S T A T E O F N E W Y O R K
________________________________________________________________________
10475--A
I N A S S E M B L Y
May 27, 2016
___________
Introduced by M. of A. DINOWITZ -- Multi-Sponsored by -- M. of A. HOOP-
ER, SIMON -- read once and referred to the Committee on Consumer
Affairs and Protection -- reported and referred to the Committee on
Codes -- reported and referred to the Committee on Ways and Means --
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:
Section 1. Subdivisions 1, 2, 5, 6, 7, 8 and 9 of section 899-aa of
the general business law, as added by chapter 442 of the laws of 2005,
paragraph (c) of subdivision 1, paragraph (a) of subdivision 6 and
subdivision 8 as amended by chapter 491 of the laws of 2005 and para-
graph (a) of subdivision 8 as amended by section 6 of part N of chapter
55 of the laws of 2013, are amended and a new subdivision 5-a is added
to read as follows:
1. As used in this section, the following terms shall have the follow-
ing meanings:
(a) "Personal information" shall mean any information concerning a
natural person which, because of name, number, personal mark, or other
identifier, can be used to identify such natural person;
(b) "Private information" shall mean EITHER: (I) personal information
consisting of any information in combination with any one or more of the
following data elements, when either the personal information or the
data element is not encrypted, or encrypted with an encryption key that
has also been acquired:
(1) social security number;
(2) driver's license number or non-driver identification card number;
[or]
(3) account number, credit or debit card number, in combination with
any required security code, access code, or password that would permit
access to an individual's financial account; OR
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09470-15-6
A. 10475--A 2
(4) BIOMETRIC INFORMATION, MEANING DATA GENERATED BY AUTOMATIC MEAS-
UREMENTS OF AN INDIVIDUAL'S PHYSICAL CHARACTERISTICS, WHICH ARE USED BY
THE OWNER OR LICENSEE TO AUTHENTICATE THE INDIVIDUAL'S IDENTITY;
(II) A USER NAME OR E-MAIL ADDRESS IN COMBINATION WITH A PASSWORD OR
SECURITY QUESTION AND ANSWER THAT WOULD PERMIT ACCESS TO AN ONLINE
ACCOUNT; OR
(III) ANY UNSECURED PROTECTED HEALTH INFORMATION HELD BY A "COVERED
ENTITY" AS DEFINED IN THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABIL-
ITY ACT OF 1996 (45 C.F.R. PTS. 160, 162, 164), AS AMENDED FROM TIME TO
TIME.
"Private information" does not include publicly available information
which is lawfully made available to the general public from federal,
state, or local government records.
(c) "Breach of the security of the system" shall mean unauthorized
acquisition or acquisition without valid authorization of computerized
data that compromises the security, confidentiality, or integrity of
[personal] PRIVATE information maintained by a business. Good faith
acquisition of [personal] PRIVATE information by an employee or agent of
the business for the purposes of the business is not a breach of the
security of the system, provided that the private information is not
used or subject to unauthorized disclosure.
In determining whether information has been acquired, or is reasonably
believed to have been acquired, by an unauthorized person or a person
without valid authorization, such business may consider the following
factors, among others:
(1) indications that the information is in the physical possession and
control of A PERSON WITHOUT VALID AUTHORIZATION OR BY an unauthorized
person, such as a lost or stolen computer or other device containing
information; or
(2) indications that the information has been downloaded or copied; or
(3) indications that the information was used by A PERSON WITHOUT
VALID AUTHORIZATION OR an unauthorized person, such as fraudulent
accounts opened or instances of identity theft reported.
(d) "Consumer reporting agency" shall mean any person which, for mone-
tary fees, dues, or on a cooperative nonprofit basis, regularly engages
in whole or in part in the practice of assembling or evaluating consumer
credit information or other information on consumers for the purpose of
furnishing consumer reports to third parties, and which uses any means
or facility of interstate commerce for the purpose of preparing or
furnishing consumer reports. A list of consumer reporting agencies shall
be compiled by the state attorney general and [furnished upon request to
any person or business required to make a notification under subdivision
two of this section] PUBLICLY POSTED ON ITS WEBSITE.
(E) "CREDIT CARD" SHALL MEAN ANY CARD OR OTHER CREDIT DEVICE ISSUED BY
A FINANCIAL INSTITUTION TO A CONSUMER FOR THE PURPOSE OF PROVIDING
MONEY, PROPERTY, LABOR OR SERVICES ON CREDIT.
