California Issues New ADMT Regulations Expanding Consumer Rights

California is moving decisively from transparency-based privacy regulation to substantive governance of automated decision making. The new Automated Decision-Making Technology (ADMT) regulations issued by the California Privacy Protection Agency (CPPA) materially expand consumer rights and impose affirmative compliance, documentation, and risk-assessment obligations on businesses that use AI-driven or automated systems to make consequential decisions about individuals.

For companies operating at scale, these rules require operational changes, new disclosures, internal review processes, and defensible documentation well before the January 1, 2027 effective date. Scope and Applicability: Who Is Covered The ADMT regulations are part of the broader California Consumer Privacy Act (CCPA) framework, as amended by the California Privacy Rights Act (CPRA). They generally apply to for-profit businesses doing business in California that meet any of the following thresholds: The regulations define ADMT broadly as any technology that processes personal information using computation to replace or substantially replace human decision making.

This includes many AI- and machine-learning-driven tools used in employment, lending, healthcare, education, and similar contexts. The rules exclude basic infrastructure technologies, such as data storage, networking, firewalls, spellchecking tools, and spreadsheets, so long as they do not replace human decision making.

The regulatory focus is not on automation per se but on automation that meaningfully determines outcomes for individuals. Front-End Obligations The compliance burden intensifies when ADMT is used to make or materially inform significant decisions. These include decisions affecting: Opt-Out and Appeal Rights Businesses must offer at least two methods for consumers to opt out of the use of ADMT, such as online forms, phone numbers, email, or mail-based requests. There are limited exceptions, most notably where a consumer already has a right to human appeal, or ADMT is used solely for work or educational assessment, allocation, or compensation without unlawful discrimination.

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