SB3334 103RD GENERAL ASSEMBLY

LRB103 38209 SPS 68343 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3334

Introduced 2/7/2024, by Sen. Sue Rezin

SYNOPSIS AS INTRODUCED:

New Act
30 ILCS 105/5.1015 new

Creates the Illinois Age-Appropriate Design Code Act. Provides that all covered entities that operate in the State and process children's data in any capacity shall do so in a manner consistent with the best interests of children. Provides that a covered entity subject to the Act shall take specified actions to protect children's privacy in connection with online services, products, or features, including completing a data protection impact assessment for an online service, product, or feature that is reasonably likely to be accessed by children; and maintain documentation of the data protection impact assessment. Contains provisions concerning additional requirements for covered entities; prohibited acts by covered entities; data practices; enforcement by the Attorney General; limitations of the Act; data protection impact assessment dates; and severability. Amends the State Finance Act to create the Age-Appropriate Design Code Enforcement Fund. Effective immediately.

A BILL FOR

AN ACT concerning business.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Illinois Age-Appropriate Design Code Act.

Section 5. Intent. It is the intent of the General Assembly that nothing in this Act shall be construed to infringe on the existing rights and freedoms of children.

Section 10. Definitions. As used in this Act:

"Affiliate" means a legal entity that controls, is controlled by, or is under common control with, another legal entity. For the purposes of this definition, "control" or "controlled" means: (i) ownership of, or the power to vote, more than 50% of the outstanding shares of any class of voting security of a covered entity; (ii) control in any manner over the election of a majority of the directors or of individuals exercising similar functions; or (iii) the power to exercise a controlling influence over the management of a covered entity.

"Age-appropriate" means a recognition of the distinct needs and diversities of children at different age ranges. In order to help support the design of online services, products, and features, covered entities should take into account the unique needs and diversities of different age ranges, including the following developmental stages: 0 to 5 years of age or preliterate and early literacy; 6-9 years of age or core primary school years; 10 to 12 years of age or transition years; 13 to 15 years of age or early teens; and 16 to 17 years or age or approaching adulthood.

"Best interests of children" means the use, by a covered entity, of the personal data of a child or the design of an online service, product, or feature in a way that:

(1) will not benefit the covered entity to the detriment of the child; and

(2) will not result in:

(A) reasonably foreseeable and material physical or financial harm to the child;

(B) reasonably foreseeable and severe psychological, or emotional harm to the child;

(C) a highly offensive intrusion on the reasonable privacy expectations of the child; or

(D) discrimination against the child based upon race, color, religion, national origin, disability, sex, or sexual orientation.

"Child" means a consumer who is under 18 years of age.

"Collect" means buying, renting, gathering, obtaining, receiving, or accessing any personal data pertaining to a consumer by any means. "Collect" includes receiving data from the consumer, either actively or passively, or by observing the consumer's behavior.

"Covered entity" means:

(1) a sole proprietorship, partnership, limited liability company, corporation, association, or other legal entity that is organized or operated for the profit or financial benefit of its shareholders or other owners; and

(2) an affiliate of a covered entity that shares common branding with the covered entity. For the purposes of this definition, "common branding" means a shared name, service mark, or trademark that the average consumer would understand that 2 or more entities are commonly owned.

For purposes of this Act, for a joint venture or partnership composed of covered entities in which each covered entity has at least a 40% interest, the joint venture or partnership and each covered entity that composes the joint venture or partnership shall separately be considered a single covered entity, except that personal data in the possession of each covered entity and disclosed to the joint venture or partnership shall not be shared with the other covered entity.

"Consumer" means a natural person who is an Illinois resident, however identified, including by any unique identifier.

"Dark pattern" means a user interface designed or manipulated with the purpose of subverting or impairing user autonomy, decision making, or choice.

"Data protection impact assessment" means a systematic survey to assess compliance with the duty to act in the best interests of children and shall include a plan to ensure that all online products, services, or features provided by the covered entity are designed and offered in a manner consistent with the best interests of children reasonably likely to access the online product, service, or feature and a description of steps the covered entity has taken and will take to comply with the duty to act in the best interests of children.

