Each day, Americans generate massive amounts of data – from health records and financial transactions to intimate personal communications and real-time location tracking. While some states have passed data protection laws, a patchwork solution won’t work for this national problem. The information flows across state lines, but the protections governing it change at every state border. When privacy rights vary based on geography, hackers and data brokers can exploit these loopholes, and consumers feel less secure about their online activities.
The digitization of our world will continue to accelerate, and it’s time that Congress take the reins and pass a federal privacy standard this year that ensures all Americans and businesses have equal data protections online—no matter what state they’re in.
The nature of the internet, and the way we all use it, doesn’t change if you travel from one state to another.
Traditionally, that type of “interstate” commerce has been regulated at the federal level. But despite near-breakthroughs, Congress has repeatedly fumbled at the finish line, leaving the U.S. without a national standard for privacy in an era where data is king.
While federal lawmakers falter, states are filling the void with diverse and often conflicting laws on data privacy. This patchwork has caused confusion for consumers and regulatory chaos for businesses, especially small ones that can’t afford to navigate the conflicting regulations.
California’s Consumer Privacy Act (CCPA) and its expanded regulatory agency, the California Privacy Protection Agency (CPPA), are prime examples of state-level overreach. California has been using privacy laws as a launching pad to regulate other emerging technologies, including artificial intelligence (AI). The CPPA’s broad and clumsy definitions could sweep in everyday tools that usually wouldn’t be covered by these types of laws, like Excel spreadsheets, creating massive compliance burdens. These complexities hit small businesses the hardest. Worse, these rules do little to improve consumer privacy while making cutting-edge technologies less accessible.
For businesses, the state-specific laws present a compliance burden that acts as a barrier to entry, reducing competition and innovation. Rather than spending money on creating new goods and services for Americans, they’re spending massive amounts on lawyers for compliance. By failing to pass federal privacy legislation, Washington is not only ceding leadership on this critical issue to Sacramento but also hamstringing America’s competitiveness in key tech sectors.
Essentially, this patchwork is a lawyer’s dream—and a small business owner’s nightmare.
These are problems Congress has the power to fix. By implementing a single, uniform standard across the U.S., lawmakers can restore confidence in American privacy protections and foster a more competitive, consumer-friendly digital marketplace.
Not every state is getting it wrong. Texas recently passed bipartisan privacy legislation that strikes a balance—protecting consumers while fostering innovation. It’s a model worth emulating. But even the best state-level laws can’t address the fundamental problem: the internet functions across states, and without a federal standard, businesses and consumers are stuck in a maze of conflicting rules. That’s bad for the economy, bad for innovation and bad for American competitiveness.
The 119th Congress has a chance to get this right, and it should make passing a federal privacy standard a priority. These rules must strike a balance, ensuring robust consumer protections while fostering innovation. This means resolving debates over a private right of action and preemption in a way that prioritizes long-term benefits over political gridlock.