Bill Text: NY S05575 | 2019-2020 | General Assembly | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relates to notification of a security breach; includes credit and debit cards; increases civil penalties.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2019-07-25 - SIGNED CHAP.117 [S05575 Detail]
Download: New_York-2019-S05575-Amended.html
Bill Title: Relates to notification of a security breach; includes credit and debit cards; increases civil penalties.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2019-07-25 - SIGNED CHAP.117 [S05575 Detail]
Download: New_York-2019-S05575-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 5575--A 2019-2020 Regular Sessions IN SENATE May 7, 2019 ___________ Introduced by Sens. THOMAS, CARLUCCI -- (at request of the Attorney General) -- read twice and ordered printed, and when printed to be committed to the Committee on Internet and Technology -- committee discharged and said bill committed to the Committee on Consumer Protection -- 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. This act shall be known and may be cited as the "Stop Hacks 2 and Improve Electronic Data Security Act (SHIELD Act)". 3 § 2. The article heading of article 39-F of the general business law, 4 as added by chapter 442 of the laws of 2005, is amended to read as 5 follows: 6 NOTIFICATION OF UNAUTHORIZED ACQUISITION OF PRIVATE 7 INFORMATION; DATA SECURITY PROTECTIONS 8 § 3. Subdivisions 1, 2, 3, 5, 6, 7 and 8 of section 899-aa of the 9 general business law, subdivisions 1, 2, 3, 5, 6 and 7 as added by chap- 10 ter 442 of the laws of 2005, paragraph (c) of subdivision 1, paragraph 11 (a) of subdivision 6 and subdivision 8 as amended by chapter 491 of the 12 laws of 2005 and paragraph (a) of subdivision 8 as amended by section 6 13 of part N of chapter 55 of the laws of 2013, are amended to read as 14 follows: 15 1. As used in this section, the following terms shall have the follow- 16 ing meanings: 17 (a) "Personal information" shall mean any information concerning a 18 natural person which, because of name, number, personal mark, or other 19 identifier, can be used to identify such natural person; 20 (b) "Private information" shall mean either: (i) personal information 21 consisting of any information in combination with any one or more of the EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD05343-03-9S. 5575--A 2 1 following data elements, when either the data element or the combination 2 of personal information [or] plus the data element is not encrypted, or 3 is encrypted with an encryption key that has also been accessed or 4 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 or other informa- 10 tion that would permit access to an individual's financial account; 11 (4) account number, credit or debit card number, if circumstances 12 exist wherein such number could be used to access an individual's finan- 13 cial account without additional identifying information, security code, 14 access code, or password; or 15 (5) biometric information, meaning data generated by electronic meas- 16 urements of an individual's unique physical characteristics, such as a 17 fingerprint, voice print, retina or iris image, or other unique physical 18 representation or digital representation of biometric data which are 19 used to authenticate or ascertain the individual's identity; 20 (ii) a user name or e-mail address in combination with a password or 21 security question and answer that would permit access to an online 22 account; or 23 (iii) any unsecured protected health information held by a "covered 24 entity" as defined in the health insurance portability and accountabil- 25 ity act of 1996 (45 C.F.R. pts. 160, 162, 164), as amended from time to 26 time. 27 "Private information" does not include publicly available information 28 which is lawfully made available to the general public from federal, 29 state, or local government records. 30 (c) "Breach of the security of the system" shall mean unauthorized 31 access to or acquisition of, or access to or acquisition without valid 32 authorization, of computerized data that compromises the security, 33 confidentiality, or integrity of [personal] private information main- 34 tained by a business. Good faith access to, or acquisition of 35 [personal], private information by an employee or agent of the business 36 for the purposes of the business is not a breach of the security of the 37 system, provided that the private information is not used or subject to 38 unauthorized disclosure. 39 In determining whether information has been accessed, or is reasonably 40 believed to have been accessed, by an unauthorized person or a person 41 without valid authorization, such business may consider, among other 42 factors, indications that the information was viewed, communicated with, 43 used, or altered by a person without valid authorization or by an unau- 44 thorized person. 45 In determining whether information has been acquired, or is reasonably 46 believed to have been acquired, by an unauthorized person or a person 47 without valid authorization, such business may consider the following 48 factors, among others: 49 (1) indications that the information is in the physical possession and 50 control of an unauthorized person, such as a lost or stolen computer or 51 other device containing information; or 52 (2) indications that the information has been downloaded or copied; or 53 (3) indications that the information was used by an unauthorized 54 person, such as fraudulent accounts opened or instances of identity 55 theft reported.S. 5575--A 3 1 (d) "Consumer reporting agency" shall mean any person which, for mone- 2 tary fees, dues, or on a cooperative nonprofit basis, regularly engages 3 in whole or in part in the practice of assembling or evaluating consumer 4 credit information or other information on consumers for the purpose of 5 furnishing consumer reports to third parties, and which uses any means 6 or facility of interstate commerce for the purpose of preparing or 7 furnishing consumer reports. A list of consumer reporting agencies shall 8 be compiled by the state attorney general and furnished upon request to 9 any person or business required to make a notification under subdivision 10 two of this section. 