Bill Text: NY S06834 | 2015-2016 | General Assembly | Amended
Bill Title: Relates to notification of a security breach; includes credit and debit card; increases civil penalties.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2016-06-09 - PRINT NUMBER 6834B [S06834 Detail]
Download: New_York-2015-S06834-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 6834--B IN SENATE February 26, 2016 ___________ Introduced by Sen. VENDITTO -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the general business law and the state technology law, in relation to notification of a security breach The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivisions 1, 2, 5, 6, 7, 8 and 9 of section 899-aa of 2 the general business law, as added by chapter 442 of the laws of 2005, 3 paragraph (c) of subdivision 1, paragraph (a) of subdivision 6 and 4 subdivision 8 as amended by chapter 491 of the laws of 2005 and para- 5 graph (a) of subdivision 8 as amended by section 6 of part N of chapter 6 55 of the laws of 2013, are amended and a new subdivision 5-a is added 7 to read as follows: 8 1. As used in this section, the following terms shall have the follow- 9 ing meanings: 10 (a) "Personal information" shall mean any information concerning a 11 natural person which, because of name, number, personal mark, or other 12 identifier, can be used to identify such natural person; 13 (b) "Private information" shall mean either: (i) personal information 14 consisting of any information in combination with any one or more of the 15 following data elements, when either the personal information or the 16 data element is not encrypted, or encrypted with an encryption key that 17 has also been acquired: 18 (1) social security number; 19 (2) driver's license number or non-driver identification card number; 20 [or] 21 (3) account number, credit or debit card number, in combination with 22 any required security code, access code, or password that would permit 23 access to an individual's financial account; or EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD09470-16-6S. 6834--B 2 1 (4) biometric information, meaning data generated by automatic meas- 2 urements of an individual's physical characteristics, which are used by 3 the owner or licensee to authenticate the individual's identity; 4 (ii) a user name or e-mail address in combination with a password or 5 security question and answer that would permit access to an online 6 account; or 7 (iii) any unsecured protected health information held by a "covered 8 entity" as defined in the health insurance portability and accountabil- 9 ity act of 1996 (45 C.F.R. pts. 160, 162, 164), as amended from time to 10 time. 11 "Private information" does not include publicly available information 12 which is lawfully made available to the general public from federal, 13 state, or local government records. 14 (c) "Breach of the security of the system" shall mean unauthorized 15 acquisition or acquisition without valid authorization of computerized 16 data that compromises the security, confidentiality, or integrity of 17 [personal] private information maintained by a business. Good faith 18 acquisition of [personal] private information by an employee or agent of 19 the business for the purposes of the business is not a breach of the 20 security of the system, provided that the private information is not 21 used or subject to unauthorized disclosure. 22 In determining whether information has been acquired, or is reasonably 23 believed to have been acquired, by an unauthorized person or a person 24 without valid authorization, such business may consider the following 25 factors, among others: 26 (1) indications that the information is in the physical possession and 27 control of a person without valid authorization or by an unauthorized 28 person, such as a lost or stolen computer or other device containing 29 information; or 30 (2) indications that the information has been downloaded or copied; or 31 (3) indications that the information was used by a person without 32 valid authorization or an unauthorized person, such as fraudulent 33 accounts opened or instances of identity theft reported. 34 (d) "Consumer reporting agency" shall mean any person which, for mone- 35 tary fees, dues, or on a cooperative nonprofit basis, regularly engages 36 in whole or in part in the practice of assembling or evaluating consumer 37 credit information or other information on consumers for the purpose of 38 furnishing consumer reports to third parties, and which uses any means 39 or facility of interstate commerce for the purpose of preparing or 40 furnishing consumer reports. A list of consumer reporting agencies shall 41 be compiled by the state attorney general and [furnished upon request to42any person or business required to make a notification under subdivision43two of this section] publicly posted on its website. 44 (e) "Credit card" shall mean any card or other credit device issued by 45 a financial institution to a consumer for the purpose of providing 46 money, property, labor or services on credit. 47 (f) "Debit card" shall mean any card or other device issued by a 48 financial institution to a consumer for use in initiating an electronic 49 fund transfer from the account of the consumer at such financial insti- 50 tution, for the purpose of transferring money between accounts or 51 obtaining money, property, labor, or services. 52 2. Any person or business which conducts business in New York state, 53 and which owns or licenses computerized data which includes private 54 information shall disclose any breach of the security of the system 55 following discovery or notification of the breach in the security of the 56 system to any resident of New York state whose private information was,S. 6834--B 3 1 or is reasonably believed to have been, acquired by a person without 2 valid authorization or by an unauthorized person. The disclosure shall 3 be made in the most expedient time possible and without unreasonable 4 delay, consistent with the legitimate needs of law enforcement, as 5 provided in subdivision four of this section, or any measures necessary 6 to determine the scope of the breach and restore the [reasonable] integ- 7 rity of the system. 