legal basis;
• prevent, detect, protect against, or respond to security incidents, identity theft, fraud, harassment, malicious or deceptive activities, or any illegal activity;
• preserve the integrity or security of systems or investigate, report, or prosecute those responsible for breaches of system security;
• engage in public or peer-reviewed scientific or statistical research in the public interest that adheres to all other applicable ethics and privacy laws and is approved, monitored, and governed by an institutional review board or similar independent oversight entity that determines:
  • if the deletion of the information is likely to provide substantial benefits that do not exclusively accrue to the controller;
  • whether the expected benefits of the research outweigh the privacy risks; and
  • if the controller has implemented reasonable safeguards to mitigate privacy risks associated with research, including any risks associated with reidentification; or
• assist another controller, processor, or third party with any of the requirements under this subsection.

In addition, the requirements imposed on controllers and processors under the TDPSA must not restrict their ability to collect, use, or retain data to:

• conduct internal research to develop, improve, or repair products, services, or technology;
• affect a product recall;
• identify and repair technical errors that impair existing or intended functionality; or
• perform internal operations that:
  • are reasonably aligned with the expectations of the consumer;
  • are reasonably anticipated based on the consumer's existing relationship with the controller; or
  • are otherwise compatible with processing data in furtherance of the provision of a product or service specifically requested by a consumer or the performance of a contract to which the consumer is a party.

Personal data processed by a controller may be processed to the extent that the processing of the data is:

• reasonably necessary and proportionate to the purposes provided in the TDPSA; and
• adequate, relevant, and limited to what is necessary in relation to the specific purposes under the TDPSA.

Enforcement

The AG has exclusive authority to enforce the TDPSA and may issue a civil investigative demand where they have reasonable cause to believe that a person has engaged or is engaging in violation of the TDPSA. Before bringing an action under the TDPSA, the AG must notify persons in writing, no later than 30 days before bringing the action, identifying specific provisions of the TDPSA the AG alleges to have been or are being violated. However, the AG may not bring an action if:

• within the 30-day period, the person cures the identified violation; or
• the person provides the AG with a written statement that the person:
  • cured the alleged violation;
  • notified the consumer that the consumer's privacy violation was addressed, if the consumer's contact information has been made available to the person;
  • provided supportive documentation to show how the privacy violation was cured; and
  • made changes to internal policies, if necessary, to ensure that no such further violations occur.

Persons who violate the TDPSA following the cure period or who breach a written statement provided to the AG are liable to a civil penalty that does not exceed $7,500 for each violation of the TDPSA.

More generally, the TDPSA provides that the AG will post on the AGs website:

• information relating to:
  • the responsibilities of a controller;
  • the responsibility of a processor; and
  • consumer's rights under the TDPSA; and
• an online mechanism through which a consumer may submit a complaint under the TDPSA through the AG.

Finally, nothing in the TDPSA shall be construed as providing a basis for, or being subject to, a private right of action for a violation of the TDPSA or any other law.

Harry Chambers Senior Privacy Analyst
[email protected]