S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8884--A
 
                           I N  A S S E M B L Y
 
                              January 4, 2018
                                ___________
 
 Introduced  by  M. of A. TITONE -- (at request of the Department of Law)
   -- read once and referred to the Committee  on  Consumer  Affairs  and
   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:
 
   Section  1.  This act shall be known and may be cited as the "New York
 Data Security Act".
   § 2. The article heading of article 39-F of the general business  law,
 as  added  by  chapter  442  of  the laws of 2005, is amended to read as
 follows:
            NOTIFICATION OF UNAUTHORIZED ACQUISITION OF PRIVATE
                  INFORMATION; DATA SECURITY PROTECTIONS
   § 3. Subdivisions 1, 2, 3, 5, 6, 7 and 8  of  section  899-aa  of  the
 general business law, as added by chapter 442 of the laws of 2005, para-
 graph  (c) of subdivision 1, paragraph (a) of subdivision 6 and subdivi-
 sion 8 as amended by chapter 491 of the laws of 2005 and  paragraph  (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 ACCESSED OR acquired:
   (1) social security number;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD13619-06-8

 A. 8884--A                          2
 
   (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 OR OTHER INFORMA-
 TION that would permit access to an individual's financial account;
   (4) ACCOUNT NUMBER, CREDIT OR  DEBIT  CARD  NUMBER,  IF  CIRCUMSTANCES
 EXIST WHEREIN SUCH NUMBER COULD BE USED TO ACCESS AN INDIVIDUAL'S FINAN-
 CIAL  ACCOUNT WITHOUT ADDITIONAL IDENTIFYING INFORMATION, SECURITY CODE,
 ACCESS CODE, OR PASSWORD; OR
   (5) BIOMETRIC INFORMATION, MEANING DATA GENERATED BY  AUTOMATIC  MEAS-
 UREMENTS  OF AN INDIVIDUAL'S PHYSICAL CHARACTERISTICS, WHICH ARE USED 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
 ACCESS  TO  OR acquisition OF, or ACCESS TO OR acquisition without valid
 authorization, of  computerized  data  that  compromises  the  security,
 confidentiality,  or  integrity  of [personal] PRIVATE information main-
 tained  by  a  business.  Good  faith  ACCESS  TO,  OR  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 ACCESSED, OR IS REASONABLY
 BELIEVED TO HAVE BEEN ACCESSED, BY AN UNAUTHORIZED PERSON  OR  A  PERSON
 WITHOUT  VALID  AUTHORIZATION,  SUCH  BUSINESS MAY CONSIDER, AMONG OTHER
 FACTORS, INDICATIONS THAT THE INFORMATION WAS VIEWED, COMMUNICATED WITH,
 USED, OR ALTERED BY A PERSON WITHOUT VALID AUTHORIZATION OR BY AN  UNAU-
 THORIZED PERSON.
   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

 A. 8884--A                          3
 
 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.
   (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,
 or is reasonably believed to have been, ACCESSED OR acquired by a person
 without valid authorization OR BY AN UNAUTHORIZED PERSON.   The  disclo-
 sure  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 system.
   3. Any person or business  which  maintains  computerized  data  which
 includes  private information which such person or business does not own
 shall notify the owner or licensee of the information of any  breach  of
 the  security  of  the  system  immediately  following discovery, if the
 private information  was,  or  is  reasonably  believed  to  have  been,
 acquired  by  a person without valid authorization OR BY AN UNAUTHORIZED
 PERSON.
   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,  EXCEPT IF THE BREACHED INFORMATION INCLUDES 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 INSTEAD PROVIDE 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

 A. 8884--A                          4
 
 WHICH  THE  PERSON  OR  BUSINESS  KNOWS THE CONSUMER CUSTOMARILY USES TO
 ACCESS 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
 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] THREE  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, ACCESSED OR acquired  by  a  person  without
 valid  authorization  OR BY AN UNAUTHORIZED PERSON, including specifica-
 tion of which of the elements of personal information and private infor-
 mation were, or are reasonably believed to have  been,  so  ACCESSED  OR
 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 SHALL 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.

