California has a 1967 anti-wiretapping law, and lawyers are now using it to sue small businesses over normal website features. Things like chat bubbles, AI assistants, contact forms and other customer communication software on your site could cause issues for you…because a loophole in the 1967 law can treat them as if they were secret phone taps.

It’s called the California Invasion of Privacy Act (CIPA).

Under it, a plaintiff doesn’t have to prove anyone was harmed. Instead, they can just claim a “violation,” and collect up to $5,000 per visitor. Multiply that across a website’s traffic and you’ll see why it’s become a business model: serial filers now blast out demand letters by the hundreds, betting that owners will pay rather than fight.

The results: over 3,400 California businesses sued in under two years.

According to the California Chamber of Commerce, 99% of them were food banks, community health centers, local museums, nonprofits, and small businesses. These lawsuits are targeting the uninformed and those least likely to have the time or resources to keep up with legal loopholes.

This is why the Santa Monica Chamber is reaching out to our members and other businesses: to inform and ask for support.

These lawsuits are, simply put, extortion. The law firms aiming to bring the suits are looking for quick settlements and have no regard for who they are targeting.

If you run a restaurant with a reservation chat, a shop with a “Questions? Chat with us” popup, or any business with a contact form, you are in the crosshairs.

The fix: SB 690

Senate Bill 690, from Senator Anna Caballero, closes this loophole: it makes clear that using ordinary website tools for normal business purposes isn’t wiretapping. It passed the Senate 35–0, and a recent amendment sharpened it to specifically shut down these “pen register” lawsuits and hand enforcement to the Attorney General instead of any plaintiff with a form letter.

The catch: it has to clear the Assembly and get final Senate sign-off by August 31, 2026, or it dies for the year. That’s this week. Passage looks likely, but not guaranteed, and bills stall in Sacramento all the time simply because no one made noise.

We have already sent in a letter on behalf of our members and will keep everyone updated as it moves through the legislature. Protecting our businesses is priority number 1 for our advocacy team and we will continue to ensure we make your voice heard when issues like this arise.