S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7167
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              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:
 
   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.
                                                            LBD10986-01-7
              

 A. 7167                             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. 7167                             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. 7167                             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.
   §  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. 7167                             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. 7167                             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.
   § 3. This act shall take effect January 1, 2018.