New Report Finds CIPA Demand Letters Have Already Cost Businesses More Than $1 Billion
Reform CIPA Coalition says findings underscore urgent need to stop predatory lawsuits targeting ordinary website tools
SACRAMENTO, CA — June 15, 2026 — The Reform CIPA Coalition today highlighted the release of a new economic analysis from Oxford Economics finding that California Invasion of Privacy Act demand letters alone may have already cost businesses more than $1 billion, with the broader cost of CIPA-related litigation extending far beyond that figure.
The report, The Economic Costs of CIPA Litigation, examines the growing wave of lawsuits and demand letters filed under California’s decades-old privacy statute. Originally enacted in 1967, CIPA is now being used to target routine website tools such as analytics, chat features, and other technologies commonly used by small businesses, nonprofits, retailers, healthcare providers, and community organizations.
Among the report’s key findings:
- The cost of CIPA demand letters alone on businesses is estimated to be at least $1 billion, with some estimates reaching as high as $3 billion.
- The average total cost of a CIPA demand letter is approximately $30,000, including settlement payments, legal fees, website remediation, and lost staff time.
- The estimated defense costs for filed CIPA lawsuits are approximately $500 million.
- The average defense cost for a filed case is estimated at approximately $150,000.
“For a small business, a $30,000 demand letter is not a minor legal expense, it can be the difference between hiring a worker, investing in growth, or simply staying open,” said Greg Van Dyke, Chairman of California Consumer Advocates. “This report confirms what businesses across California have been saying for months: CIPA is being weaponized against ordinary website tools in ways that impose massive costs while doing little to advance consumer privacy.”
According to the report, approximately 3,500 CIPA website-privacy lawsuits have been filed to date, while demand letters are estimated to be far more widespread. The report notes that these letters often seek quick settlements because the cost of fighting the claim can exceed the proposed settlement.
“These are not theoretical costs,” said Tami Goldsmith, Owner of Folsom Lake Heating & Air. “Small businesses are being forced to pay tens of thousands of dollars over commonplace digital tools that help us communicate with customers, schedule appointments, answer questions, and compete online.”
The Reform CIPA Coalition is urging lawmakers to modernize CIPA and clarify that ordinary online tools already governed by California’s modern consumer privacy laws should not trigger abusive lawsuits under a statute written decades before the internet existed.
“California can protect consumer privacy without allowing predatory litigation to drain resources from small businesses, nonprofits, and local employers,” said Robert Sausedo, President and CEO of Community Build Inc. “The Legislature should act now to bring clarity, stop abuse, and ensure privacy laws are enforced in a way that is fair, modern, and workable.”
The full report is available at: https://reformcipa.com/the-economic-costs
About the Reform CIPA Coalition
The Reform CIPA Coalition is a broad coalition of small businesses, business organizations, nonprofits, technology advocates, and community stakeholders working to modernize California’s outdated privacy laws and stop abusive lawsuits targeting ordinary website tools.