(F) "DEBIT CARD" SHALL MEAN ANY CARD OR OTHER DEVICE ISSUED BY A
FINANCIAL INSTITUTION TO A CONSUMER FOR USE IN INITIATING AN ELECTRONIC
FUND TRANSFER FROM THE ACCOUNT OF THE CONSUMER AT SUCH FINANCIAL INSTI-
TUTION, FOR THE PURPOSE OF TRANSFERRING MONEY BETWEEN ACCOUNTS OR
OBTAINING MONEY, PROPERTY, LABOR, OR SERVICES.
2. Any person or business which conducts business in New York state,
and which owns or licenses computerized data which includes private
information shall disclose any breach of the security of the system
following discovery or notification of the breach in the security of the
system to any resident of New York state whose private information was,
A. 10475--A 3
or is reasonably believed to have been, acquired by a person without
valid authorization OR BY AN UNAUTHORIZED PERSON. The disclosure shall
be made in the most expedient time possible and without unreasonable
delay, consistent with the legitimate needs of law enforcement, as
provided in subdivision four of this section, or any measures necessary
to determine the scope of the breach and restore the [reasonable] integ-
rity of the system.
5. The notice required by this section shall be directly provided to
the affected persons by one of the following methods:
(a) written notice;
(b) electronic notice, provided that the person to whom notice is
required has expressly consented to receiving said notice in electronic
form and a log of each such notification is kept by the person or busi-
ness who notifies affected persons in such form; provided further,
however, that in no case shall any person or business require a person
to consent to accepting said notice in said form as a condition of
establishing any business relationship or engaging in any transaction.
(c) telephone notification provided that a log of each such notifica-
tion is kept by the person or business who notifies affected persons; or
(d) substitute notice, if a business demonstrates to the state attor-
ney general that the cost of providing notice would exceed two hundred
fifty thousand dollars, or that the affected class of subject persons to
be notified exceeds five hundred thousand, or such business does not
have sufficient contact information. Substitute notice shall consist of
all of the following:
(1) e-mail notice when such business has an e-mail address for the
subject persons, PROVIDED THE BREACHED INFORMATION DOES NOT INCLUDE AN
E-MAIL ADDRESS IN COMBINATION WITH A PASSWORD OR SECURITY QUESTION AND
ANSWER THAT WOULD PERMIT ACCESS TO THE ONLINE ACCOUNT, IN WHICH CASE,
THE PERSON OR BUSINESS SHALL NOT COMPLY WITH THIS SECTION BY PROVIDING
NOTICE TO THAT E-MAIL ACCOUNT, BUT SHALL INSTEAD COMPLY WITH THIS
SECTION BY CLEAR AND CONSPICUOUS NOTICE DELIVERED TO THE CONSUMER ONLINE
WHEN THE CONSUMER IS CONNECTED TO THE ONLINE ACCOUNT FROM AN INTERNET
PROTOCOL ADDRESS OR FROM AN ONLINE LOCATION WHICH THE PERSON OR BUSINESS
KNOWS THE CONSUMER CUSTOMARILY ACCESSES THE ONLINE ACCOUNT;
(2) conspicuous posting of the notice on such business's web site
page, if such business maintains one; and
(3) notification to major statewide media.
5-A. ANY CREDIT OR DEBIT CARD ISSUER THAT ISSUES A NEW CREDIT OR DEBIT
CARD AS A RESULT OF A BREACH OF THE SECURITY OF THE SYSTEM PURSUANT TO
PARAGRAPH (C) OF SUBDIVISION ONE OF THIS SECTION, SHALL PROVIDE THE
CONSUMER NOTICE THAT THE ISSUANCE OF THE REPLACEMENT CREDIT OR DEBIT
CARD IS DUE TO A POTENTIAL COMPROMISE OF THE PRIOR CARD ABSENT ANY
EVIDENCE OF ACTUAL OR POTENTIAL UNAUTHORIZED USE OF SUCH CREDIT OR DEBIT
CARD OR OTHER CIRCUMSTANCES PRECIPITATING THE ISSUANCE OF A REPLACEMENT
CARD.
