Clifford Chance

On May 1, 2023, Indiana became the seventh state in the U.S. to enact comprehensive data privacy legislation with Indiana Governor, Eric Holcomb, signing Indiana Senate Bill 5 (the Indiana Consumer Data Protection Act or INCDPA). The INCDPA comes into effect on January 1, 2026. The INCDPA joins other U.S. state data privacy laws that are either in effect or will soon come into force (together with the INCDPA, the "State Data Privacy Laws"). This article summarizes key provisions of the INCDPA.

Scope and Applicability

The INCDPA applies to a person that conducts business in Indiana or produces products or services that are targeted at Indiana residents, and during a calendar year either:

• controls or processes personal data of at least 100,000 Indiana residents or 
• controls or processes personal data of at least 25,000 Indiana residents and derives over fifty percent (50%) of gross revenue from the "sale" of any personal data.

The INCDPA is similar to most other State Data Privacy Laws with respect to certain exclusions and exemptions. For example, the INCDPA only applies to personal data collected from individuals who are Indiana residents and, like most State Data Privacy Laws other than the California Consumer Privacy Act and California Privacy Rights Act, expressly excludes personal data collected or processed from individuals acting in an employment or commercial context (e.g., business-to-business activities). The INCDPA also includes exemptions in line with most other State Data Privacy Laws, such as for state political subdivisions or entities, nonprofit organizations, institutions of higher education, and any information or data regulated by certain other privacy laws, including the Health Insurance Portability and Accountability Act and the Gramm-Leach-Bliley Act.

Controller and Processor Regime

The INCDPA, like certain other State Data Privacy Laws, contains the regulatory framework of the European Union's General Data Protection Regulation, which distinguishes roles and responsibilities between controllers and processors. The INCDPA defines a "controller" as a person that, alone or jointly with others, determines the purpose and means of processing personal data and a "processor" as a person who processes personal data on behalf of a controller.

The INCDPA requires controllers to provide consumers with a reasonably accessible, clear, and meaningful privacy notice, which, among other things, discloses:

• the categories of personal data processed by the controller and the purpose of such processing
• the categories of personal data and third parties with whom the controller shares personal data
• how consumers may exercise their privacy rights, including the appeals process.

Controllers may only process personal data to the extent such processing is "reasonably necessary and proportionate" and "adequate, relevant, and limited to what is necessary" for certain specified purposes. Controllers are also required to establish, implement, and maintain administrative, technical, and physical measures to protect the confidentiality, integrity, and accessibility of personal data and reduce reasonably foreseeable risks of harm to consumers.

Similar to certain other State Data Privacy Laws, the INCDPA requires that controllers conduct and document data protection impact assessments in connection with certain processing activities, such as processing personal data for targeted advertising or certain profiling purposes, selling personal data, processing sensitive data, or any other processing activity that presents a heightened risk of harm to consumers. A data protection impact assessment must identify and weigh the benefits of the processing activity with potential risks to consumers (as mitigated by the safeguards employed by the controller related to such risks). Data protection impact assessment obligations under the INCDPA apply to activities created or generated after December 31, 2025, and are not retroactive to any activities before January 1, 2026. Controllers may use data protection impact assessments created pursuant to other laws with similar requirements, including other relevant State Date Privacy Laws, for INCDPA compliance purposes.

Like most other State Data Privacy Laws, the INCDPA requires controllers and processors to enter into a written contract, which governs the processor's data processing procedures performed on behalf of the controller. The INCDPA requires contractual provisions that clearly set out instructions for the processing of applicable data, describe the type of data subject to and the duration, nature, and purpose of such processing, and specify the rights and obligations of each party. Processors must be subject to a duty of confidentiality with respect to the applicable data and enter into subcontracts with sub-processors to ensure similar protections. Processors are also generally required to adhere to the controller's instructions and must assist the controller for meeting its applicable obligations (1) under the INCDPA (e.g., responding to consumer rights requests and providing information for data protection impact assessments) and (2) the notification of security breaches under Indiana Code § 24-4.9.

Consumer Rights and Requests

The INCDPA provides a variety of individual consumer rights that align with those found in most other State Data Privacy Laws. These rights provide consumers with a right to access, correct, delete, and obtain a copy of their personal data, and to opt-out of the selling of personal data and/or sharing of personal data for targeted advertising.

The INCDPA also permits parents and guardians to exercise rights on behalf of their children (defined as individuals under the age of thirteen (13)). Children's data must be processed in accordance with the Children's Online Privacy Protection Act, 15 U.S.C. § 6501 et seq. ("COPPA"), which requires consent from parents or guardians.