11 2. Any person or business which [conducts business in New York state,12and which] owns or licenses computerized data which includes private 13 information shall disclose any breach of the security of the system 14 following discovery or notification of the breach in the security of the 15 system to any resident of New York state whose private information was, 16 or is reasonably believed to have been, accessed or acquired by a person 17 without valid authorization. The disclosure shall be made in the most 18 expedient time possible and without unreasonable delay, consistent with 19 the legitimate needs of law enforcement, as provided in subdivision four 20 of this section, or any measures necessary to determine the scope of the 21 breach and restore the [reasonable] integrity of the system. 22 (a) Notice to affected persons under this section is not required if 23 the exposure of private information was an inadvertent disclosure by 24 persons authorized to access private information, and the person or 25 business reasonably determines such exposure will not likely result in 26 misuse of such information, or financial harm to the affected persons or 27 emotional harm in the case of unknown disclosure of online credentials 28 as found in subparagraph (ii) of paragraph (b) of subdivision one of 29 this section. Such a determination must be documented in writing and 30 maintained for at least five years. If the incident affects over five 31 hundred residents of New York, the person or business shall provide the 32 written determination to the state attorney general within ten days 33 after the determination. 34 (b) If notice of the breach of the security of the system is made to 35 affected persons pursuant to the breach notification requirements under 36 any of the following laws, nothing in this section shall require any 37 additional notice to those affected persons, but notice still shall be 38 provided to the state attorney general, the department of state and the 39 division of state police pursuant to paragraph (a) of subdivision eight 40 of this section and to consumer reporting agencies pursuant to paragraph 41 (b) of subdivision eight of this section: 42 (i) regulations promulgated pursuant to Title V of the federal Gramm- 43 Leach-Bliley Act (15 U.S.C. 6801 to 6809), as amended from time to time; 44 (ii) regulations implementing the Health Insurance Portability and 45 Accountability Act of 1996 (45 C.F.R. parts 160 and 164), as amended 46 from time to time, and the Health Information Technology for Economic 47 and Clinical Health Act, as amended from time to time; 48 (iii) part five hundred of title twenty-three of the official compila- 49 tion of codes, rules and regulations of the state of New York, as 50 amended from time to time; or 51 (iv) any other data security rules and regulations of, and the stat- 52 utes administered by, any official department, division, commission or 53 agency of the federal or New York state government as such rules, regu- 54 lations or statutes are interpreted by such department, division, 55 commission or agency or by the federal or New York state courts.S. 5575--A 4 1 3. Any person or business which maintains computerized data which 2 includes private information which such person or business does not own 3 shall notify the owner or licensee of the information of any breach of 4 the security of the system immediately following discovery, if the 5 private information was, or is reasonably believed to have been, 6 accessed or acquired by a person without valid authorization. 7 5. The notice required by this section shall be directly provided to 8 the affected persons by one of the following methods: 9 (a) written notice; 10 (b) electronic notice, provided that the person to whom notice is 11 required has expressly consented to receiving said notice in electronic 12 form and a log of each such notification is kept by the person or busi- 13 ness who notifies affected persons in such form; provided further, 14 however, that in no case shall any person or business require a person 15 to consent to accepting said notice in said form as a condition of 16 establishing any business relationship or engaging in any transaction. 17 (c) telephone notification provided that a log of each such notifica- 18 tion is kept by the person or business who notifies affected persons; or 19 (d) substitute notice, if a business demonstrates to the state attor- 20 ney general that the cost of providing notice would exceed two hundred 21 fifty thousand dollars, or that the affected class of subject persons to 22 be notified exceeds five hundred thousand, or such business does not 23 have sufficient contact information. Substitute notice shall consist of 24 all of the following: 25 (1) e-mail notice when such business has an e-mail address for the 26 subject persons, except if the breached information includes an e-mail 27 address in combination with a password or security question and answer 28 that would permit access to the online account, in which case the person 29 or business shall instead provide clear and conspicuous notice delivered 30 to the consumer online when the consumer is connected to the online 31 account from an internet protocol address or from an online location 32 which the person or business knows the consumer customarily uses to 33 access the online account; 34 (2) conspicuous posting of the notice on such business's web site 35 page, if such business maintains one; and 36 (3) notification to major statewide media. 