6 Things Hawai’i Businesses Need to Know About Data Privacy Rules in 2026
Data privacy compliance is no longer a big-business problem. Whether you run a retail shop in Honolulu, a medical practice on Maui, or a hospitality operation on the Big Island, the rules governing how you collect, store, and share customer data are evolving fast - and the consequences for falling behind are real. Here is what Hawai’i small- to medium-sized businesses (SMB) need to understand heading into 2026.
There is still no Federal privacy law - but that does not mean you are off the hook
The United States does not have a single comprehensive federal data privacy statute. Congress has attempted to pass one (most recently through the American Privacy Rights Act (APRA) in 2024) but federal legislation remains stalled. What fills that gap is a patchwork of state laws and federal agency enforcement actions that still reach your business, regardless of where you operate.
The Federal Trade Commission (FTC) is the primary federal body with authority over consumer data practices. Under Section 5 of the FTC Act, the agency can pursue businesses of any size for unfair or deceptive data practices - including misrepresenting how customer data is used or failing to secure it adequately. The FTC has remained active in enforcement even as its leadership has shifted, and it has signaled continued focus on data security, children’s data, and deceptive AI claims in 2026.
What this means for you: Even without a federal privacy law, you can face federal scrutiny if your data practices are misleading or insecure. A clear, accurate privacy notice and reasonable data security practices are not optional.
Hawai’i does not yet have a comprehensive privacy law - but legislation is active
Hawai’i is one of roughly 30 states that still lacks a comprehensive consumer data privacy law. A bill that would have established broad consumer rights - SB 1037, known as the Consumer Data Protection Act - died in the Hawai’i Senate in March 2025 after failing to clear the crossover deadline. A companion bill (SB 1038) that would have expanded the definition of “personal information” under Hawai’i’s data breach notification law carried over into the 2026 legislative session.
What Hawai’i does have is a constitutional right to privacy - one of only a handful of states that explicitly enshrines it. That constitutional foundation, combined with continued legislative activity, makes it likely that a meaningful state privacy law is coming. Businesses that build sound data practices now will be far better positioned than those that wait.
What this means for you: Do not treat the absence of a state law as a green light. Legislative momentum is building, and the cost of retrofitting poor data practices later will exceed the cost of getting ahead of it today.
Other States’ privacy laws may already apply to your business
Here is a fact many Hawai’i business owners miss: state privacy laws in other states can apply to your business if you collect data from residents of those states - even if you never leave Hawai’i. If you run an e-commerce operation, a subscription service, a booking platform, or any digital business that attracts customers from the mainland, you may already be subject to laws in California, Texas, Virginia, Colorado, and others.
As of January 1, 2026, 19 states have comprehensive consumer privacy laws in effect, with Indiana, Kentucky, and Rhode Island joining the list at the start of this year. California’s framework - the CCPA - is the most expansive and now includes new requirements around automated decision-making technology (ADMT), cybersecurity audits, and privacy risk assessments that took effect January 1, 2026. Violations can result in penalties of up to $7,500 per incident, and California’s enforcement agency has shown it will pursue cases - including a $1.35 million settlement against a national retailer in 2025.
What this means for you: If your customer base extends to the mainland, conduct a basic data inventory. Identify where your customers are located and determine whether any applicable state laws set compliance thresholds you may be approaching or already crossing.
The DOJ’s Data Security Program is a new federal rule with broad reach
One of the most significant new federal developments in 2025 was the finalization of the Department of Justice’s (DOJ) Data Security Program (DSP), which went into effect last year. This rule targets the cross-border transfer of bulk sensitive personal data, including precise geolocation data, health data, financial data, and device identifiers, to countries the U.S. government has designated as “countries of concern.”
While this may sound like an enterprise problem, the rule has broad applicability based on how its key terms are defined. It does not include the standard exemptions found in most state privacy laws, and violations can carry steep civil penalties and potential criminal liability. Enforcement is expected to intensify in 2026.
What this means for you: If your business uses third-party software vendors, analytics tools, or cloud platforms with data infrastructure located outside the U.S., you should verify where your customer data is being routed and stored. This is especially relevant for businesses using lower-cost international SaaS providers.
Children’s data is a top enforcement priority right now
Federal regulators are making children’s data a focal point of 2026 enforcement activity. The FTC updated its rules under the Children’s Online Privacy Protection Act (COPPA) in 2025, expanding requirements for businesses that collect data from children under 13. The updated rules place greater obligations on obtaining verifiable parental consent, limiting data retention, and restricting data sharing.
This is not theoretical. A major media company paid $10 million to settle FTC allegations that it allowed personal data to be collected from children viewing kid-directed videos on YouTube without proper parental notification or consent. The FTC has also been scrutinizing AI chatbot companies and digital platforms popular with minors.
If your business operates a website, app, or digital platform that could attract users under 13 (or under 16 in some state laws) this applies to you. Hawai’i’s tourism and hospitality industry, family-oriented businesses, education-adjacent services, and youth sports organizations should pay particular attention.
What this means for you: Review your website’s data collection practices. If any part of your digital presence could attract minors, ensure your privacy notice is accurate, parental consent mechanisms are in place, and data retention is limited to what is necessary.
Your vendors and third-party tools are part of your compliance risk
A common blind spot for small businesses is the assumption that compliance is solely about what your own team does with data. In practice, every third-party tool you use - your email marketing platform, customer analytics software, point-of-sale system, booking engine, or website - is part of your data ecosystem, and regulators are paying attention to vendor relationships.
The FTC has explicitly signaled that it scrutinizes third-party vendors used for payment processing, customer service, website analytics, and product development. Class action litigation is also rising around common website tracking technologies - including social media and third-party analytics tools - under various state and federal privacy theories.
What this means for you: Review your vendor contracts for data processing agreements. Know what data your tools are collecting, where it goes, and what your vendors are permitted to do with it. This is a fundamental aspect of data governance and one of the fastest ways to reduce your compliance exposure without major investment.
Our Take
The data privacy landscape is changing whether Hawai’i businesses are ready or not. Federal enforcement is ongoing, other states’ laws are reaching further than most SMBs realize, and Hawai’i’s own legislative activity signals that a state-level law may not be far off. The businesses that start treating data as a governed asset, knowing what they collect, why they collect it, and who they share it with, will be in a far stronger position than those scrambling to catch up when compliance deadlines arrive.
Sources
Bass Berry & Sims, “Countdown to Compliance: Navigating 2026 Privacy Laws and Regulations”
Benesch Law, “FTC Enforcement Trends in 2026”
Federal Trade Commission, FTC.gov
Hawaii Legislature, SB 1037 and SB 1038 (2025 - 2026 Session)
Smith Anderson, “Data Privacy in 2026: State Enforcement Takes Center Stage”
White & Case, “Privacy and Cybersecurity 2025-2026”
Wiley Law, “Five Privacy Checkpoints to Start in 2026”
WilmerHale, “State Comprehensive Privacy Law Update - March 21, 2025”
WilmerHale, “Year in Review: Top Ten US Data Privacy Developments from 2025”