Thousands of US businesses have received legal demand letters this year, not for a data breach, but for tracking website visitors before asking for consent.
If businesses use cookies to collect visitor information on their websites, they are supposed to create, publish, and enforce a privacy policy that explains how they collect, use, store, and share each user’s personal information. Cookies are one of the most common methods to collect user data online. They are basically small text files stored on the user’s browser and contain information about their preferences and actions on the website.
Unfortunately, most businesses don’t realize that they have to ask for consent from each user before tracking and storing data from their website activity. It ultimately ends up getting them into trouble with the law.
What is the CIPA?
CIPA civil cases have skyrocketed to more than 4,000 in 2026, and thousands of demand letters have been settled quietly, typically for $5,000 – $50,000. If you don’t want this to happen to your business, you must learn more about this law and the ways in which you can comply with it.
The California Invasion of Privacy Act (CIPA) was a law passed in California in 1967 to outlaw unauthorized wiretapping of individuals. Now, nearly 60 years later, private individuals and their attorneys are applying this same law to businesses that use tracking technologies to collect user data without the user’s consent or awareness.
Any company or individual operating a website online has a legal obligation to disclose and seek consent for the use of data tracking. If a business fails to comply with this law, they open themselves up to significant legal risks for noncompliance with the law. These risks apply to all website operators, even those located outside of California.
An out-of-state business must still comply with California law if they collect information from California visitors. That includes using any tracking technology to track their information, such as cookies, chat widgets, and video session replay software. Even the use of popular analytical trackers like Google Analytics can get a business in trouble.
CIPA Lawsuits and Demand Letters Are on the Rise
An increasing number of CIPA lawsuits have been filed against websites with cookie trackers. Even businesses that never intentionally misused user information are now finding themselves the defendants in lawsuits brought by private individuals and their attorneys.
Many cookie trackers begin collecting user data as soon as the user lands on the website. If a business doesn’t obtain user consent, it exposes itself to allegations of collecting personal information unlawfully. In that case, the business could receive either a lawsuit or a demand letter.
A demand letter is a legal document sent to the business that outlines the legal claim made against them and the recommended settlement. The plaintiff’s attorney may send a demand letter before filing a lawsuit in order to avoid a long and costly legal battle. The hope is that the business will settle and agree to pay a specific amount of money to the plaintiff to avoid potentially paying more in a lawsuit.
Because many businesses are unaware their trackers fire before consent is given, they often find it difficult to dispute the core claim and opt to settle, though courts have reached mixed conclusions and the legal landscape continues to evolve.
Why Privacy Policies Alone Don’t Provide Adequate Legal Protection
Most businesses believe that posting a privacy policy on their websites is enough to satisfy all their privacy-related legal requirements. It is one of the biggest misconceptions surrounding privacy regulatory compliance.
Of course, it is important to have a privacy policy that explains how user information is collected and used, but it is not enough. Businesses must ask for consent from the user before even attempting to track and store their personal data.
Every website visitor must have the opportunity to accept or reject the attempt to track their data. If they reject it, the website cannot activate any tracking tools to collect their data. If they do, the business will likely receive a demand letter or notice of lawsuit after the plaintiff’s attorney proactively scans the site and finds trackers firing before any consent direction is offered.
Has Your Company Received or Fear Demand Letters?
A demand letter alone could set a company’s finances back significantly, or possibly force a settlement that ends up putting it out of business. That is why many businesses fear receiving demand letters due to the potential financial risk involved.
Has your company received or feared the potential of receiving a demand letter? If so, you will need a comprehensive solution for ensuring your compliance with CIPA and other federal and state privacy laws. One such solution that many companies are using is called Cookiebot, developed by Usercentrics.
Cookiebot is a consent management platform that specializes in automating cookie consent collection from users on a website. Not only that, but it can automatically detect new cookies and tracking technologies that are installed on the website. That way, you don’t have to manually audit your consent management system each time you install a new cookie tracker.
For CIPA Protection, Cookiebot can prevent trackers from firing before the user makes a consent choice. It is a direct fix to any potential CIPA exposure. There is also a consent audit trail, which is a timestamped record of every consent decision. It’s what a business would need to defend itself if a demand letter arrives from a plaintiff’s attorney.
Cookiebot has the ability to customize and categorize consent banners to help businesses build trust and boost engagement on their websites. A fully customizable and automated cookie consent collection system is what every small business and growing business needs to stay in compliance with worldwide privacy laws. It should give a business full control over the design and text of the consent banner displayed on each user’s computer or mobile device screen.
Avoid Legal and Financial Headaches While Building Customer Trust
What if you could save yourself the legal and financial headaches of a demand letter and build customer trust at the same time? A consent management platform like Cookiebot can help you do just that.
Many consumers have become increasingly aware of their online privacy rights and legal protections. For this reason, they expect websites to explain which of their data they are collecting and why they are collecting it.
Aside from the legal protection offered, a consent management system can help you show your customers that you care about their privacy. It allows you to sustain transparent consent practices, where all website visitors have the power to control what happens to their personal information. That will make them trust the website more.
Businesses shouldn’t view consent as a mere legal obligation. Instead, they should view it as something that can build customer trust and give themselves a competitive advantage in the marketplace.
