Bill Text: NY S05601 | 2017-2018 | General Assembly | Amended
Bill Title: Relates to notification of a security breach; includes credit and debit card; increases civil penalties.
Spectrum: Slight Partisan Bill (Democrat 6-3)
Status: (Introduced - Dead) 2018-02-01 - PRINT NUMBER 5601A [S05601 Detail]
Download: New_York-2017-S05601-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 5601--A 2017-2018 Regular Sessions IN SENATE April 19, 2017 ___________ Introduced by Sens. CARLUCCI, AKSHAR, ALCANTARA, GOLDEN, HAMILTON, HELM- ING, KAMINSKY, PERALTA, SAVINO -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection -- recommitted to the Committee on Consumer Protection in accordance with Senate Rule 6, sec. 8 -- 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, subdivisions 1, 2, 5, 6, 7 and 9 as added by 3 chapter 442 of the laws of 2005, paragraph (c) of subdivision 1, para- 4 graph (a) of subdivision 6 and subdivision 8 as amended by chapter 491 5 of the laws of 2005 and paragraph (a) of subdivision 8 as amended by 6 section 6 of part N of chapter 55 of the laws of 2013, are amended and a 7 new subdivision 5-a is added 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] EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD10986-02-8S. 5601--A 2 1 (3) account number, credit or debit card number, in combination with 2 any required security code, access code, or password that would permit 3 access to an individual's financial account; or 4 (4) biometric information, meaning data generated by automatic meas- 5 urements of an individual's physical characteristics, which are used by 6 the owner or licensee to authenticate the individual's identity; 7 (ii) a user name or e-mail address in combination with a password or 8 security question and answer that would permit access to an online 9 account; or 10 (iii) any unsecured protected health information held by a "covered 11 entity" as defined in the health insurance portability and accountabil- 12 ity act of 1996 (45 C.F.R. pts. 160, 162, 164), as amended from time to 13 time. 14 "Private information" does not include publicly available information 15 which is lawfully made available to the general public from federal, 16 state, or local government records. 17 (c) "Breach of the security of the system" shall mean unauthorized 18 acquisition or acquisition without valid authorization of computerized 19 data that compromises the security, confidentiality, or integrity of 20 [personal] private information maintained by a business. Good faith 21 acquisition of [personal] private information by an employee or agent of 22 the business for the purposes of the business is not a breach of the 23 security of the system, provided that the private information is not 24 used or subject to unauthorized disclosure. 25 In determining whether information has been acquired, or is reasonably 26 believed to have been acquired, by an unauthorized person or a person 27 without valid authorization, such business may consider the following 28 factors, among others: 29 (1) indications that the information is in the physical possession and 30 control of a person without valid authorization or by an unauthorized 31 person, such as a lost or stolen computer or other device containing 32 information; or 33 (2) indications that the information has been downloaded or copied; or 34 (3) indications that the information was used by a person without 35 valid authorization or an unauthorized person, such as fraudulent 36 accounts opened or instances of identity theft reported. 37 (d) "Consumer reporting agency" shall mean any person which, for mone- 38 tary fees, dues, or on a cooperative nonprofit basis, regularly engages 39 in whole or in part in the practice of assembling or evaluating consumer 40 credit information or other information on consumers for the purpose of 41 furnishing consumer reports to third parties, and which uses any means 42 or facility of interstate commerce for the purpose of preparing or 43 furnishing consumer reports. A list of consumer reporting agencies shall 44 be compiled by the state attorney general and [furnished upon request to45any person or business required to make a notification under subdivision46two of this section] publicly posted on its website. 47 (e) "Credit card" shall mean any card or other credit device issued by 48 a financial institution to a consumer for the purpose of providing 49 money, property, labor or services on credit. 50 (f) "Debit card" shall mean any card or other device issued by a 51 financial institution to a consumer for use in initiating an electronic 52 fund transfer from the account of the consumer at such financial insti- 53 tution, for the purpose of transferring money between accounts or 54 obtaining money, property, labor, or services. 55 2. Any person or business which conducts business in New York state, 56 and which owns or licenses computerized data which includes privateS. 5601--A 3 1 information shall disclose any breach of the security of the system 2 following discovery or notification of the breach in the security of the 3 system to any resident of New York state whose private information was, 4 or is reasonably believed to have been, acquired by a person without 5 valid authorization or by an unauthorized person. The disclosure shall 6 be made in the most expedient time possible and without unreasonable 7 delay, consistent with the legitimate needs of law enforcement, as 8 provided in subdivision four of this section, or any measures necessary 9 to determine the scope of the breach and restore the [reasonable] integ- 10 rity of the system. 11 5. The notice required by this section shall be directly provided to 12 the affected persons by one of the following methods: 13 (a) written notice; 14 (b) electronic notice, provided that the person to whom notice is 15 required has expressly consented to receiving said notice in electronic 16 form and a log of each such notification is kept by the person or busi- 17 ness who notifies affected persons in such form; provided further, 18 however, that in no case shall any person or business require a person 19 to consent to accepting said notice in said form as a condition of 20 establishing any business relationship or engaging in any transaction. 