"Default" means a preselected option adopted by the covered entity for the online service, product, or feature.

"Deidentified" means data that cannot reasonably be used to infer information about, or otherwise be linked to, an identified or identifiable natural person, or a device linked to such person, provided that the covered entity that possesses the data:

(1) takes reasonable measures to ensure that the data cannot be associated with a natural person;

(2) publicly commits to maintain and use the data only in a deidentified fashion and not attempt to re-identify the data; and

(3) contractually obligates any recipients of the data to comply with all provisions of this Act.

"Derived data" means data that is created by the derivation of information, data, assumptions, correlations, inferences, predictions, or conclusions from facts, evidence, or another source of information or data about a child or a child's device.

"Online service, product, or feature" does not mean any of the following:

(1) telecommunications service, as defined in 47 U.S.C. 153;

(2) a broadband service as defined in the Public Utilities Act; or

(3) the sale, delivery, or use of a physical product.

"Personal data" means any information, including derived data, that is linked or reasonably linkable, alone or in combination with other information, to an identified or identifiable natural person. "Personal data" does not include de-identified data or publicly available information. For the purposes of this definition, "publicly available information" means information (i) that is lawfully made available from federal, State, or local government records or widely distributed media; and (ii) that a controller has a reasonable basis to believe a consumer has lawfully made available to the general public.

"Precise geolocation" means any data that is derived from a device and that is used or intended to be used to locate a consumer within a geographic area that is equal to or less than the area of a circle with a radius of 1,850 feet, except as prescribed by regulations.

"Process" or "processing" means to conduct or direct any operation or set of operations performed, whether by manual or automated means, on personal data or on sets of personal data, such as the collection, use, storage, disclosure, analysis, deletion, modification, or otherwise handling of personal data.

"Product experimentation results" means the data that companies collect to understand the experimental impact of their products.

"Profiling" means any form of automated processing of personal data to evaluate, analyze, or predict personal aspects concerning an identified or identifiable natural person's economic situation, health, personal preferences, interests, reliability, behavior, location, or movements. "Profiling" does not include the processing of information that does not result in an assessment or judgment about a natural person.

"Reasonably likely to be accessed" means an online service, product, or feature that is accessed by children based on any of the following indicators:

(1) the online service, product, or feature is directed to children, as defined by the Children's Online Privacy Protection Act, 15 U.S.C. 6501 et seq., and the Federal Trade Commission rules implementing that Act;

(2) the online service, product, or feature is determined, based on competent and reliable evidence regarding audience composition, to be routinely accessed by a significant number of children;

(3) the online service, product, or feature contains advertisements marketed to children;

(4) the online service, product, or feature is substantially similar or the same as an online service, product, or feature subject to paragraph (2) of this definition;

(5) a significant amount of the audience of the online service, product, or feature is determined, based on internal company research, to be children; and

(6) the covered entity knew or should have known that a significant number of users are children, provided that, in making this assessment, the covered entity shall not collect or process any personal data that is not reasonably necessary to provide an online service, product, or feature with which a child is actively and knowingly engaged.

"Sale" or "sell" means the exchange of personal data for monetary or other valuable consideration by a covered entity to a third party. "Sale" or "sell" do not include the following:

(1) the disclosure of personal data to a third party who processes the personal data on behalf of the covered entity;

(2) the disclosure of personal data to a third party with whom the consumer has a direct relationship for purposes of providing a product or service requested by the consumer;

(3) the disclosure or transfer of personal data to an affiliate of the covered entity;

(4) the disclosure of data that the consumer intentionally made available to the general public via a channel of mass media and did not restrict to a specific audience; or

(5) the disclosure or transfer of personal data to a third party as an asset that is part of a completed or proposed merger, acquisition, bankruptcy, or other transaction in which the third party assumes control of all or part of the covered entity's assets.