37 6. (a) whenever the attorney general shall believe from evidence 38 satisfactory to him or her that there is a violation of this article he 39 or she may bring an action in the name and on behalf of the people of 40 the state of New York, in a court of justice having jurisdiction to 41 issue an injunction, to enjoin and restrain the continuation of such 42 violation. In such action, preliminary relief may be granted under 43 article sixty-three of the civil practice law and rules. In such action 44 the court may award damages for actual costs or losses incurred by a 45 person entitled to notice pursuant to this article, if notification was 46 not provided to such person pursuant to this article, including conse- 47 quential financial losses. Whenever the court shall determine in such 48 action that a person or business violated this article knowingly or 49 recklessly, the court may impose a civil penalty of the greater of five 50 thousand dollars or up to [ten] twenty dollars per instance of failed 51 notification, provided that the latter amount shall not exceed [one] two 52 hundred fifty thousand dollars. 53 (b) the remedies provided by this section shall be in addition to any 54 other lawful remedy available. 55 (c) no action may be brought under the provisions of this section 56 unless such action is commenced within [two] three years [immediately]S. 5575--A 5 1 after either the date [of the act complained of or the date of discovery2of such act] on which the attorney general became aware of the 3 violation, or the date of notice sent pursuant to paragraph (a) of 4 subdivision eight of this section, whichever occurs first. In no event 5 shall an action be brought after six years from the date of discovery of 6 the breach of private information by the company unless the company took 7 steps to hide the breach. 8 7. Regardless of the method by which notice is provided, such notice 9 shall include contact information for the person or business making the 10 notification, the telephone numbers and websites of the relevant state 11 and federal agencies that provide information regarding security breach 12 response and identity theft prevention and protection information, and a 13 description of the categories of information that were, or are reason- 14 ably believed to have been, accessed or acquired by a person without 15 valid authorization, including specification of which of the elements of 16 personal information and private information were, or are reasonably 17 believed to have been, so accessed or acquired. 18 8. (a) In the event that any New York residents are to be notified, 19 the person or business shall notify the state attorney general, the 20 department of state and the division of state police as to the timing, 21 content and distribution of the notices and approximate number of 22 affected persons and shall provide a copy of the template of the notice 23 sent to affected persons. Such notice shall be made without delaying 24 notice to affected New York residents. 25 (b) In the event that more than five thousand New York residents are 26 to be notified at one time, the person or business shall also notify 27 consumer reporting agencies as to the timing, content and distribution 28 of the notices and approximate number of affected persons. Such notice 29 shall be made without delaying notice to affected New York residents. 30 § 4. The general business law is amended by adding a new section 899- 31 bb to read as follows: 32 § 899-bb. Data security protections. 1. Definitions. (a) "Compliant 33 regulated entity" shall mean any person or business that is subject to, 34 and in compliance with, any of the following data security requirements: 35 (i) regulations promulgated pursuant to Title V of the federal Gramm- 36 Leach-Bliley Act (15 U.S.C. 6801 to 6809), as amended from time to time; 37 (ii) regulations implementing the Health Insurance Portability and 38 Accountability Act of 1996 (45 C.F.R. parts 160 and 164), as amended 39 from time to time, and the Health Information Technology for Economic 40 and Clinical Health Act, as amended from time to time; 41 (iii) part five hundred of title twenty-three of the official compila- 42 tion of codes, rules and regulations of the state of New York, as 43 amended from time to time; or 44 (iv) any other data security rules and regulations of, and the stat- 45 utes administered by, any official department, division, commission or 46 agency of the federal or New York state government as such rules, regu- 47 lations or statutes are interpreted by such department, division, 48 commission or agency or by the federal or New York state courts. 49 (b) "Private information" shall have the same meaning as defined in 50 section eight hundred ninety-nine-aa of this article. 