21 (c) telephone notification provided that a log of each such notifica- 22 tion is kept by the person or business who notifies affected persons; or 23 (d) substitute notice, if a business demonstrates to the state attor- 24 ney general that the cost of providing notice would exceed two hundred 25 fifty thousand dollars, or that the affected class of subject persons to 26 be notified exceeds five hundred thousand, or such business does not 27 have sufficient contact information. Substitute notice shall consist of 28 all of the following: 29 (1) e-mail notice when such business has an e-mail address for the 30 subject persons, provided the breached information does not include an 31 e-mail address in combination with a password or security question and 32 answer that would permit access to the online account, in which case, 33 the person or business shall not comply with this section by providing 34 notice to that e-mail account, but shall instead comply with this 35 section by clear and conspicuous notice delivered to the consumer online 36 when the consumer is connected to the online account from an internet 37 protocol address or from an online location which the person or business 38 knows the consumer customarily accesses the online account; 39 (2) conspicuous posting of the notice on such business's web site 40 page, if such business maintains one; and 41 (3) notification to major statewide media. 42 5-a. Any credit or debit card issuer that issues a new credit or debit 43 card as a result of a breach of the security of the system pursuant to 44 paragraph (c) of subdivision one of this section, shall provide the 45 consumer notice that the issuance of the replacement credit or debit 46 card is due to a potential compromise of the prior card absent any 47 evidence of actual or potential unauthorized use of such credit or debit 48 card or other circumstances precipitating the issuance of a replacement 49 card. 50 6. (a) whenever the attorney general shall believe from evidence 51 satisfactory to him that there is a violation of this article he may 52 bring an action in the name and on behalf of the people of the state of 53 New York, in a court of justice having jurisdiction to issue an injunc- 54 tion, to enjoin and restrain the continuation of such violation. In 55 such action, preliminary relief may be granted under article sixty-three 56 of the civil practice law and rules. In such action the court may awardS. 5601--A 4 1 damages for actual costs or losses incurred by a person entitled to 2 notice pursuant to this article, if notification was not provided to 3 such person pursuant to this article, including consequential financial 4 losses. Whenever the court shall determine in such action that a person 5 or business violated this article knowingly or recklessly, the court may 6 impose a civil penalty of the greater of five thousand dollars or up to 7 [ten] twenty dollars per instance of failed notification, provided that 8 the latter amount shall not exceed [one] two hundred fifty thousand 9 dollars. 10 (b) the remedies provided by this section shall be in addition to any 11 other lawful remedy available. 12 (c) no action may be brought under the provisions of this section 13 unless such action is commenced within two years [immediately] after 14 either the date [of the act complained of or the date of discovery of15such act] on which the attorney general became aware of the violation, 16 or the date of notice sent pursuant to paragraph (a) of subdivision 17 eight of this section, whichever occurs first. 18 7. Regardless of the method by which notice is provided, such notice 19 shall include contact information for the person or business making the 20 notification, the telephone numbers and websites of the relevant state 21 and federal agencies that provide information regarding security breach 22 response and identity theft prevention and protection information, and a 23 description of the categories of information that were, or are reason- 24 ably believed to have been, acquired by a person without valid authori- 25 zation or by an unauthorized person, including specification of which of 26 the elements of personal information and private information were, or 27 are reasonably believed to have been, so acquired. 28 8. (a) In the event that any New York residents are to be notified, 29 the person or business shall notify the state attorney general, the 30 department of state and the [division of state police] office of infor- 31 mation technology services as to the timing, content and distribution of 32 the notices [and], approximate number of affected persons and provide a 33 copy of the template of the notice sent to affected persons. Such 34 notice shall be made without delaying notice to affected New York resi- 35 dents. 36 (b) In the event that more than five thousand New York residents are 37 to be notified at one time, the person or business shall also notify 38 consumer reporting agencies as to the timing, content and distribution 39 of the notices and approximate number of affected persons. Such notice 40 shall be made without delaying notice to affected New York residents. 41 9. The department of state shall receive complaints pursuant to 42 section ninety-four-a of the executive law relating to any breach of the 43 security of the system, make referrals as appropriate and in cooperation 44 with the state attorney general and the office of information technology 45 services develop, regularly update and make publicly available informa- 46 tion relating to how to respond to a breach of the security of the 47 system and best practices for how to prevent a breach of the security of 48 the system. 49 10. The provisions of this section shall be exclusive and shall 50 preempt any provisions of local law, ordinance or code, and no locality 51 shall impose requirements that are inconsistent with or more restrictive 52 than those set forth in this section. 