6. (a) whenever the attorney general shall believe from evidence
satisfactory to him that there is a violation of this article he may
bring an action in the name and on behalf of the people of the state of
New York, in a court of justice having jurisdiction to issue an injunc-
tion, to enjoin and restrain the continuation of such violation. In
such action, preliminary relief may be granted under article sixty-three
of the civil practice law and rules. In such action the court may award
damages for actual costs or losses incurred by a person entitled to
notice pursuant to this article, if notification was not provided to
such person pursuant to this article, including consequential financial
A. 10475--A 4
losses. Whenever the court shall determine in such action that a person
or business violated this article knowingly or recklessly, the court may
impose a civil penalty of the greater of five thousand dollars or up to
[ten] TWENTY dollars per instance of failed notification, provided that
the latter amount shall not exceed [one] TWO hundred fifty thousand
dollars.
(b) the remedies provided by this section shall be in addition to any
other lawful remedy available.
(c) no action may be brought under the provisions of this section
unless such action is commenced within two years [immediately] after
EITHER the date [of the act complained of or the date of discovery of
such act] ON WHICH THE ATTORNEY GENERAL BECAME AWARE OF THE VIOLATION,
OR THE DATE OF NOTICE SENT PURSUANT TO PARAGRAPH (A) OF SUBDIVISION
EIGHT OF THIS SECTION, WHICHEVER OCCURS FIRST.
7. Regardless of the method by which notice is provided, such notice
shall include contact information for the person or business making the
notification, THE TELEPHONE NUMBERS AND WEBSITES OF THE RELEVANT STATE
AND FEDERAL AGENCIES THAT PROVIDE INFORMATION REGARDING SECURITY BREACH
RESPONSE AND IDENTITY THEFT PREVENTION AND PROTECTION INFORMATION, and a
description of the categories of information that were, or are reason-
ably believed to have been, acquired by a person without valid authori-
zation OR BY AN UNAUTHORIZED PERSON, including specification of which of
the elements of personal information and private information were, or
are reasonably believed to have been, so acquired.
8. (a) In the event that any New York residents are to be notified,
the person or business shall notify the state attorney general, the
department of state and the [division of state police] OFFICE OF INFOR-
MATION TECHNOLOGY SERVICES as to the timing, content and distribution of
the notices [and], approximate number of affected persons AND PROVIDE A
COPY OF THE TEMPLATE OF THE NOTICE SENT TO AFFECTED PERSONS. Such
notice shall be made without delaying notice to affected New York resi-
dents.
(b) In the event that more than five thousand New York residents are
to be notified at one time, the person or business shall also notify
consumer reporting agencies as to the timing, content and distribution
of the notices and approximate number of affected persons. Such notice
shall be made without delaying notice to affected New York residents.
9. THE DEPARTMENT OF STATE SHALL RECEIVE COMPLAINTS PURSUANT TO
SECTION NINETY-FOUR-A OF THE EXECUTIVE LAW RELATING TO ANY BREACH OF THE
SECURITY OF THE SYSTEM, MAKE REFERRALS AS APPROPRIATE AND IN COOPERATION
WITH THE STATE ATTORNEY GENERAL AND THE OFFICE OF INFORMATION TECHNOLOGY
SERVICES DEVELOP, REGULARLY UPDATE AND MAKE PUBLICLY AVAILABLE INFORMA-
TION RELATING TO HOW TO RESPOND TO A BREACH OF THE SECURITY OF THE
SYSTEM AND BEST PRACTICES FOR HOW TO PREVENT A BREACH OF THE SECURITY OF
THE SYSTEM.
10. The provisions of this section shall be exclusive and shall
preempt any provisions of local law, ordinance or code, and no locality
shall impose requirements that are inconsistent with or more restrictive
than those set forth in this section.
S 2. Paragraphs (a) and (d) of subdivision 1 and subdivisions 2, 6, 7
and 8 of section 208 of the state technology law, paragraphs (a) and (d)
of subdivision 1 and subdivision 8 as added by chapter 442 of the laws
of 2005, subdivision 2 and paragraph (a) of subdivision 7 as amended by
section 5 of part N of chapter 55 of the laws of 2013 and subdivisions 6
and 7 as amended by chapter 491 of the laws of 2005, are amended to read
as follows:
A. 10475--A 5
(a) "Private information" shall mean: (I) personal information in
combination with any one or more of the following data elements, when
either the personal information or the data element is not encrypted or
encrypted with an encryption key that has also been acquired:
(1) social security number;
(2) driver's license number or non-driver identification card number;
[or]
(3) account number, credit or debit card number, in combination with
any required security code, access code, or password which would permit
access to an individual's financial account; OR
(4) BIOMETRIC INFORMATION, MEANING DATA GENERATED BY AUTOMATIC MEAS-
UREMENTS OF AN INDIVIDUAL'S PHYSICAL CHARACTERISTICS, WHICH ARE USED BY
THE OWNER OR LICENSEE TO AUTHENTICATE THE INDIVIDUAL'S IDENTITY;
(II) A USER NAME OR E-MAIL ADDRESS IN COMBINATION WITH A PASSWORD OR
SECURITY QUESTION AND ANSWER THAT WOULD PERMIT ACCESS TO AN ONLINE
ACCOUNT; OR
(III) ANY UNSECURED PROTECTED HEALTH INFORMATION HELD BY A COVERED
ENTITY AS DEFINED IN THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY
ACT OF 1996 (45 C.F.R. PTS. 160, 162, 164), AS AMENDED FROM TIME TO
TIME.