"Share" means sharing, renting, releasing, disclosing, disseminating, making available, transferring, or otherwise communicating orally, in writing, or by electronic or other means a consumer's personal data by the covered entity to a third party for cross-context behavioral advertising, whether or not for monetary or other valuable consideration, including transactions between a covered entity and a third party for cross-context behavioral advertising for the benefit of a covered entity in which no money is exchanged.

"Third party" means a natural or legal person, public authority, agency, or body other than the consumer or the covered entity.

Section 15. Information fiduciary. All covered entities that operate in this State and process children's data in any capacity shall do so in a manner consistent with the best interests of children.

Section 20. Scope; exclusions.

(a) A covered entity operating in this State is subject to the requirements of this Act if it:

(1) collects consumers' personal data or has consumers' personal data collected on its behalf by a third party;

(2) alone or jointly with others, determines the purposes and means of the processing of consumers' personal data; and

(3) satisfies one or more of the following thresholds:

(i) has annual gross revenues in excess of $25,000,000, as adjusted every odd numbered year to reflect the Consumer Price Index;

(ii) alone or in combination, annually buys, receives for the covered entity's commercial purposes, sells, or shares for commercial purposes, alone or in combination, the personal data of 50,000 or more consumers, households, or devices; or

(iii) derives 50% or more of its annual revenues from selling consumers' personal data.

(b) This Act does not apply to:

(1) protected health information that is collected by a covered entity or covered entity associate governed by the privacy, security, and breach notification rules issued by the United States Department of Health and Human Services, 45 CFR 160 and 164, established pursuant to the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191, and the Health Information Technology for Economic and Clinical Health Act, Public Law 111-5;

(2) a covered entity governed by the privacy, security, and breach notification rules issued by the United States Department of Health and Human Services, 45 CFR 160 and 164, established pursuant to the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191, to the extent the provider or covered entity maintains patient information in the same manner as medical information or protected health information as described in paragraph (1); or

(3) information collected as part of a clinical trial subject to the federal policy for the protection of human subjects, also known as the common rule, pursuant to good clinical practice guidelines issued by the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use or human subject protection requirements issued by the United States Food and Drug Administration.

Section 25. Requirements for covered entities.

(a) A covered entity subject to this Act shall:

(1) complete a data protection impact assessment for an online service, product, or feature or any new online service, product, or feature that is reasonably likely to be accessed by children; and maintain documentation of the data protection impact assessment for as long as the online service, product, or feature is reasonably likely to be accessed by children;

(2) review and modify all data protection impact assessments as necessary to account for material changes to processing pertaining to the online service, product, or feature within 90 days after such material changes;

(3) within 5 business days after a written request by the Attorney General, provide to the Attorney General a list of all data protection impact assessments the covered entity has completed;

(4) within 7 business days after a written request by the Attorney General, provide the Attorney General with a copy of any data protection impact assessment, unless the Attorney General, in its discretion, extends the time period for a covered entity to respond;

(5) configure all default privacy settings provided to children by the online service, product, or feature to settings that offer a high level of privacy, unless the covered entity can demonstrate a compelling reason that a different setting is in the best interests of children;

(6) provide any privacy information, terms of service, policies, and community standards concisely, prominently, and using clear language suited to the age of children reasonably likely to access that online service, product, or feature; and

(7) provide prominent, accessible, and responsive tools to help children, or if applicable their parents or guardians, exercise their privacy rights and report concerns.

