US Data Breach and Privacy 2019 Legislative Recap

A few weeks ago, Texas signed into law an amendment to its data breach law, capping off a busy first half of 2019 for state lawmakers in this arena.  As we gear up for the second half of 2019, we thought a recap was worthwhile.  The legislation reflects a number of trends, including increasing obligations on consumer reporting agencies (CRAs) to protect consumers (no doubt in part a reaction to the Equifax breach), and updating data breach notice and reporting to provide more transparency and more information to consumers to protect their data, and to update older laws to address developments in technology and risks. 

Massachusetts

At the beginning of the year, Massachusetts’ governor signed into law a bill (HB 4806) amending its consumer reports law (Mass. G.L. Chptr. 93 § 62A et seq.) and data breach laws (Mass. G.L. Chptr. 93H § 3 et seq.).  Significant revisions included:

  • Prohibiting CRAs from charging a victim of identity theft or his/her spouse a fee to place, lift, or remove a freeze on a credit report if the victim has submitted a valid police report related to the identity theft.
  • Prohibiting a CRA from offering a paid product to prevent unauthorized access or restrict access to a consumer’s credit unless the CRA (i) notifies the consumer of the availability of obtaining a security freeze without charge and (ii) provides information to the consumer on how to obtain a security freeze.
  • Requiring CRAs who compile files on consumers on a nationwide basis and receive a request for a credit freeze to identify other CRAs that compile files on a nationwide basis so that the consumer can request a credit freeze from those CRAs as well.
  • Requiring CRAs to notify consumers (using specific language) of their right to obtain a security freeze and requiring CRAs to disclose more information to a consumer about the information the CRA maintains in its file on the consumer, the sources of credit information, and the recipients of consumer reports on the consumer in certain stated periods.
  • Amending Massachusetts’ data breach statute by requiring companies who experience a covered data breach to include in their notice to the attorney general, the Massachusetts director of consumer affairs and business regulation, and consumer reporting or state agencies, if any,  (i) the nature of the breach of security or unauthorized acquisition or use; (ii) the number of Massachusetts residents affected by such incident at the time of notification; (iii) the name and address of the company or agency that experienced the breach of security; (iv) name and title of the company or agency reporting the breach of security, and their relationship to the company or agency that experienced the breach of security; (v) the type of company or agency reporting the breach of security; (vi) the person responsible for the breach of security, if known; (vii) the type of personal information compromised, including, but not limited to, social security number, driver’s license number, financial account number, credit or debit card number or other data; (viii) whether the company or agency maintains a written information security program (“WISP”); and (ix) any steps the company or agency has taken or plans to take relating to the incident, including updating the written information security program. The obligation to report whether the company has a WISP is significant because Massachusetts’ regulations require covered entities to have WISP (201 CMR 17.00). 
  • Requiring the notice to the Massachusetts resident to include (i) the resident’s right to obtain a police report; (ii) how a resident may request a security freeze at no cost and the necessary information to be provided when requesting the security freeze; (iii) mitigation services to be provided; and (iv) all information necessary for the resident to enroll in credit monitoring and to place a credit freeze on his or her consumer credit report if the breach involved social security numbers.  In addition, the notice must identify the “parent or affiliated” corporations of the entity that experienced the breach.   The statute retains Massachusetts unique prohibition on the notice including the nature of the breach of security or unauthorized acquisition or use, or the number of residents affected by said breach of security or unauthorized access or use.
  • Amending the data incident statute to require a company who experienced a breach of security involving (or reasonably believed to have involved) social security numbers to provide through a third party no cost credit monitoring for a period of 18 months (42 months if a CRA experienced the data breach) and to file a report with the attorney general and the director of consumer affairs and business regulation certifying their credit monitoring services comply with the statute.
  • Making clear that lack of knowledge of the total number of residents affected by the breach is not an acceptable reason for delaying notice.
  • Requiring that a sample of the breach notice be sent to the attorney general and the office of consumer affairs and business regulation. The sample notice will be posted by the office of consumer affairs and business on its website.

The amendments were effective April 10, 2019

Utah 

Although not a data breach law, this Utah legislation is notable.  On March 27, 2019, Utah’s governor signed into law the Electronic Information or Data Privacy Act which is the first bill to protect electronic information that individuals have shared with certain third parties.   The bill restricts law enforcement’s ability to obtain certain types of electronic information of a Utah resident in situations where a warrant is not required, including location information, stored data, or transmitted data of an electronic device, and data stored with a “remote computing service provider.”