The INCDPA also grants consumers certain rights with respect to other "sensitive data." The INCDPA's definition of "sensitive data" is similar to definitions seen in most other State Data Privacy Laws, which encompass a consumer's racial or ethnic origin, religious beliefs, mental or physical health diagnosis, sexual orientation, citizenship or immigration status, genetic or biometric data, children's data, and precise geolocation data. Similar to certain other State Data Privacy Laws, like the Virginia Consumer Data Protection Act, the INCDPA provides an "opt-in" regime with respect to the processing of sensitive data where controllers may not process a consumer's sensitive data "without obtaining the consumer's consent" (or in accordance with COPPA if the "sensitive data" is children's data).

Right to Appeal

Under the INCDPA, a controller must respond to a consumer's request to exercise a right within forty-five (45) days of receipt of such request. A controller can extend the response period by an additional forty-five (45) days when reasonably necessary and in consideration of the complexity and number of consumer requests received within the initial forty-five (45) day period by providing notice and an explanation to the consumer. Like most other State Data Privacy Laws, if the controller denies a consumer's request, the controller must explain the justification for the denial and include instructions for appeal that are conspicuously available and similar to the process for submitting consumer rights requests. Within sixty (60) days of receipt of an appeal request, a controller must inform the consumer of any action taken or not taken in response to the appeal. If the appeal is denied, the controller must provide the consumer with an online mechanism or other method through which the consumer may contact the Indiana Attorney General to submit a complaint.

Selling Personal Data

The INCDPA defines the "sale of personal data" as "the exchange of personal data for monetary consideration by the controller to a third party." The INCDPA also provides exceptions to the "sale of personal data" in line with a number of other State Data Privacy Laws, including a controller's disclosure of personal data:

• to a processor that processes personal data on behalf of the controller
• to a third party for purposes of providing a product or service requested by the consumer
• to the controller's affiliates
• that the consumer intentionally made available to the general public and did not restrict to a specific audience
• to a third party as an asset that is part of a proposed or actual merger, acquisition, bankruptcy, or other transaction.

As noted above, controllers must provide consumers with the ability to opt-out of the selling of their personal data, but the INCDPA does not provide any additional guidance on how controllers must offer and process such consumer opt-out requests from a technical perspective.

Targeted Advertising

The INCDPA defines "targeted advertising" as "the displaying of an advertisement to a consumer in which the advertisement is selected based on personal data obtained from that consumer's activities over time and across nonaffiliated websites or online applications to predict that consumer's preferences or interests." Like most other State Data Privacy Laws, the INCDPA expressly excludes certain activities from the definition of "targeted advertising," such as advertisements based on:

• activities within a controller's own or affiliated websites or online applications
• the context of a consumer's current search query, visit to a website, or online application
• the consumer's request for information or feedback
• the measuring or reporting of the performance, reach, or frequency of an advertisement.

The INCDPA also imposes the same opt-out requirements in connection with targeted advertising on controllers as it does with respect to the sale of personal data.

De-identified and Pseudonymous Data

The INCDPA defines "de-identified data" as data that cannot reasonably be linked to an identified or identifiable individual, and such data is expressly excluded from the definition of "personal data." Similar to certain other State Data Privacy Laws, the INCDPA requires that controllers in possession of de-identified data take reasonable measures to ensure that such data cannot be associated with an individual and contractually obligate any recipients of de-identified data to comply with all applicable provisions of the INCDPA. Additionally, like some other State Data Privacy Laws, such as the Virginia Consumer Data Protection Act, Utah Consumer Privacy Act, and Connecticut Data Privacy Act, the INCDPA requires that controllers "publicly commit" not to re-identify de-identified data.

The INCDPA defines "pseudonymous data" as personal data that cannot be attributed to a specific individual because additional information that would allow such data to be attributable to an individual is kept separately and subject to appropriate technical and organizational safeguards. Certain consumer rights (e.g., right to access, delete, opt-out, etc.) and controller responsibilities under the INCDPA do not apply to pseudonymous data if the controller demonstrates that any additional information necessary to identify the consumer is kept separately and subject to effective technical and organizational measures that prevents the controller from accessing such information.

The INCDPA requires controllers that disclose de-identified data and/or pseudonymous data to exercise reasonable oversight to monitor compliance with any contractual commitments with third parties related to such de-identified data (including avoiding attempts to re-identify such data) and/or pseudonymous data and to take appropriate actions to address any breaches of such contractual commitments.

Enforcement and Penalties

In contrast to the California Consumer Privacy Act and California Privacy Rights Act, the INCDPA does not provide consumers with a private right of action and is not enforced by a dedicated privacy agency. Rather, the INCDPA is enforced by the Indiana Attorney General. Under the INCDPA, the Indiana Attorney General, prior to initiating an action, will provide a controller and/or processor with thirty (30) days' written notice that identifies the specific provision(s) alleged to be violated. The controller and/or processor may cure such alleged violations within the thirty (30) day period. If uncured, the Indiana Attorney General may initiate an action against the controller and/or processor and recover up to $7,500 in civil penalties per violation.