CCPA, Data Privacy, Privacy

Synthetic Data: The Privacy Solution That Might Still Get You in Trouble

August 5, 2025

Synthetic Data Isn’t a Guaranteed Privacy Shield

In today’s data-driven business environment, synthetic data has emerged as a popular alternative for training artificial intelligence (AI) systems, running simulations, and testing software. Promoted as a privacy-preserving solution, synthetic data is artificially generated to mimic real-world data patterns—without exposing actual individuals’ personal information.

But here’s the catch: not all synthetic data is as private or safe as it seems.

What is Synthetic Data (and Why Businesses Are Using It)?

Synthetic data is artificially generated data that replicates the structure and statistical patterns of real data, but does not directly relate to any individual. It’s used across industries like fintech, healthcare, e-commerce, and customer analytics to:

Train AI/ML (Machine Learning) algorithms
Test systems without using real user data
Avoid the hassle of collecting user consent
Appear “privacy-compliant” in fast-moving environments

For Chief Executive Officers (CEOs), Chief Privacy Officers (CPOs), and other business leaders, synthetic data seems like a smart way to sidestep growing regulatory pressure. But in reality, using synthetic data doesn’t automatically remove your compliance obligations.

The Hidden Risks of Synthetic Data Under CPRA

Let’s focus on one specific regulation: the California Privacy Rights Act (CPRA), which amended and expanded the California Consumer Privacy Act (CCPA) to strengthen individual data protections in California.

Under the CPRA, if synthetic data can be linked—even probabilistically—back to an individual, it may still be considered personal information. That means it’s still subject to:

Data minimization principles
Consumer access, deletion, and correction rights
Mandatory disclosure in privacy policies
Purpose limitation and retention requirements

Even data that appears “scrubbed” or generated by AI can potentially retain patterns that correlate with real individuals, especially if the source data wasn’t properly de-identified. This creates serious legal and reputational risk for businesses using synthetic datasets without documented safeguards.

Key Questions Business Leaders Should Be Asking

Was our synthetic data generated from properly de-identified input?
Can it be reverse-engineered or re-identified?
Are we disclosing synthetic data usage in our privacy notices?
Do we have documentation in place if regulators come knocking?

If the answer to any of these questions is uncertain, your company might be unintentionally violating data privacy laws—even if you thought synthetic data would shield you.

How Curated Privacy LLC Helps Your Business Stay Compliant

At Curated Privacy LLC, we specialize in helping businesses assess the real privacy risks in their operations—including the hidden dangers of synthetic data. Our services include:

Synthetic data risk assessments
CPRA compliance audits
Privacy policy and disclosure updates
AI data governance consultation
Data mapping and impact assessments

We offer FREE consultations for the U.S.-based companies who want expert guidance on data privacy strategy, AI compliance, and risk mitigation.

Whether you’re a startup experimenting with AI, or an established company seeking to modernize responsibly, we’ll help you ensure your innovation doesn’t come at the cost of compliance.