• by Wendy Davis  @wendyndavis, Yesterday

Lawmakers in California's senate recently approved a revision to the state's wiretap law that, if enacted, could curb lawsuits over online tracking.

The measure (SB 690), introduced this year by state Senator Anna Caballero, has not yet been passed by the state assembly.

Currently, the state wiretap law, California Invasion of Privacy Act, prohibits companies from intercepting or recording electronic communications without all parties' consent, and using “pen registers” to collect certain communications related metadata without consent. In recent years, consumers' attorneys have cited that law in numerous class-action privacy complaints against tech companies like Google and Meta, as well as online retailers, healthcare sites and other publishers that use analytics tools provided by third parties.

Caballero's proposal would create exemptions to the California Invasion of Privacy Act for “commercial business purposes” -- including online advertising and internal research. Those exemptions would effectively allow companies to track people's online activity for ad purposes without violating the state wiretap law.

A separate law, the California Consumer Privacy Act, would still give consumers the right to opt out of “cross-context” behavioral advertising -- meaning ads served based on activity across sites or apps.

Caballero stated earlier this year that her proposal aims to stop “abusive lawsuits ... for standard online business activities that are already regulated by the California Consumer Privacy Act.”

The Senate approved the measure last week by a vote of 35-0.

If SB 690 takes effect, lawyers for consumers could still raise other privacy-related claims in lawsuits over online tracking -- but the wiretap law is seen as an especially powerful tool for plaintiffs because it provides for penalties of $5,000 per violation.

Attorney Colin Knisely, a partner at the law firm Duane Morris, tells MediaPost that the bill, if enacted, “would be a huge blow to the plaintiffs' bar that's filing these cases.”

Knisely, who has defended companies in privacy lawsuits, and also has written about SB 690, adds that lawyers who have sued over online tracking have “shoehorned data privacy claims” into state wiretap laws that predate the internet. California's wiretap law, for instance, dates to 1967.

Even without new legislation, at least one state court has effectively brought a halt to wiretap claims over online tracking. Last October, Massachusetts' highest court ruled 5-1 that hospitals don't violate the state wiretap law by transmitting data about website visitors' browsing activity to Google and Meta.

“Based on our review of the text of the wiretap act and its legislative history, we cannot conclude with any confidence that the legislature intended 'communication' to extend so broadly as to criminalize the interception of web browsing and other such interactions,” the justices said in that case.

Business groups including the California Chamber of Commerce, News/Media Alliance and TechNet -- which counts Amazon, eBay Google, OpenAI and Meta among its members -- support Caballero's bill.

The lobbying organization Alliance For Legal Fairness argues the measure will stop “exploitative lawsuits while preserving real consumer privacy protections.”

Privacy advocates such as Consumer Reports, Electronic Frontier Foundation and Electronic Privacy Information Center are among the opponents.

Consumer Reports argued in a letter sent to Caballero late last month that the “gives the green light to dystopian corporate surveillance practices, which will endanger the privacy and safety of all Californians, with very little guardrails to prevent abuse.”

The group offered several examples of activity that would no longer violate the state wiretap law, should the legislation go through.

For instance, Consumer Reports wrote, the bill could allow a social media company to “create a backdoor to allow employees to read encrypted messages between users to help them tweak their algorithm to keep people on their platform.”

The group added: “A smart TV or home speaker could surreptitiously listen to all the conversations in your home to help train their next AI system.”