Bryan Toston and Jason Stock : The American Privacy Rights Act holds promise – and significant perils – for small businesses

At last, Congress has produced a national data privacy bill, the American Privacy Rights Act. As the owners of a Spokane-based software firm and small business marketing agency, we see bill as a step in the right direction. We’ve advocated for a national privacy law for several years, and even recently met with Rep. Cathy McMorris Rodgers, R-Wash., to express our opinion. Ideally, such legislation would offer consumers meaningful privacy protection and small businesses clear, comprehensive rules to help them thrive in today’s digital economy.

Unfortunately, some of the bill’s core provisions would hurt small businesses. That’s because local and specialized businesses – folks like caterers or jewelry-makers – depend on data-powered digital ads to find customers. Data analytics tools help ensure businesses’ ads go to the right people – folks nearby who are planning a party or shopping for handmade earrings.

Analytics tools can also show which ads are working and which aren’t, so small business owners can invest more in effective ads and pull or improve ineffective ones. Data analysis involves lightspeed processing of basic consumer data – not “surveillance.” Critically, it reduces small businesses’ advertising costs, increases their sales, and boosts their bottom line so they can hire more people and invest in new equipment. Data-powered digital ads also provide important revenue to app publishers, local newspapers, and small businesses that sell ad space on their app or website.

The American Privacy Rights Act would overregulate the data that powers those tools, making small businesses’ key marketing and advertising activities more expensive and less effective – a devastating combination.

Although the bill’s intent may be to regulate data brokers or big companies like Facebook and Google, the bill treats any business that annually generates 200,000 data points (for example, website visits or ad clicks) the same as the biggest tech companies. Almost any small business using digital ads or marketing will easily exceed that threshold.

The bill’s strict data privacy rules would make it much harder for small businesses to provide outstanding communication and personalized customer service. For instance, suppose someone routinely makes Sunday brunch reservations at your restaurant, and they like to sit at a particular table. They’d probably appreciate knowing what times that table is free. But the bill would prevent that kind of personalized communication. It says businesses must only use the minimum amount of data necessary for a specific product or service – so there’s no using data from last week’s brunch to try to entice a customer back – or give them information they might want.

As small business owners and advisors, we can say unequivocally that folks like us care deeply about customers’ privacy. Running a small business is tough – and small business owners are passionate about succeeding by offering terrific products and services. That means they need to be able to get to know and communicate with their customers. That’s good business – and it shouldn’t be illegal.

That brings us to our final concern about the American Privacy Rights Act: It leaves small businesses vulnerable to lawsuits, because it includes a “private right of action.” That lets anyone sue any business they think isn’t compliant with the law. Unfortunately, recent history shows that private right of action is an open invitation to unscrupulous lawyers. They accuse small businesses of noncompliance with federal law (like the Americans with Disability Act) and threaten to sue them for tens of thousands of dollars. Then they offer to settle out of court for a few thousand dollars. Most small businesses simply pay to settle. Private right of action is a boon for lawyers, but a big problem for small businesses.

The American Privacy Rights Act is a step in the right direction. But as lawmakers continue moving forward, they need to seriously consider the bill’s implications for small businesses. We urge our representatives to listen to business owners’ concerns and strive for a bill that protects consumers and allows small businesses to continue growing and thriving.

Bryan Toston is the founder and lead designer of small business advisory Kraken Creative. Jason Stock is the founder of Firecracker Software. Both are based in Spokane.