"Private information" does not include publicly available information
that is lawfully made available to the general public from federal,
state, or local government records.
(d) "Consumer reporting agency" shall mean any person which, for mone-
tary fees, dues, or on a cooperative nonprofit basis, regularly engages
in whole or in part in the practice of assembling or evaluating consumer
credit information or other information on consumers for the purpose of
furnishing consumer reports to third parties, and which uses any means
or facility of interstate commerce for the purpose of preparing or
furnishing consumer reports. A list of consumer reporting agencies shall
be compiled by the state attorney general and [furnished upon request to
state entities required to make a notification under subdivision two of
this section] PUBLICLY POSTED ON ITS WEBSITE.
2. Any state entity that owns or licenses computerized data that
includes private information shall disclose any breach of the security
of the system following discovery or notification of the breach in the
security of the system to any resident of New York state whose private
information was, or is reasonably believed to have been, acquired by a
person without valid authorization OR AN UNAUTHORIZED PERSON. The
disclosure shall be made in the most expedient time possible and without
unreasonable delay, consistent with the legitimate needs of law enforce-
ment, as provided in subdivision four of this section, or any measures
necessary to determine the scope of the breach and restore the [reason-
able] integrity of the data system. The state entity shall consult with
the state office of information technology services to determine the
scope of the breach and restoration measures. WITHIN NINETY DAYS OF THE
NOTICE OF THE BREACH, THE OFFICE OF INFORMATION TECHNOLOGY SERVICES
SHALL DELIVER A REPORT ON THE SCOPE OF THE BREACH AND RECOMMENDATIONS TO
RESTORE AND IMPROVE THE SECURITY OF THE SYSTEM TO THE STATE ENTITY.
6. Regardless of the method by which notice is provided, such notice
shall include contact information for the state entity making the
notification, THE TELEPHONE NUMBERS AND THE WEBSITES FOR THE RELEVANT
STATE AND FEDERAL AGENCIES THAT PROVIDE INFORMATION REGARDING SECURITY
BREACH RESPONSE AND IDENTITY THEFT PREVENTION AND PROTECTION INFORMATION
and a description of the categories of information that were, or are
reasonably believed to have been, acquired by a person without valid
A. 10475--A 6
authorization OR AN UNAUTHORIZED PERSON, including specification of
which of the elements of personal information and private information
were, or are reasonably believed to have been, so acquired.
7. (a) In the event that any New York residents are to be notified,
the state entity shall notify the state attorney general, the department
of state and the state office of information technology services as to
the timing, content and distribution of the notices and approximate
number of affected persons AND PROVIDE A COPY OF THE TEMPLATE OF THE
NOTICE SENT TO AFFECTED PERSONS. Such notice shall be made without
delaying notice to affected New York residents.
(b) In the event that more than five thousand New York residents are
to be notified at one time, the state entity shall also notify consumer
reporting agencies as to the timing, content and distribution of the
notices and approximate number of affected persons. Such notice shall be
made without delaying notice to affected New York residents.
8. THE STATE OFFICE OF INFORMATION TECHNOLOGY SERVICES SHALL DEVELOP,
UPDATE AND PROVIDE REGULAR TRAINING TO ALL STATE ENTITIES RELATING TO
BEST PRACTICES FOR THE PREVENTION OF A BREACH OF THE SECURITY OF THE
SYSTEM.
9. Any entity listed in subparagraph two of paragraph (c) of subdivi-
sion one of this section shall adopt a notification policy no more than
one hundred twenty days after the effective date of this section. Such
entity may develop a notification policy which is consistent with this
section or alternatively shall adopt a local law which is consistent
with this section.
S 3. This act shall take effect January 1, 2017.