51 (c) "Small business" shall mean any person or business with (i) fewer 52 than fifty employees; (ii) less than three million dollars in gross 53 annual revenue in each of the last three fiscal years; or (iii) less 54 than five million dollars in year-end total assets, calculated in 55 accordance with generally accepted accounting principles.S. 5575--A 6 1 2. Reasonable security requirement. (a) Any person or business that 2 owns or licenses computerized data which includes private information of 3 a resident of New York shall develop, implement and maintain reasonable 4 safeguards to protect the security, confidentiality and integrity of the 5 private information including, but not limited to, disposal of data. 6 (b) A person or business shall be deemed to be in compliance with 7 paragraph (a) of this subdivision if it either: 8 (i) is a compliant regulated entity as defined in subdivision one of 9 this section; or 10 (ii) implements a data security program that includes the following: 11 (A) reasonable administrative safeguards such as the following, in 12 which the person or business: 13 (1) designates one or more employees to coordinate the security 14 program; 15 (2) identifies reasonably foreseeable internal and external risks; 16 (3) assesses the sufficiency of safeguards in place to control the 17 identified risks; 18 (4) trains and manages employees in the security program practices and 19 procedures; 20 (5) selects service providers capable of maintaining appropriate safe- 21 guards, and requires those safeguards by contract; and 22 (6) adjusts the security program in light of business changes or new 23 circumstances; and 24 (B) reasonable technical safeguards such as the following, in which 25 the person or business: 26 (1) assesses risks in network and software design; 27 (2) assesses risks in information processing, transmission and stor- 28 age; 29 (3) detects, prevents and responds to attacks or system failures; and 30 (4) regularly tests and monitors the effectiveness of key controls, 31 systems and procedures; and 32 (C) reasonable physical safeguards such as the following, in which the 33 person or business: 34 (1) assesses risks of information storage and disposal; 35 (2) detects, prevents and responds to intrusions; 36 (3) protects against unauthorized access to or use of private informa- 37 tion during or after the collection, transportation and destruction or 38 disposal of the information; and 39 (4) disposes of private information within a reasonable amount of time 40 after it is no longer needed for business purposes by erasing electronic 41 media so that the information cannot be read or reconstructed. 42 (c) A small business as defined in paragraph (c) of subdivision one of 43 this section complies with subparagraph (ii) of paragraph (b) of subdi- 44 vision two of this section if the small business's security program 45 contains reasonable administrative, technical and physical safeguards 46 that are appropriate for the size and complexity of the small business, 47 the nature and scope of the small business's activities, and the sensi- 48 tivity of the personal information the small business collects from or 49 about consumers. 50 (d) Any person or business that fails to comply with this subdivision 51 shall be deemed to have violated section three hundred forty-nine of 52 this chapter, and the attorney general may bring an action in the name 53 and on behalf of the people of the state of New York to enjoin such 54 violations and to obtain civil penalties under section three hundred 55 fifty-d of this chapter. 56 (e) Nothing in this section shall create a private right of action.S. 5575--A 7 1 § 5. Paragraph (a) of subdivision 1 and subdivisions 2, 3, 6, 7 and 8 2 of section 208 of the state technology law, paragraph (a) of subdivision 3 1 and subdivisions 3 and 8 as added by chapter 442 of the laws of 2005, 4 subdivision 2 and paragraph (a) of subdivision 7 as amended by section 5 5 of part N of chapter 55 of the laws of 2013 and subdivisions 6 and 7 as 6 amended by chapter 491 of the laws of 2005, are amended to read as 7 follows: 8 (a) "Private information" shall mean either: (i) personal information 9 consisting of any information in combination with any one or more of the 10 following data elements, when either the data element or the combination 11 of personal information [or] plus the data element is not encrypted or 12 encrypted with an encryption key that has also been accessed or 13 acquired: 14 (1) social security number; 15 (2) driver's license number or non-driver identification card number; 16 [or] 17 (3) account number, credit or debit card number, in combination with 18 any required security code, access code, [or] password or other informa- 19 tion which would permit access to an individual's financial account; 20 (4) account number, or credit or debit card number, if circumstances 21 exist wherein such number could be used to access to an individual's 22 financial account without additional identifying information, security 23 code, access code, or password; or 24 (5) biometric information, meaning data generated by electronic meas- 25 urements of an individual's unique physical characteristics, such as 26 fingerprint, voice print, or retina or iris image, or other unique phys- 27 ical representation or digital representation which are used to authen- 28 ticate or ascertain the individual's identity; 29 (ii) a user name or e-mail address in combination with a password or 30 security question and answer that would permit access to an online 31 account; or 32 (iii) any unsecured protected health information held by a "covered 33 entity" as defined in the health insurance portability and accountabil- 34 ity act of 1996 (45 C.F.R. pts. 160, 162, 164), as amended from time to 35 time. 36 "Private information" does not include publicly available information 37 that is lawfully made available to the general public from federal, 38 state, or local government records. 