Understanding the New CCPA Regulations: A Game Changer for Privacy Compliance

Executive Summary

The finalized regulations under the California Consumer Privacy Act (CCPA) are ushering in a new era of privacy compliance for businesses that collect personal information from California residents. These regulations are set to begin on January 1, 2026, and bring critical changes specifically designed to address the growing use of automated decision-making technologies (ADMT) in significant consumer decisions.

What’s New?

The CCPA’s new framework requires explicit consent and opt-out options, detailed disclosures regarding privacy policies and the ADMT process, as well as risk assessments and cybersecurity audits. The flexibility offered in these regulations aims to reshape how businesses manage personal data, ensuring enhanced protection for consumers.

Why It Matters

By establishing strict governance requirements, these regulations underscore the importance of consumer privacy. Businesses that process California consumers’ data must adapt swiftly to these rules to avoid potential legal and financial risks.

What to Do Now

Organizations are encouraged to start mapping their use of ADMT. Identifying processing activities that may necessitate risk assessments and preparing for upcoming cybersecurity audits will be crucial steps toward compliance.

A Deep Dive into the CCPA Regulations

On September 23, 2025, the California Office of Administrative Law greenlit the California Privacy Protection Agency’s (CPPA) regulations under the CCPA. Here’s a breakdown of the significant areas of compliance that businesses need to be aware of:

1. Obligations Related to Automated Decision-Making Technology (ADMT)

The regulations unequivocally define ADMT in a narrow scope: it’s technology that processes personal information using computation, effectively replacing or significantly reducing the role of human decision-making. Significant decisions encompass areas such as finance, housing, education, employment, or healthcare, but notably exclude advertising from this classification.

Starting April 1, 2027, businesses using ADMT for these critical decisions must comply with several mandates:

• Conduct a risk assessment of the technology.
• Provide pre-use notice about how ADMT will impact consumer decisions.
• Present California consumers with an opt-out option.
• Allow consumers to request access to information about the ADMT usage, including the decision-making logic.
• Enable consumers to appeal the results of the ADMT.

2. Risk Assessments

For businesses subject to the CCPA, conducting and maintaining thorough risk assessments is mandatory before they initiate any processing activities deemed a “significant risk” to consumer privacy. Businesses should flag activities such as selling or sharing personal information for cross-context behavioral advertising, processing sensitive personal data, or using ADMT for significant decisions as triggers for risk assessments.

Assessments must analyze potential “negative impacts” on consumers, including risks of discrimination, economic harm, or any interference with informed decision-making. Businesses have the option to group similar processing activities together for a single risk assessment and can even utilize assessments conducted under other regulations, like the EU’s GDPR.

It’s essential for businesses to retain these assessments either for the duration of the processing activity or for a minimum of five years post-completion.

3. Cybersecurity Audits

Annual independent cybersecurity audits are now obligatory for businesses whose processing activities pose a “significant risk” to consumer security. This applies particularly to companies generating substantial revenue from selling or sharing personal information or those with large consumer bases. Audits must be performed by qualified independent professionals and should detail the organization’s cybersecurity efforts, security measures, and accompanying policies.

The timeline for these audits is phased based on revenue. Highlights include:

• April 1, 2028: Businesses with over $100 million in 2026 revenue.
• April 1, 2029: Businesses with revenue between $50 million and $100 million in 2027.
• April 1, 2030: Businesses earning less than $50 million in 2028.

4. Key Clarifications in Existing Regulations

The latest regulations provide clarity in several areas critical for compliance:

• Consent for processing purposes may be withdrawn at any time.
• Links to privacy policies are now required on any web pages where personal information is collected, not just the homepage.
• The ease of opting out must match that of opting in.
• Consumers can request information beyond the last 12 months.

Proactive Steps for Businesses

In light of these significant changes to California’s privacy landscape, businesses are encouraged to take immediate action to prepare for compliance. Here are some strategies to consider:

1. Evaluate ADMT Usage: Conduct an inventory of currently used ADMT tools, particularly those involved in hiring, lending, fraud detection, or customer profiling.

2. Prepare for Risk Assessments: Develop frameworks and templates to document and assess high-risk processing activities, ensuring readiness before the due dates.

3. Review Cybersecurity Programs: Audit current cybersecurity measures against the core components required in upcoming audits.

4. Revise Consumer-facing Materials: Update notices and rights processes to align with the new requirements, ensuring clear communication with consumers about their privacy rights.

By acting proactively, businesses can not only mitigate risk but also foster trust with consumers who are increasingly concerned about their data privacy in an evolving digital landscape.