NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7167
SPONSOR: Kavanagh (MS) TITLE OF BILL: An act to amend the general business law and the state
technology law, in relation to notification of a security breach
PURPOSE:
New York's data breach notification law needs to be updated keep pace
with current technology. This bill broadens the scope of information
covered under the notification law and updates the notification require-
ments when there has been a breech of data.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill amends section 899-aa of the General Business Law.
The amendments would:
*update the notifications section of the General Business Law by adding
biometric data, email addresses or user names in combination with a
password or security question answer, and protected health information
held by a "covered entity" to the private information definition;
*add definitions for the terms credit card and debit card;
*require a business to notify a customer if the business believes that
any private information belonging to the consumer has been accessed by
an unauthorized individual;
*authorize businesses in certain circumstances to notify the consumer
via email of the breach and if the consumer's email is believed to have
been compromised authorize the business to use other electronic methods
to notify the consumer;
*require that, if a business is sending out a new credit or debit card
to a consumer, the consumer be notified that the card is on its way;
*outline penalties for businesses that fail to provide notice to consum-
ers of a breach;
*require certain information to be included in the notice that would
direct consumers to federal and state data security prevention entities
and require businesses to send a template of their notice to consumers
to the Office of Information Technology Services; and,
*task the Department of State with receiving and responding to data
breach complaints and with informing the public of data security
prevention techniques.
Section 2 of the bill amends the State Technology Law. The amendments
would:
*include the same terms as above in the definition of private informa-
tion;
*state that should a data breach occur in a State entity the Office of
the Attorney General will post information about the breach on its'
website and the Office of Information Technology Services shall deliver
a report on the scope of the breach to the entity affected;
*require that an entity shall notify individuals affected by the data
breach as quickly as possible; and,
*task the office of information technology services to develop and
provide regular trainings to all entities on preventing data breaches.
Section 3 of the bill sets forth the effective date.
JUSTIFICATION:
New York's current data breach notification law needs to be updated to
keep pace with individuals' use and dissemination of private informa-
tion. This bill expands the scope of information subject to the current
law to include biometric information, email addresses and their corre-
sponding passwords or security questions and answers, and protected
health information as defined under HIPAA. It also updates the notifica-
tion procedures companies and state entities must follow when there has
been a breach of private information.
PRIOR LEGISLATIVE HISTORY:
2016: A10475A (Dinowitz) - On the Floor
FISCAL IMPACT ON THE STATE:
None.
FISCAL IMPACT ON LOCALITIES:
None.
IMPACT ON THE REGULATION OF BUSINESSES AND INDIVIDUALS:
The bill would impose stronger obligations on businesses handling
personal data of customers, regarding security and proper notification
of breaches.
IMPACT ON FINES, IMPRISONMENT, FORFEITURE OF RIGHTS, OR OTHER PENAL
SANCTIONS:
None.
EFFECTIVE DATE:
This act shall take effect January 1, 2018.
STATE OF NEW YORK
________________________________________________________________________
7167
2017-2018 Regular Sessions
IN ASSEMBLY
April 12, 2017
___________
Introduced by M. of A. KAVANAGH, DINOWITZ, CRESPO, OTIS, GALEF --
Multi-Sponsored by -- M. of A. COOK, HOOPER, SIMON -- read once and
referred to the Committee on Consumer Affairs and Protection
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.
LBD10986-01-7
A. 7167 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 to
42 any person or business required to make a notification under subdivision
43 two 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,
A. 7167 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 financial
A. 7167 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 of
12 such 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:
A. 7167 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 to
32 state entities required to make a notification under subdivision two of
33 this 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-
44 able] 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 valid
A. 7167 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, 2018.