In situations where a warrant was issued to collect certain types of electronic information or data, the bill requires that law enforcement give notice to the owner of the of the electronic device or electronic information or data specified in the warrant within 14 days that a warrant was applied for and granted, the nature of the warrant issued, and how long the agency may collect data. Law enforcement may request that a court extend the notice requirement for thirty days if there exists reasonable cause to believe the notification may endanger the security of an individual or affect judicial process. Upon expiration of the original extension, under limited circumstances, the court may approve an additional sixty day extension upon request by law enforcement. The agency must also notify the data owner of the alleged offense and the identity of the law enforcement agency and the judge who issued the warrant. However, a court may grant permission to delay the notification if certain conditions are met.

The bill was expected to take effect in May 2019.

Arkansas

On April 15, 2019, Arkansas’ governor signed into law an act expanding the scope of personal information, amending the Personal Information Protection Act as it relates to biometric data generated by automatic measurements of an individual’s biological characteristics. These characteristics include fingerprints, faceprint, retina or iris scan, hand geometry, voiceprint analysis, deoxyribonucleic acid, or any other unique biologically characteristics of an individual if those characteristics can be used to uniquely authenticate an individual’s identity when accessing a system or account.

Additionally, the bill enacts notification requirements following a data breach. It requires that a security breach be disclosed to the Arkansas attorney general when the breach affects 1,000 or more individuals. Notice must be given to the attorney general when sent to the individuals or within 45 days of determination that the likelihood of harm from the data breach is reasonable, whichever comes first.  The law requires the person or business to retain a report concerning the data breach for five years and also requires the person or company to submit a copy of the written report to the attorney general within 30 days of the attorney general’s request.

The law takes effect July 23, 2019.

Maryland

On April 30, 2019, Maryland’s governor signed into law an amendment to the state’s data breach notification law Md. COMMERCIAL LAW Code Ann. § 14-35-01 et seq. The amendment expands the obligations of a business that owns, licenses or maintains computerized data including personal information of a Maryland resident after becoming aware of a data breach. The bill requires that such businesses conduct a good faith investigation to determine the likelihood that personal information has been or will be misused as a result of the data breach. Businesses that incur a breach, but do not own or license the data, can’t charge the owner or licensee for providing information needed to give notice to impacted individuals under the law.  The amendment also requires notification to affected individuals based on the risk of harm.

In addition, the amendments prohibit data collectors from using information relative to the breach of security for purposes beyond providing notification, information sharing with national information security organizations created for such purpose, or protecting or securing personal information in the event of a data breach.

The law takes effect on October 1, 2019.

Washington

On May 7, 2019, Washington’s governor signed into law a bill (HB 1071) strengthening its data breach notification laws (R.C.W. chapters 19.255 and 42.56). The bill expands the definition of personal information to include username or email address in combination with a password or security questions and answers and in the event of breach involving such information, the breach notice must inform the consumer to promptly change his or her password or security question and answer, or to take other appropriate steps to protect the online accounts using the same password and email or security question/answer.  Further, the notice cannot be to the compromised email account.  Additionally, the expanded definition includes the following when combined with an individual’s name: (i) full birth date; (ii) private key unique to the individual used to authenticate or sign electronic records; (iii) student, military, or password identification number; (iv) health insurance policy or identification number; (v) any medical history information, mental or physical condition, or healthcare professional’s medical diagnosis or treatment of the individual; or (vi) biometric data used to identify a specific individual. If not encrypted at the time of loss, then these elements do not have to be combined with the consumer’s name to meet the threshold of a data breach if the data element or combination of data elements would still enable a person to commit identity theft against the individual.

The bill also reduced the deadline for notification from 45 days to 30 days and requires that the notice also include the time frame of exposure (including the date of the breach and the date of discovery of the breach).  The bill contains new requirements for notice to the Washington attorney general.

The amendments take effect on March 1, 2020.

New Jersey

On May 10, 2019, New Jersey’s governor signed into law amendments to New Jersey’s data breach notification law (N.J. Stat. § 56:8-161 et seq.).   The amendments expand the definition of personal information to include online account information. Under the new law, a breach notification is necessary whenever an individual’s “user name, email address, or any other account holder identifying information, in combination with any password or security question and answer” is breached.

The new law also permits email notification in instances when a username or password are disclosed in a data breach, but like Washington, notice to a compromised email address is prohibited.   

The law takes effect on September 1, 2019.

Oregon

On May 24, 2019, Oregon’s governor signed into law Senate Bill 684, which amends the Oregon Consumer Identity Theft Protection Act (“OCITPA”) by increasing the breach notification requirements applicable to third party vendors. Previously, OCITPA only applied to entities (e.g., person that owned or licensed personal information in the course of that person’s business, vocation, occupation or volunteer activities). With the amendments, the law also encompasses “vendors,” defined as any person with which a previously covered entity contracts to maintain, store, process or otherwise access personal information.

Vendors also are required to notify the Oregon attorney general of any breach of security involving the personal information of 250 or more Oregon residents or if the vendor cannot determine the number of consumers.  The notice must be given within 45 days of discovering the breach. The vendor must also notify the covered entity with which the vendor has contracted no later than 10 days after discovering the breach.  