(b) A data protection, impact assessment required by this Section shall identify the purpose of the online service, product, or feature; how it uses children's personal data; and determine whether the online service, product, or feature is designed and offered in a age-appropriate manner consistent with the best interests of children that are reasonably likely to access the online product by examining, at a minimum, the following:

(1) whether the design of the online service, product, or feature could lead to children experiencing or being targeted by contacts on the online service, product, or feature that would result in: reasonably foreseeable and material physical or financial harm to the child; reasonably foreseeable and severe psychological or emotional harm to the child; a highly offensive intrusion on the reasonable privacy expectations of the child; or discrimination against the child based upon race, color, religion, national origin, disability, sex, or sexual orientation;

(2) whether the design of the online service, product, or feature could permit children to witness, participate in, or be subject to conduct on the online service, product, or feature that would result in: reasonably foreseeable and material physical or financial harm to the child; reasonably foreseeable and severe psychological or emotional harm to the child; a highly offensive intrusion on the reasonable privacy expectations of the child; or discrimination against the child based upon race, color, religion, national origin, disability, sex, or sexual orientation;

(3) whether the design of the online service, product, or feature are reasonably expected to allow children to be party to or exploited by a contract on the online service, product, or feature that would result in: reasonably foreseeable and material physical or financial harm to the child; reasonably foreseeable and severe psychological or emotional harm to the child; a highly offensive intrusion on the reasonable privacy expectations of the child; or discrimination against the child based upon race, color, religion, national origin, disability, sex, or sexual orientation;

(4) whether algorithms used by the product, service, or feature would result in: reasonably foreseeable and material physical or financial harm to the child; reasonably foreseeable and severe psychological or emotional harm to the child; a highly offensive intrusion on the reasonable privacy expectations of the child; or discrimination against the child based upon race, color, religion, national origin, disability, sex, or sexual orientation;

(5) whether targeted advertising systems used by the online service, product, or feature would result in: reasonably foreseeable and material physical or financial harm to the child; reasonably foreseeable and severe psychological or emotional harm to the child; a highly offensive intrusion on the reasonable privacy expectations of the child; or discrimination against the child based upon race, color, religion, national origin, disability, sex, or sexual orientation;

(6) whether the online service, product, or feature uses system design features to increase, sustain, or extend use of the online service, product, or feature by children, including the automatic playing of media, rewards for time spent, and notifications, that would result in: reasonably foreseeable and material physical or financial harm to the child; reasonably foreseeable and severe psychological or emotional harm to the child; a highly offensive intrusion on the reasonable privacy expectations of the child; or discrimination against the child based upon race, color, religion, national origin, disability, sex, or sexual orientation; and

(7) whether, how, and for what purpose the online product, service, or feature collects or processes personal data of children, and whether those practices would result in: reasonably foreseeable and material physical or financial harm to the child; reasonably foreseeable and severe psychological or emotional harm to the child; a highly offensive intrusion on the reasonable privacy expectations of the child; or discrimination against the child based upon race, color, religion, national origin, disability, sex, or sexual orientation; and

(8) whether and how product experimentation results for the online product, service, or feature reveal data management or design practices that would result in: reasonably foreseeable and material physical or financial harm to the child; reasonably foreseeable and extreme psychological or emotional harm to the child; a highly offensive intrusion on the reasonable privacy expectations of the child; or discrimination against the child based upon race, color, religion, national origin, disability, sex, or sexual orientation.

(c) A data protection impact assessment conducted by a covered entity for the purpose of compliance with any other law complies with this Section if the data protection impact assessment meets the requirement of this Act.

(d) A single data protection impact assessment may contain multiple similar processing operations that present similar risk only if each relevant online service, product, or feature is addressed.

(e) A company may process only the personal data reasonably necessary to provide an online service, product, or feature with which a child is actively and knowingly engaged to estimate age.

Section 30. Prohibited acts by covered entities. A covered entity that provides an online service, product, or feature reasonably likely to be accessed by children shall not:

(1) process the personal data of any child in a way that is inconsistent with the best interests of children reasonably likely to access the online service, product, or feature;

(2) profile a child by default unless:

(A) the covered entity can demonstrate it has appropriate safeguards in place to ensure that profiling is consistent with the best interests of children reasonably likely to access the online service, product, or feature; and

(B) either of the following is true:

(i) profiling is necessary to provide the online service, product, or feature requested and only with respect to the aspects of the online service, product, or feature with which a child is actively and knowingly engaged;

(ii) the covered entity can demonstrate a compelling reason that profiling is in the best interests of children;

