In the spring of 2025, the Colorado Legislature enacted one of the nation’s most ambitious technology and consumer-safety packages, aiming to address a spectrum of digital risks that have emerged alongside rapid innovation. Over recent years, high-profile data breaches, opaque use of artificial intelligence, and incidents of insecure Internet-connected devices have eroded public trust and exposed consumers to financial, physical, and privacy harms. Responding to constituent calls for stronger protections, Colorado’s lawmakers crafted a bipartisan collection of statutes to enhance individual data rights, impose rigorous testing requirements on smart devices, regulate AI-driven decision-making, and elevate transparency across digital advertising. While these measures will roll out in phased stages through 2027, they collectively signal Colorado’s intention to lead the nation in balancing consumer safety with continued technological growth. Local businesses and national tech firms alike are now recalibrating compliance strategies, even as policymakers elsewhere evaluate Colorado’s model for possible adoption.
Strengthening Data Privacy with a “Right to Know” Framework
Central to the legislation is an expansion of Colorado’s existing privacy regime into a comprehensive “Right to Know” structure. Under the new law, companies operating in the state must clearly disclose, in concise and non-technical language, precisely what categories of personal data they collect, the purposes for which it is used, and any third parties with whom it is shared. This obligation applies both at the point of initial data collection and upon consumer request. Residents may submit verifiable requests to access their data records, correct inaccuracies, and demand deletion of non-essential personal data. Companies are required to respond within 45 days or risk civil penalties that scale according to the severity and willfulness of any breach of compliance.
To ensure enforcement, the statute empowers Colorado’s Attorney General to levy fines ranging from $2,500 to $20,000 per violation and up to $500,000 for systemic or repeated infractions. A unique feature is a private right of action allowing individuals to seek statutory damages in cases of unauthorized data sharing or failure to process deletion requests. By granting consumers both information access and legal recourse, Colorado aims to shift the balance of power, making it economically viable for businesses to implement robust privacy controls rather than risk costly litigation.
Mandating Safety Testing for Internet-Connected Devices
The Consumer IoT Safety Act represents a first-of-its-kind requirement that all Internet-connected devices sold in Colorado undergo independent security and safety testing before reaching consumers. Devices ranging from smart thermostats and fitness trackers to medical wearables must be evaluated against a set of benchmarks developed by the National Institute of Standards and Technology (NIST) and adapted for Colorado’s standards. Testing covers resilience to unauthorized remote access, data encryption during transmission, and potential physical hazards from hardware malfunctions.
Manufacturers must submit test reports demonstrating that devices resist common attack vectors, such as credential stuffing, man-in-the-middle interception, and firmware tampering. Products that fail to meet criteria must be remediated and resubmitted before sale authorization. To alleviate the financial burden on smaller vendors, the law allocates $5 million in grants for independent laboratory fees and establishes a state-run testing facility offering subsidized evaluations. Additionally, companies must register each model in a public database maintained by the Department of Regulatory Agencies, providing consumers with searchable safety certifications. By shifting defect detection upstream, Colorado seeks to prevent large-scale recalls and mitigate risks before devices enter homes and hospitals.
Regulating AI-Driven Decision Systems
As artificial intelligence becomes embedded in critical areas such as credit underwriting, hiring, and healthcare triage, Colorado’s Artificial Intelligence Accountability Act introduces rigorous oversight for automated decision systems that materially affect individuals’ lives. Covered entities must conduct algorithmic impact assessments that evaluate potential biases, error rates, and disparate outcomes across demographic groups. These assessments require documentation of training data sources, model performance metrics, and mitigation strategies for identified risks. Impact reports must be updated annually or whenever underlying model architectures are substantially retrained.
In cases where an AI system issues a denial—such as rejecting a mortgage application or a job candidate—companies must retain a human-in-the-loop review process and furnish the individual with a clear, plain-language explanation of the decision rationale. Consumers who believe they have been adversely affected can appeal through an independent ombuds process or, if necessary, seek remedy in state court. By embedding transparency requirements and due-process safeguards, Colorado aims to foster responsible AI innovation without stifling beneficial applications in finance, healthcare, and public services.
Promoting Transparency in Digital Advertising
Digital advertising has matured into a multibillion-dollar industry driven by sophisticated targeting capabilities. Colorado’s new advertising transparency rules require platforms and advertisers operating within the state to disclose, upon consumer request, the criteria used to target each individual—including demographic filters, behavioral segments, and location data. Companies must provide an annual transparency report detailing aggregate ad spend by category, the number of users impacted, and the most common targeting attributes.
The law also enshrines an opt-out mechanism for interest-based advertising, obliging companies to include a persistent “Do Not Track” toggle in privacy dashboards. Special protections prohibit micro-targeting for sensitive products, such as tobacco or mental-health services, to minors. Platforms found non-compliant face penalties up to 5% of their statewide revenue or $1 million, whichever is greater. By illuminating the hidden mechanics of digital persuasion, Colorado aims to foster more ethical advertising practices and empower consumers to make informed choices about the ads they receive.
Creating a Statewide Tech Safety Ombudsperson
To provide a centralized enforcement and advocacy hub, the legislation establishes the Office of the Technology Safety Ombudsperson. This independent office will serve as the primary point of contact for consumer complaints related to data privacy, IoT device failures, AI-driven harms, and advertising grievances. The Ombudsperson is charged with triaging incoming reports, mediating disputes between users and companies, and referring chronic or severe violations to the Attorney General for enforcement action.
Each year, the office will publish a “State of Tech Safety” report profiling compliance trends, notable enforcement actions, and emerging threats. The report will include anonymized data on complaint volumes, average resolution times, and aggregate incident types. By centralizing oversight and public reporting, Colorado ensures consistent application of the laws and maintains ongoing dialogue between regulators, industry stakeholders, and consumer advocates.
Phased Implementation and Support for Local Innovation
Recognizing the complexity of complying with sweeping new regulations, Colorado designed a staggered implementation timeline. During the first year, companies must update privacy policies, register device models for testing, and begin drafting initial AI impact assessments. In the second year, full compliance deadlines take effect for device safety certification, the first round of AI assessments, and initial advertising transparency disclosures. To support smaller businesses and startups, the state partners with local universities and nonprofit tech incubators to provide free workshops, online compliance toolkits, and one-on-one advisory sessions.
Additionally, the legislation establishes a Innovation and Compliance Grant Fund, allocating $10 million over five years to help firms invest in secure development practices, privacy engineering, and third-party audits. By coupling robust consumer safeguards with tangible resources for local entrepreneurs, Colorado aims to foster an ecosystem where safety and innovation reinforce one another rather than compete.
Implications for the Broader Tech Landscape
Although these measures apply only within Colorado’s borders, their ripples are already being felt nationwide. Several states, including Washington and Massachusetts, have convened task forces to evaluate similar frameworks, while federal legislators have cited Colorado’s example in drafting proposed data-privacy and AI bills. Tech companies with multi-state footprints are preemptively aligning their product development roadmaps to Colorado’s timeline, effectively elevating minimum expectations for privacy, security, and transparency across the United States.
Industry analysts predict that vendors able to rapidly adapt will leverage Colorado-compliant certifications as competitive differentiators, attracting privacy- and safety-conscious consumers. Meanwhile, consumer advocates herald the legislation as a long-overdue corrective to unregulated deployment of powerful technologies. As Colorado’s phased rollout progresses, the state will serve as a living laboratory, offering real-world data on how regulatory rigor influences innovation, market dynamics, and consumer trust.