39 2. Any state entity that owns or licenses computerized data that 40 includes private information shall disclose any breach of the security 41 of the system following discovery or notification of the breach in the 42 security of the system to any resident of New York state whose private 43 information was, or is reasonably believed to have been, accessed or 44 acquired by a person without valid authorization. The disclosure shall 45 be made in the most expedient time possible and without unreasonable 46 delay, consistent with the legitimate needs of law enforcement, as 47 provided in subdivision four of this section, or any measures necessary 48 to determine the scope of the breach and restore the [reasonable] integ- 49 rity of the data system. The state entity shall consult with the state 50 office of information technology services to determine the scope of the 51 breach and restoration measures. Within ninety days of the notice of the 52 breach, the office of information technology services shall deliver a 53 report on the scope of the breach and recommendations to restore and 54 improve the security of the system to the state entity. 55 (a) Notice to affected persons under this section is not required if 56 the exposure of private information was an inadvertent disclosure byS. 5575--A 8 1 persons authorized to access private information, and the state entity 2 reasonably determines such exposure will not likely result in misuse of 3 such information, or financial or emotional harm to the affected 4 persons. Such a determination must be documented in writing and main- 5 tained for at least five years. If the incident affected over five 6 hundred residents of New York, the state entity shall provide the writ- 7 ten determination to the state attorney general within ten days after 8 the determination. 9 (b) If notice of the breach of the security of the system is made to 10 affected persons pursuant to the breach notification requirements under 11 any of the following laws, nothing in this section shall require any 12 additional notice to those affected persons, but notice still shall be 13 provided to the state attorney general, the department of state and the 14 office of information technology services pursuant to paragraph (a) of 15 subdivision seven of this section and to consumer reporting agencies 16 pursuant to paragraph (b) of subdivision seven of this section: 17 (i) regulations promulgated pursuant to Title V of the federal Gramm- 18 Leach-Bliley Act (15 U.S.C. 6801 to 6809), as amended from time to time; 19 (ii) regulations implementing the Health Insurance Portability and 20 Accountability Act of 1996 (45 C.F.R. parts 160 and 164), as amended 21 from time to time, and the Health Information Technology for Economic 22 and Clinical Health Act, as amended from time to time; 23 (iii) part five hundred of title twenty-three of the official compila- 24 tion of codes, rules and regulations of the state of New York, as 25 amended from time to time; or 26 (iv) any other data security rules and regulations of, and the stat- 27 utes administered by, any official department, division, commission or 28 agency of the federal or New York state government as such rules, regu- 29 lations or statutes are interpreted by such department, division, 30 commission or agency or by the federal or New York state courts. 31 3. Any state entity that maintains computerized data that includes 32 private information which such agency does not own shall notify the 33 owner or licensee of the information of any breach of the security of 34 the system immediately following discovery, if the private information 35 was, or is reasonably believed to have been, acquired by a person with- 36 out valid authorization. 37 6. Regardless of the method by which notice is provided, such notice 38 shall include contact information for the state entity making the 39 notification, the telephone numbers and websites of the relevant state 40 and federal agencies that provide information regarding security breach 41 response and identity theft prevention and protection information and a 42 description of the categories of information that were, or are reason- 43 ably believed to have been, accessed or acquired by a person without 44 valid authorization, including specification of which of the elements of 45 personal information and private information were, or are reasonably 46 believed to have been, so accessed or acquired. 47 7. (a) In the event that any New York residents are to be notified, 48 the state entity shall notify the state attorney general, the department 49 of state and the state office of information technology services as to 50 the timing, content and distribution of the notices and approximate 51 number of affected persons and provide a copy of the template of the 52 notice sent to affected persons. Such notice shall be made without 53 delaying notice to affected New York residents. 54 (b) In the event that more than five thousand New York residents are 55 to be notified at one time, the state entity shall also notify consumer 56 reporting agencies as to the timing, content and distribution of theS. 5575--A 9 1 notices and approximate number of affected persons. Such notice shall be 2 made without delaying notice to affected New York residents. 3 8. The state office of information technology services shall develop, 4 update and provide regular training to all state entities relating to 5 best practices for the prevention of a breach of the security of the 6 system. 7 9. Any entity listed in subparagraph two of paragraph (c) of subdivi- 8 sion one of this section shall adopt a notification policy no more than 9 one hundred twenty days after the effective date of this section. Such 10 entity may develop a notification policy which is consistent with this 11 section or alternatively shall adopt a local law which is consistent 12 with this section. 13 § 6. This act shall take effect on the ninetieth day after it shall 14 have become a law; provided, however, that section four of this act 15 shall take effect on the two hundred fortieth day after it shall have 16 become a law.