(3) process any personal data that is not reasonably necessary to provide an online service, product, or feature with which a child is actively and knowingly engaged;

(4) if the end user is a child, process personal data for any reason other than a reason for which that personal data was collected;

(5) process any precise geolocation information of children by default, unless the collection of that precise geolocation information is strictly necessary for the covered entity to provide the service, product, or feature requested and then only for the limited time that the collection of precise geolocation information is necessary to provide the service, product, or feature;

(6) process any precise geolocation information of a child without providing an obvious sign to the child for the duration of that collection that precise geolocation information is being collected;

(7) use dark patterns to cause children to provide personal data beyond what is reasonably expected to provide that online service, product, or feature to forgo privacy protections, or to take any action that the covered entity knows, or has reason to know, is not in the best interests of children reasonably likely to access the online service, product, or feature; and

(8) allow a child's parent, guardian, or any other consumer to monitor the child's online activity or track the child's location, without providing an obvious signal to the child when the child is being monitored or tracked.

Section 35. Data practices.

(a) A data protection impact assessment collected or maintained by the Attorney General under Section 25 is classified as nonpublic data.

(b) To the extent any information contained in a data protection impact assessment disclosed to the Attorney General includes information subject to attorney-client privilege or work product protection, disclosure does not constitute a waiver of that privilege or protection.

Section 40. Attorney General enforcement.

(a) A covered entity that violates this Act may be subject to an injunction and liable for a civil penalty of not more than $2,500 per affected child for each negligent violation, or not more than $7,500 per affected child for each intentional violation, which may be assessed or recovered only in a civil action brought by the Attorney General. If the State prevails in an action to enforce this Act, the State may, in addition to civil penalties provided by this subsection or other remedies provided by the law, be allowed an amount determined by the court to be the reasonable value of all or part of the State's litigation expenses incurred.

(b) All moneys received by the Attorney General as civil penalties, fees, or other amounts under subsection (a) shall be deposited into the Age-Appropriate Design Code Enforcement Fund, a special fund created in the State treasury, and shall be used, subject to appropriation and as directed by the Attorney General, to offset costs incurred by the Attorney General in connection with the enforcement of this Act.

(c) If a covered entity is in substantial compliance with the requirements of Section 25, the Attorney General shall, before initiating a civil action under this Section, provide written notice to the covered entity identifying the specific provisions of this Act that the Attorney General alleges have been or are being violated. If, for a covered entity that satisfied Section 50 or subsection (a) of Section 25 before offering any new online product, service, or feature reasonably likely to be accessed by children to the public, within 90 days after the notice required by this subsection, the covered entity cures any noticed violation and provides the Attorney General a written statement that the alleged violations have been cured, and sufficient measures have been taken to prevent future violations, the covered entity is not liable for a civil penalty for any violation cured pursuant to this Act.

(d) Nothing in this Act shall be construed to create a private right of action.

Section 45. Limitations. Nothing in this Act shall be interpreted or construed to:

(1) impose liability in a manner that is inconsistent with 47 U.S.C. 230;

(2) prevent or preclude any child from deliberately or independently searching for, or specifically requesting, content; or

(3) require a covered entity to implement an age gating requirement.

Section 50. Data protection impact assessment date.

(a) By January 1, 2025 a covered entity shall complete a data protection impact assessment for any online service, product, or feature reasonably likely to be accessed by children offered to the public before January 1, 2025, unless that online service, product, or feature is exempt under paragraph (b).

(b) This Act does not apply to an online service, product, or feature that is not offered to the public on or after January 1, 2025.

Section 55. Severability. If any provision of this Act, or an amendment made by this Act, is determined to be unenforceable or invalid, the remaining provisions of this Act and the amendments made by this Act shall not be affected.

Section 90. The State Finance Act is amended by adding Section 5.1015 as follows:

(30 ILCS 105/5.1015 new)

Sec. 5.1015. The Age-Appropriate Design Code Enforcement Fund.

Section 99. Effective date. This Act takes effect upon becoming law.