Virginia bans sale of precise geolocation data

Virginia has taken a groundbreaking step in consumer data privacy, becoming the first state in the US to enact legislation banning the sale of precise geolocation data. This law, signed into effect in February 2024, has significant implications for businesses, and particularly for those in the financial sector. Financial institutions handle sensitive customer data, and location information, when combined with other data points, can create a powerful (and potentially exploitable) profile. This article will break down the Virginia law, its impact on financial professionals, and what steps you need to take to ensure compliance and protect your clients.

§What Does the Virginia Law Actually Do?

The core of the legislation prohibits data brokers from selling or sharing “precise geolocation data” without explicit, informed consent from the consumer. But what is precise geolocation data? The law defines it as any location information collected with an accuracy within 1.85 meters. This level of precision is far more granular than the general area data often used for marketing purposes.

§Here’s a breakdown of the key elements:

• Who's Affected: Primarily, the law targets data brokers – businesses that collect and sell personal information. However, any entity that sells precise location data, even if they aren't traditionally considered a “data broker”, falls under the law’s purview.
• What Data is Covered: GPS data, cell tower triangulation, WiFi hotspot positioning – any data pinpointing a location with an accuracy of 1.85 meters or less.
• The Ban: Selling, trading, or otherwise sharing this precise data is prohibited without explicit consent. This consent must be informed and freely given. Simply burying permission within lengthy terms of service is unlikely to be sufficient.
• Enforcement: The Virginia Attorney General has the authority to enforce the law, and violations can result in civil penalties.
• Effective Date: The law took effect on January 1, 2024.

§Why is This a Big Deal for Finance?

The financial industry is a prime target for data-driven insights. Location data, when combined with financial transaction history, can reveal a wealth of information about a customer’s habits, spending patterns, and even financial vulnerability. Here’s how the Virginia law specifically impacts financial professionals:

• Enhanced Fraud Detection: While location data can be used to enhance fraud detection (e.g., flagging transactions originating from unusual locations), the ban restricts access to the precise data needed for some advanced fraud prevention models. Financial institutions will need to explore alternative fraud prevention methods.
• Targeted Marketing (Restricted): The law significantly impacts location-based marketing campaigns. Offering financial services based on a customer's precise location – for example, promoting a mortgage to someone near a desired property – will require explicit consent.
• Loan Risk Assessment: Lenders might use location data to assess risk, for example, identifying customers living in areas prone to natural disasters. The ban makes this practice more challenging, necessitating a greater reliance on traditional credit scoring and other risk assessment factors.
• Account Security & Authentication: Geolocation can be a factor in two-factor authentication. While not banning the use of geolocation for security purposes, the law underscores the need for transparency and consent regarding data collection.
• Increased Regulatory Scrutiny: Virginia's move is likely to inspire similar legislation in other states. Financial institutions need to proactively adapt their data privacy practices to prepare for a potentially fragmented regulatory landscape.
• Reputational Risk: Consumers are increasingly concerned about data privacy. Any perceived misuse of location data, even if technically compliant, could lead to reputational damage.

§What Financial Professionals Need to Do Now

Staying ahead of these changes is crucial. Here's a checklist for financial professionals:

1. Data Audit: Conduct a thorough audit of your data collection and usage practices. Identify any instances where you collect, process, or share precise geolocation data. Where did the data come from? How is it being used? Who has access to it?
2. Vendor Management: If you rely on third-party vendors for data analytics or marketing services, review your contracts to ensure they comply with the Virginia law. You are responsible for the actions of your vendors. Specifically, verify that any vendor accessing location data has obtained explicit, informed consent from the consumer.
3. Update Privacy Policies: Revise your privacy policies to clearly explain how you handle location data. Be transparent about what data you collect, how you use it, and with whom you share it. Use plain language that consumers can easily understand.
4. Obtain Explicit Consent: Implement mechanisms for obtaining explicit, informed consent before collecting or sharing precise geolocation data. Avoid pre-checked boxes or bundled consent requests. The consent form should clearly state the purpose of data collection and provide consumers with the option to opt-out.
5. Implement Data Minimization: Only collect the location data you absolutely need for legitimate business purposes. Avoid collecting data "just in case" it might be useful in the future.
6. Invest in Privacy-Enhancing Technologies: Explore technologies that can help you anonymize or aggregate location data, reducing the risk of violating privacy regulations. and offer VPN services that can help mask IP addresses and location data.
7. Employee Training: Train your employees on the new law and your company’s revised data privacy policies. Ensure they understand their responsibilities regarding data collection and usage.
8. Monitor Legislative Developments: Keep a close watch on data privacy legislation in other states. The Virginia law is likely to serve as a model for future regulations.

§Beyond Virginia: The Broader Trend

Virginia’s action isn’t an isolated incident. Consumer awareness of data privacy is growing, and legislators are responding. California’s Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA) established broad data privacy rights for California residents. Other states are considering similar legislation. The federal government is also debating a national data privacy law.

This trend toward greater data privacy regulation presents both challenges and opportunities for financial institutions. While compliance can be complex and costly, it also builds trust with customers. Consumers are more likely to do business with companies they believe are protecting their data.

§The Role of Cybersecurity in Data Privacy

Data privacy and cybersecurity are closely intertwined. A data breach can compromise sensitive location data, even if you’re compliant with privacy regulations. Investing in robust cybersecurity measures is essential for protecting customer data and maintaining compliance.

§Consider these cybersecurity best practices:

• Strong Encryption: Encrypt sensitive data both in transit and at rest.
• Multi-Factor Authentication: Implement MFA for all critical systems and accounts.
• Regular Security Audits: Conduct regular security audits to identify and address vulnerabilities.
• Employee Cybersecurity Training: Train employees on phishing scams and other cybersecurity threats.
• Incident Response Plan: Develop and regularly test an incident response plan to prepare for data breaches. offers security solutions designed for financial institutions.

§Future Considerations

The landscape of data privacy is constantly evolving. Expect to see the following trends in the coming years:

• Increased Enforcement: Regulators will likely become more aggressive in enforcing data privacy laws.
• More Granular Regulations: Future regulations may focus on specific types of data, such as biometric data or health information.
• The Rise of Privacy-Enhancing Technologies: Technologies like differential privacy and federated learning will become more prevalent as companies seek to balance data utility with privacy protection.
• Consumer Control over Data: Consumers will demand greater control over their personal data, including the right to access, correct, and delete their information.

§Conclusion

The Virginia geolocation data ban is a landmark development in data privacy regulation. Financial professionals need to understand the implications of this law and take proactive steps to ensure compliance. By prioritizing data privacy and investing in robust cybersecurity measures, you can protect your customers, build trust, and navigate the evolving regulatory landscape. Failing to adapt could result in significant legal and reputational risks.

§Disclaimer:

This article is for informational purposes only and does not constitute legal advice. We participate in affiliate marketing and may earn a commission if you click on and make a purchase through some of the links provided. Consult with a qualified legal professional for guidance on specific legal issues.