Many companies today use “look-alike audiences” (a.k.a “mirror audiences” or “similar audiences”) to reach potential consumers through online advertising. A look-alike audience is created when a business sends information, typically in hashed form, about a group of its current customers (the “seed audience”) to an advertising platform who matches the seed audience to an entirely new audience (the “look-alike audience”). The matching process uses the aggregated seed audience information to identify new individuals who have similar purchase habits, preferences, search histories, or other relevant traits. After the match is complete and the look-alike audience created, the advertising platform then serves the business’s ads directly to the look-alike audience.1 While the use of a look-alike audience can offer significant advantages to a company, it can also raise concerns that a company is “selling” personal information as defined by the CCPA.
Depending on the underlying contractual terms, the business’s initial transfer of customer’s personal data to the advertising platform could be considered a “sale” under the CCPA. The CCPA broadly defines “sale” to include “selling, renting, releasing, disclosing, disseminating, making available, transferring, or otherwise communicating…a consumer’s personal information by the business to another business or a third party for monetary or other valuable consideration.”2 As such, the very act of transferring the data arguably falls within this broad definition, since the business almost certain gets valuable consideration in return.
However, a “sale” does not include sharing information with a “service provider.” A “service provider” includes an entity who “process information on behalf of a business and to which a business discloses a consumer’s personal information for a business purpose pursuant to a written contract.”4 Importantly, the contract must prohibit the entity from “retaining, using, or disclosing” the personal information for any purpose other than to perform the services specified in the contract.5 The contractual terms between the business and the advertising company governing the creation of the look-alike audience, such as the advertising platform’s terms of service, may exclude the initial data transfer from the definition of “sale” by qualifying the advertising platform as a “service provider.” Each advertising platform has different contractual terms, so in order to determine whether the creation of a look-alike audience is a “sale” under the CCPA, a business must determine the following:
- Does the contract prohibit the advertising platform from “using” the data for any purpose other than to create the look-alike audience?
- Does the contract prohibit the advertising platform from “disclosing” the data to another third party except for the purposes of creating the look-alike audience?
- Does the contract prohibit the advertising platform from “retaining” the data longer than as necessary to create the look-alike audience?
If the contract fails to do any of those three things, or the contract does not govern all of the personal information subject to the transfer, the transfer of data to the advertising platform is likely a “sale” under the CCPA.