53 § 2. Paragraphs (a) and (d) of subdivision 1 and subdivisions 2, 6, 7 54 and 8 of section 208 of the state technology law, paragraphs (a) and (d) 55 of subdivision 1 and subdivision 8 as added by chapter 442 of the laws 56 of 2005, subdivision 2 and paragraph (a) of subdivision 7 as amended byS. 5601--A 5 1 section 5 of part N of chapter 55 of the laws of 2013 and subdivisions 6 2 and 7 as amended by chapter 491 of the laws of 2005, are amended to read 3 as follows: 4 (a) "Private information" shall mean: (i) personal information in 5 combination with any one or more of the following data elements, when 6 either the personal information or the data element is not encrypted or 7 encrypted with an encryption key that has also been acquired: 8 (1) social security number; 9 (2) driver's license number or non-driver identification card number; 10 [or] 11 (3) account number, credit or debit card number, in combination with 12 any required security code, access code, or password which would permit 13 access to an individual's financial account; or 14 (4) biometric information, meaning data generated by automatic meas- 15 urements of an individual's physical characteristics, which are used by 16 the owner or licensee to authenticate the individual's identity; 17 (ii) a user name or e-mail address in combination with a password or 18 security question and answer that would permit access to an online 19 account; or 20 (iii) any unsecured protected health information held by a covered 21 entity as defined in the health insurance portability and accountability 22 act of 1996 (45 C.F.R. pts. 160, 162, 164), as amended from time to 23 time. 24 "Private information" does not include publicly available information 25 that is lawfully made available to the general public from federal, 26 state, or local government records. 27 (d) "Consumer reporting agency" shall mean any person which, for mone- 28 tary fees, dues, or on a cooperative nonprofit basis, regularly engages 29 in whole or in part in the practice of assembling or evaluating consumer 30 credit information or other information on consumers for the purpose of 31 furnishing consumer reports to third parties, and which uses any means 32 or facility of interstate commerce for the purpose of preparing or 33 furnishing consumer reports. A list of consumer reporting agencies shall 34 be compiled by the state attorney general and [furnished upon request to35state entities required to make a notification under subdivision two of36this section] publicly posted on its website. 37 2. Any state entity that owns or licenses computerized data that 38 includes private information shall disclose any breach of the security 39 of the system following discovery or notification of the breach in the 40 security of the system to any resident of New York state whose private 41 information was, or is reasonably believed to have been, acquired by a 42 person without valid authorization or an unauthorized person. The 43 disclosure shall be made in the most expedient time possible and without 44 unreasonable delay, consistent with the legitimate needs of law enforce- 45 ment, as provided in subdivision four of this section, or any measures 46 necessary to determine the scope of the breach and restore the [reason-47able] integrity of the data system. The state entity shall consult with 48 the state office of information technology services to determine the 49 scope of the breach and restoration measures. Within ninety days of the 50 notice of the breach, the office of information technology services 51 shall deliver a report on the scope of the breach and recommendations to 52 restore and improve the security of the system to the state entity. 53 6. Regardless of the method by which notice is provided, such notice 54 shall include contact information for the state entity making the 55 notification, the telephone numbers and the websites for the relevant 56 state and federal agencies that provide information regarding securityS. 5601--A 6 1 breach response and identity theft prevention and protection information 2 and a description of the categories of information that were, or are 3 reasonably believed to have been, acquired by a person without valid 4 authorization or an unauthorized person, including specification of 5 which of the elements of personal information and private information 6 were, or are reasonably believed to have been, so acquired. 7 7. (a) In the event that any New York residents are to be notified, 8 the state entity shall notify the state attorney general, the department 9 of state and the state office of information technology services as to 10 the timing, content and distribution of the notices and approximate 11 number of affected persons and provide a copy of the template of the 12 notice sent to affected persons. Such notice shall be made without 13 delaying notice to affected New York residents. 14 (b) In the event that more than five thousand New York residents are 15 to be notified at one time, the state entity shall also notify consumer 16 reporting agencies as to the timing, content and distribution of the 17 notices and approximate number of affected persons. Such notice shall be 18 made without delaying notice to affected New York residents. 19 8. The state office of information technology services shall develop, 20 update and provide regular training to all state entities relating to 21 best practices for the prevention of a breach of the security of the 22 system. 23 9. Any entity listed in subparagraph two of paragraph (c) of subdivi- 24 sion one of this section shall adopt a notification policy no more than 25 one hundred twenty days after the effective date of this section. Such 26 entity may develop a notification policy which is consistent with this 27 section or alternatively shall adopt a local law which is consistent 28 with this section. 29 § 3. This act shall take effect on the first of January next succeed- 30 ing the date on which it shall have become a law.
