Downtown Haverhill. (Photo by Jonathan Berk)

STATE LAWMAKERS ARE currently considering a bill called the Massachusetts Data Privacy Act. The legislation’s aims are laudable. But several of its proposed restrictions on data collection and use are likely to hurt small businesses — which employ nearly 45 percent of the state’s workers and are critical to our economy.

I’ve spent years studying information-privacy law and policy. Data privacy undoubtedly needs the Legislature’s attention: It would take months — literally — for consumers to read the privacy policies for all the websites they visit annually. But data-privacy regulations need to strike just the right balance — because in today’s digital economy, small businesses rely on data-powered tools to grow and succeed.

Nearly two-thirds of small businesses, for instance, use data-powered ads to connect with customers. As an example, if you’ve been searching online for new hiking boots, you might get a digital ad from your local outdoors store. The store isn’t surveilling you; instead, its digital partners send the ads to devices where data indicates a good match for the store’s offerings.

That highly precise advertising helps the store find likely customers without wasting money advertising to unlikely customers, allowing it to compete with big players like Dick’s Sporting Goods or REI, who can afford to run multimillion-dollar ad campaigns.

Small businesses also benefit from insights provided by data-analytics tools. These tools identify trends in aggregated, non-personally identifiable data, helping business owners see things like how visitors arrive at their website — say, by clicking on an ad or social media post — and what regions customers come from.

Those insights help business owners make smart decisions about everything from how to spend a limited marketing budget, to where to open a new brick-and-mortar location. Eighty-six percent of Massachusetts small businesses use data to enhance their marketing efforts.

The data privacy legislation offers a number of sensible provisions, including strict rules for handling sensitive data, requirements for guarding against data breaches, and a prohibition on sending kids targeted ads. Here’s where it goes too far for small businesses: As currently written, the Mass. Data Privacy Act would limit businesses to collecting and processing only the minimum data necessary to deliver a specific, customer-requested product or service. That would dramatically reduce the data available for the advertising, marketing, and analysis purposes that are so valuable to small businesses.

The bill’s proposed limitations would hit small businesses hard. With less data to inform ad placement, Massachusetts small businesses’ ads would become less effective. That means the businesses would have to spend more money on ads that would likely generate fewer sales — dealing a blow to their bottom line. Bay State small businesses would also struggle to compete against out-of-state rivals, who wouldn’t face the same restrictions, and would lose ground to deep-pocketed corporate competitors who could still afford to market and advertise their products.

The proposed data privacy law would apply to companies that collect the data of 60,000 or more consumers. That threshold would be among the lowest in the nation, and far lower than the 100,000-consumer threshold that exists in half of the states that have passed consumer privacy laws, including Connecticut and California. In Europe, similar regulations led to disproportionately high compliance costs for small businesses, as compared to larger businesses. The bill pending in the Legislature would likely have the same impact on Massachusetts small businesses, overburdening the businesses least able to bear its costs — and who pose the least risk to consumers.

I support lawmakers’ efforts to protect consumers’ privacy, but I urge them to reconsider the data privacy act’s application to small businesses. Other states have shown that it’s possible to safeguard consumer data while still allowing small businesses to grow, compete, and succeed. Massachusetts can do the same by crafting balanced rules that protect privacy without hurting businesses that form the lifeblood of our economy.

Shaun Spencer is associate dean for academic affairs and a professor of law at the University of Massachusetts-Dartmouth School of Law.