8 5. The notice required by this section shall be directly provided to 9 the affected persons by one of the following methods: 10 (a) written notice; 11 (b) electronic notice, provided that the person to whom notice is 12 required has expressly consented to receiving said notice in electronic 13 form and a log of each such notification is kept by the person or busi- 14 ness who notifies affected persons in such form; provided further, 15 however, that in no case shall any person or business require a person 16 to consent to accepting said notice in said form as a condition of 17 establishing any business relationship or engaging in any transaction. 18 (c) telephone notification provided that a log of each such notifica- 19 tion is kept by the person or business who notifies affected persons; or 20 (d) substitute notice, if a business demonstrates to the state attor- 21 ney general that the cost of providing notice would exceed two hundred 22 fifty thousand dollars, or that the affected class of subject persons to 23 be notified exceeds five hundred thousand, or such business does not 24 have sufficient contact information. Substitute notice shall consist of 25 all of the following: 26 (1) e-mail notice when such business has an e-mail address for the 27 subject persons, provided the breached information does not include an 28 e-mail address in combination with a password or security question and 29 answer that would permit access to the online account, in which case, 30 the person or business shall not comply with this section by providing 31 notice to that e-mail account, but shall instead comply with this 32 section by clear and conspicuous notice delivered to the consumer online 33 when the consumer is connected to the online account from an internet 34 protocol address or from an online location which the person or business 35 knows the consumer customarily accesses the online account; 36 (2) conspicuous posting of the notice on such business's web site 37 page, if such business maintains one; and 38 (3) notification to major statewide media. 39 5-a. Any credit or debit card issuer that issues a new credit or debit 40 card as a result of a breach of the security of the system pursuant to 41 paragraph (c) of subdivision one of this section, shall provide the 42 consumer notice that the issuance of the replacement credit or debit 43 card is due to a potential compromise of the prior card absent any 44 evidence of actual or potential unauthorized use of such credit or debit 45 card or other circumstances precipitating the issuance of a replacement 46 card. 47 6. (a) whenever the attorney general shall believe from evidence 48 satisfactory to him that there is a violation of this article he may 49 bring an action in the name and on behalf of the people of the state of 50 New York, in a court of justice having jurisdiction to issue an injunc- 51 tion, to enjoin and restrain the continuation of such violation. In 52 such action, preliminary relief may be granted under article sixty-three 53 of the civil practice law and rules. In such action the court may award 54 damages for actual costs or losses incurred by a person entitled to 55 notice pursuant to this article, if notification was not provided to 56 such person pursuant to this article, including consequential financialS. 6834--B 4 1 losses. Whenever the court shall determine in such action that a person 2 or business violated this article knowingly or recklessly, the court may 3 impose a civil penalty of the greater of five thousand dollars or up to 4 [ten] twenty dollars per instance of failed notification, provided that 5 the latter amount shall not exceed [one] two hundred fifty thousand 6 dollars. 7 (b) the remedies provided by this section shall be in addition to any 8 other lawful remedy available. 9 (c) no action may be brought under the provisions of this section 10 unless such action is commenced within two years [immediately] after 11 either the date [of the act complained of or the date of discovery of12such act] on which the attorney general became aware of the violation, 13 or the date of notice sent pursuant to paragraph (a) of subdivision 14 eight of this section, whichever occurs first. 15 7. Regardless of the method by which notice is provided, such notice 16 shall include contact information for the person or business making the 17 notification, the telephone numbers and websites of the relevant state 18 and federal agencies that provide information regarding security breach 19 response and identity theft prevention and protection information, and a 20 description of the categories of information that were, or are reason- 21 ably believed to have been, acquired by a person without valid authori- 22 zation or by an unauthorized person, including specification of which of 23 the elements of personal information and private information were, or 24 are reasonably believed to have been, so acquired. 25 8. (a) In the event that any New York residents are to be notified, 26 the person or business shall notify the state attorney general, the 27 department of state and the [division of state police] office of infor- 28 mation technology services as to the timing, content and distribution of 29 the notices [and], approximate number of affected persons and provide a 30 copy of the template of the notice sent to affected persons. Such 31 notice shall be made without delaying notice to affected New York resi- 32 dents. 33 (b) In the event that more than five thousand New York residents are 34 to be notified at one time, the person or business shall also notify 35 consumer reporting agencies as to the timing, content and distribution 36 of the notices and approximate number of affected persons. Such notice 37 shall be made without delaying notice to affected New York residents. 38 9. The department of state shall receive complaints pursuant to 39 section ninety-four-a of the executive law relating to any breach of the 40 security of the system, make referrals as appropriate and in cooperation 41 with the state attorney general and the office of information technology 42 services develop, regularly update and make publicly available informa- 43 tion relating to how to respond to a breach of the security of the 44 system and best practices for how to prevent a breach of the security of 45 the system. 