Over the past couple of years, a wave of lawsuits and demand letters has hit companies, including plenty of early-stage startups, over website tools that most founders never thought of as a legal risk: chat widgets, session-replay analytics, and tracking pixels. Many of these claims come under California’s Invasion of Privacy Act, specifically its pen register provisions at California Penal Code sections 638.50 through 638.52, which create a private right of action with statutory damages of $5,000 per violation under section 637.2. Proof of harm is not required. If your startup runs a website with a chatbot, live chat, or analytics tools that record visitor sessions, this is worth understanding now, before a notice arrives rather than after.
Why Startups Are Getting Notices
The claims typically center on the idea that a website records or intercepts a visitor’s communications through session replay tools, chat transcripts, or third-party analytics without adequate notice or consent before the tool starts collecting data. Plaintiffs’ firms have targeted companies across nearly every industry, and venture-funded startups with real revenue and a public-facing website are a common target profile. Some of these claims come from serial filers who specifically look for unprotected tracking tools across many websites at once, then send near-identical demand letters to each one, which is partly why the volume of notices has climbed so quickly. Courts have generally required consent be obtained before data collection begins, not after, so the timing of your consent banner relative to when tracking tools actually fire matters as much as whether a banner exists at all.
A Pending Change Worth Watching, But Not Waiting On
As of this writing in August 2026, California lawmakers are considering SB 690, a bill that would remove the private right of action for pen register claims, meaning individuals could no longer sue directly under that provision; enforcement would fall to the state Attorney General. The bill has cleared a key committee and needs to pass the full legislature by the end of this month to become law, with an effective date of January 1, 2027, if it does.
Here’s why this shouldn’t change how urgently you treat this issue. First, as currently drafted, the bill would apply retroactively to claims filed within two years before it takes effect, so tracking tool exposure from today doesn’t disappear just because the law might narrow later. Second, SB 690 only touches pen register claims. It leaves California’s separate wiretapping provision, which carries the same $5,000 statutory damages, fully intact. And that’s where plaintiffs’ firms are increasingly focusing attention as pen register claims face more legislative and judicial pushback. If your website has the tools described above, the safest assumption is that your exposure exists today regardless of how this bill turns out.
A Practical Compliance Checklist
Most of these steps take less time than founders expect, and none of them require pulling your engineering team off the roadmap for more than an afternoon.
✔️ Inventory your website tools. List every chat widget, analytics tool, session-recording tool, and tracking pixel currently live on your site.
✔️ Review your consent mechanism. Confirm whether visitors receive clear notice and, where required, an opportunity to consent, before tracking begins.
✔️ Update your privacy policy. It should specifically disclose the categories of tools in use and how visitor data is collected and used. Generic boilerplate is often not enough.
✔️ Check your vendor agreements. Many chat and analytics vendors position themselves as processing data on your behalf. Confirm your agreements and their actual practices support that.
✔️ Audit new tools before launch. Any new marketing or product tool that touches visitor data should get a quick privacy review before it goes live, not after.
If You’ve Already Received a Notice
Don’t respond directly, and don’t assume the claim is either meritless or automatically valid. These notices are time-sensitive, and the right response depends heavily on the specific tools you use and how they’re configured. Some resolve quickly and inexpensively by fixing and documenting the underlying tracking issue; others require a more involved response, and it’s rarely obvious at the outset which kind you’re dealing with. We’ve helped clients respond to notices like this efficiently. The earlier you loop in counsel after receiving one, the more options you generally have.
This Matters Beyond Avoiding a Notice
Investors and enterprise customers are increasingly asking about data privacy practices during diligence. A clean privacy posture does more than protect you from a lawsuit. It’s increasingly part of being fundable and enterprise-ready, especially as more buyers and investors treat this kind of diligence as standard practice rather than an afterthought. Fixing this now, while your tech stack is still small enough to audit in an afternoon, is considerably easier than untangling it later once more tools, more vendors, and more historical data are involved.
The fastest way to know where you stand is a quick audit, before a notice forces the question. Contact us at inventuslaw.com/contact or email info@inventuslaw.com.
This article is for general informational purposes only and does not constitute legal advice. Privacy laws vary by state and are evolving quickly. For guidance specific to your situation, please schedule a consultation with one of our attorneys.