Furthermore, the amendments expand the definition of “Personal Information” covered by OCITPA to consist of a user name or other means of identifying a consumer for the purpose of permitting access to the customer’s account, together with another authentication method or identification.

This law takes effect January 1, 2020.

Illinois

On May 27, 2019, Illinois passed an amendment to the Personal Information Protection Act, 815 ILCS 530/1 et seq. (“PIPA”).  The amendment expands the obligations of data collector (broadly defined as including any entity that, for any purpose, handles, collects, disseminates, or otherwise deals with nonpublic personal information)  during a data breach.  The amendment requires that data collectors notify all affected Illinois residents following a data breach. Notice to the Illinois attorney general is required if the breach affects more than 500 residents of Illinois.

The notice to the attorney general must provide a description of the breach, the number of residents affected, and the steps taken related to the breach.  The attorney general may also publish the name of the data collector, the types of personal information compromised and further relevant information that will help to notify residents in a timely manner.

Nevada

On May 29, 2019, Nevada’s governor signed into law Senate Bill 220, which bans the operator of a website or online service from selling certain collected consumer information in Nevada if directed by the consumer. The law provides consumers who reside in Nevada with the ability to opt out of sales of their personal data. Consumers must submit verified requests to a designated request address established by the operator, directing the operator not to make a sale of any covered information collected about the consumer. The operator must respond within 60 days of receipt and may not extend the response by more than 30 days. 

The Nevada attorney general is responsible for enforcement and may seek a temporary or permanent injunction or a civil penalty of no more than $5,000 per violation.

This law takes effect on October 1, 2019.

New York

On June 5, 2019, the New York Senate passed the Stop Hacks and Improve Electronic Data Security Act (SHIELD Act). The bill increases the scope of information subject to current data breach notification laws to include biometric information, email addresses and their corresponding passwords or security questions and answers, and protected health information as defined under HIPAA.

The bill expands the definition of data breach to include unauthorized access to private information as defined in the law and it applies the notification requirement to any person or entity with private information of a New York resident, not just to those that conduct business in New York State.

The bill also updates the notification procedures companies and state entities must follow when there has been a breach of private information.

The law will take effect 90 days after being signed by the governor.

Maine

On June 6, 2019, Maine’s governor signed into law the Act to Protect the Privacy of Online Consumer Information. The bill prohibits broadband Internet providers (ISPs) from using, disclosing, selling, or permitting access to consumer personal information without (i) the consumers’ consent or (ii) meeting another exception (such as billing, advertising to the customer, complying with a lawful court order, or providing geolocation data in certain emergencies). The law bars ISPs in Maine from refusing to serve a customer, penalizing them, or offering them a discount in order to force the consumer into allowing the ISP to sell their data.  The law also requires ISPs to take reasonable security measures to protect the customer personal information from unauthorized use, disclosure or access and to provide notice to each customer (at the point of sale and on the provider’s website) of the customer’s rights and the ISP’s obligations under the law.  The law is observed to be the strongest privacy bill yet in the US because it mandates explicit consent.

The law takes effect on July 1, 2020.

Texas

On June 14, 2019, Texas’ governor signed into law HB4390 which updates the Texas Identity Theft Enforcement and Protection Act. The bill updates Texas’ breach notification requirements by further defining the timeline to disclose a breach and requiring disclosure of certain information to the Texas attorney general for breaches affecting at least 250 Texas residents.  The data owner or licensor must give notice to individuals whose information was or is reasonably believed to be acquired by an unauthorized person without unreasonable delay and no later than the 60th day after the data owner or licensor determines that the breach occurred.  Likewise, when notice is required to the attorney general, it must be given no later than the 60th day after determination that the breach occurred.   Notice to the attorney general must include (i) a detailed description of the nature and circumstances of the breach or use of sensitive personal information; (ii) the number of residents in Texas affected at the time of the notice; (iii) the measures taken regarding the breach; (4) the measures that the owner/licensor intends to take regarding the breach after notification; and whether law enforcement is investigating the breach. 

The bill also forms the Texas Privacy Protection Advisory Council which is to be selected by November 2019 and will meet on a consistent basis until it reports its findings and recommendations to the Texas Legislature on or before September 1, 2020. These recommendations will be used to form the basis for consumer privacy legislation when the Texas Legislature reconvenes in January 2021.

The amendments are effective January 1, 2020.

What didn’t make the cut this year?  Notably for many of our readers, Washington’s expansive privacy law  and the amendments to the North Carolina Identity Theft Act.  What are we keeping our eye on?  Definitely the amendments to the California Consumer Privacy Act making their way through the California legislature.  We expect the second half of 2019 to be as interesting as the first half.

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