46 10. The provisions of this section shall be exclusive and shall 47 preempt any provisions of local law, ordinance or code, and no locality 48 shall impose requirements that are inconsistent with or more restrictive 49 than those set forth in this section. 50 § 2. Paragraphs (a) and (d) of subdivision 1 and subdivisions 2, 6, 7 51 and 8 of section 208 of the state technology law, paragraphs (a) and (d) 52 of subdivision 1 and subdivision 8 as added by chapter 442 of the laws 53 of 2005, subdivision 2 and paragraph (a) of subdivision 7 as amended by 54 section 5 of part N of chapter 55 of the laws of 2013 and subdivisions 6 55 and 7 as amended by chapter 491 of the laws of 2005, are amended to read 56 as follows:S. 6834--B 5 1 (a) "Private information" shall mean: (i) personal information in 2 combination with any one or more of the following data elements, when 3 either the personal information or the data element is not encrypted or 4 encrypted with an encryption key that has also been acquired: 5 (1) social security number; 6 (2) driver's license number or non-driver identification card number; 7 [or] 8 (3) account number, credit or debit card number, in combination with 9 any required security code, access code, or password which would permit 10 access to an individual's financial account; or 11 (4) biometric information, meaning data generated by automatic meas- 12 urements of an individual's physical characteristics, which are used by 13 the owner or licensee to authenticate the individual's identity; 14 (ii) a user name or e-mail address in combination with a password or 15 security question and answer that would permit access to an online 16 account; or 17 (iii) any unsecured protected health information held by a covered 18 entity as defined in the health insurance portability and accountability 19 act of 1996 (45 C.F.R. pts. 160, 162, 164), as amended from time to 20 time. 21 "Private information" does not include publicly available information 22 that is lawfully made available to the general public from federal, 23 state, or local government records. 24 (d) "Consumer reporting agency" shall mean any person which, for mone- 25 tary fees, dues, or on a cooperative nonprofit basis, regularly engages 26 in whole or in part in the practice of assembling or evaluating consumer 27 credit information or other information on consumers for the purpose of 28 furnishing consumer reports to third parties, and which uses any means 29 or facility of interstate commerce for the purpose of preparing or 30 furnishing consumer reports. A list of consumer reporting agencies shall 31 be compiled by the state attorney general and [furnished upon request to32state entities required to make a notification under subdivision two of33this section] publicly posted on its website. 34 2. Any state entity that owns or licenses computerized data that 35 includes private information shall disclose any breach of the security 36 of the system following discovery or notification of the breach in the 37 security of the system to any resident of New York state whose private 38 information was, or is reasonably believed to have been, acquired by a 39 person without valid authorization or an unauthorized person. The 40 disclosure shall be made in the most expedient time possible and without 41 unreasonable delay, consistent with the legitimate needs of law enforce- 42 ment, as provided in subdivision four of this section, or any measures 43 necessary to determine the scope of the breach and restore the [reason-44able] integrity of the data system. The state entity shall consult with 45 the state office of information technology services to determine the 46 scope of the breach and restoration measures. Within ninety days of the 47 notice of the breach, the office of information technology services 48 shall deliver a report on the scope of the breach and recommendations to 49 restore and improve the security of the system to the state entity. 50 6. Regardless of the method by which notice is provided, such notice 51 shall include contact information for the state entity making the 52 notification, the telephone numbers and the websites for the relevant 53 state and federal agencies that provide information regarding security 54 breach response and identity theft prevention and protection information 55 and a description of the categories of information that were, or are 56 reasonably believed to have been, acquired by a person without validS. 6834--B 6 1 authorization or an unauthorized person, including specification of 2 which of the elements of personal information and private information 3 were, or are reasonably believed to have been, so acquired. 4 7. (a) In the event that any New York residents are to be notified, 5 the state entity shall notify the state attorney general, the department 6 of state and the state office of information technology services as to 7 the timing, content and distribution of the notices and approximate 8 number of affected persons and provide a copy of the template of the 9 notice sent to affected persons. Such notice shall be made without 10 delaying notice to affected New York residents. 11 (b) In the event that more than five thousand New York residents are 12 to be notified at one time, the state entity shall also notify consumer 13 reporting agencies as to the timing, content and distribution of the 14 notices and approximate number of affected persons. Such notice shall be 15 made without delaying notice to affected New York residents. 16 8. The state office of information technology services shall develop, 17 update and provide regular training to all state entities relating to 18 best practices for the prevention of a breach of the security of the 19 system. 20 9. Any entity listed in subparagraph two of paragraph (c) of subdivi- 21 sion one of this section shall adopt a notification policy no more than 22 one hundred twenty days after the effective date of this section. Such 23 entity may develop a notification policy which is consistent with this 24 section or alternatively shall adopt a local law which is consistent 25 with this section. 26 § 3. This act shall take effect January 1, 2017.