 A. 8884--A                          5
 
   (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.
   §  4. The general business law is amended by adding a new section 899-
 bb to read as follows:
   § 899-BB. DATA SECURITY PROTECTIONS. 1.  DEFINITIONS.  (A)  "COMPLIANT
 REGULATED  ENTITY" SHALL MEAN ANY PERSON OR BUSINESS THAT IS SUBJECT TO,
 AND IN COMPLIANCE WITH, ANY OF THE FOLLOWING DATA SECURITY REQUIREMENTS:
   (I) REGULATIONS PROMULGATED PURSUANT TO TITLE V OF THE FEDERAL  GRAMM-
 LEACH-BLILEY ACT (15 U.S.C. 6801 TO 6809), AS AMENDED FROM TIME TO TIME;
   (II)  REGULATIONS  IMPLEMENTING  THE  HEALTH INSURANCE PORTABILITY AND
 ACCOUNTABILITY ACT OF 1996 (45 C.F.R. PARTS 160  AND  164),  AS  AMENDED
 FROM  TIME  TO  TIME, AND THE HEALTH INFORMATION TECHNOLOGY FOR ECONOMIC
 AND CLINICAL HEALTH ACT, AS AMENDED FROM TIME TO TIME;
   (III) PART FIVE HUNDRED OF TITLE TWENTY-THREE OF THE OFFICIAL COMPILA-
 TION OF CODES, RULES AND REGULATIONS  OF  THE  STATE  OF  NEW  YORK,  AS
 AMENDED FROM TIME TO TIME; OR
   (IV)  ANY  OTHER DATA SECURITY RULES AND REGULATIONS OF, AND THE STAT-
 UTES ADMINISTERED BY, ANY OFFICIAL DEPARTMENT, DIVISION,  COMMISSION  OR
 AGENCY  OF THE FEDERAL OR NEW YORK STATE GOVERNMENT AS SUCH RULES, REGU-
 LATIONS OR  STATUTES  ARE  INTERPRETED  BY  SUCH  DEPARTMENT,  DIVISION,
 COMMISSION OR AGENCY OR BY THE FEDERAL OR NEW YORK STATE COURTS.
   (B)  "CERTIFIED  COMPLIANT  ENTITY"  SHALL MEAN ANY PERSON OR BUSINESS
 THAT:
   (I) IS COMPLIANT WITH ANY OF THE DATA SECURITY REQUIREMENTS  IN  PARA-
 GRAPH (A) OF THIS SUBDIVISION OR WITH THE MOST UP TO DATE VERSION OF THE
 INTERNATIONAL  STANDARDS ORGANIZATION STANDARD 27002 OR WITH THE MOST UP
 TO DATE VERSION  OF  NATIONAL  INSTITUTE  OF  STANDARDS  AND  TECHNOLOGY
 SPECIAL PUBLICATION 800-53, AS IT RELATES TO THE PROTECTION OF ELECTRON-
 IC PRIVATE INFORMATION; AND
   (II)  HAS SUCH COMPLIANCE CERTIFIED ANNUALLY BY AN INDEPENDENT, THIRD-
 PARTY ASSESSMENT ORGANIZATION THAT IS AUTHORIZED TO PROVIDE SUCH CERTIF-
 ICATIONS BY THE OFFICIAL DEPARTMENT, DIVISION, COMMISSIONER OR AGENCY OR
 STANDARDS BODY THAT PROMULGATES THE DATA SECURITY REGULATIONS OR  STAND-
 ARDS BEING CERTIFIED.
   (C)  "PRIVATE  INFORMATION"  SHALL HAVE THE SAME MEANING AS DEFINED IN
 SECTION EIGHT HUNDRED NINETY-NINE-AA OF THIS ARTICLE.
   (D) "SMALL BUSINESS" SHALL MEAN ANY PERSON OR BUSINESS WITH (I)  FEWER
 THAN  FIFTY  EMPLOYEES,  INCLUDING  ANY  INDEPENDENT CONTRACTORS, OF THE
 BUSINESS; (II) LESS THAN THREE MILLION DOLLARS IN GROSS  ANNUAL  REVENUE
 IN  EACH OF THE LAST THREE FISCAL YEARS; OR (III) LESS THAN FIVE MILLION
 DOLLARS IN YEAR-END TOTAL ASSETS, CALCULATED IN ACCORDANCE WITH GENERAL-
 LY ACCEPTED ACCOUNTING PRINCIPLES.
   2. REASONABLE SECURITY. (A)  ANY  PERSON  OR  BUSINESS  THAT  OWNS  OR
 LICENSES COMPUTERIZED DATA WHICH INCLUDES PRIVATE INFORMATION OF A RESI-
 DENT  OF NEW YORK SHALL DEVELOP, IMPLEMENT AND MAINTAIN REASONABLE SAFE-
 GUARDS TO PROTECT THE SECURITY, CONFIDENTIALITY  AND  INTEGRITY  OF  THE
 PRIVATE INFORMATION INCLUDING, BUT NOT LIMITED TO, DISPOSAL OF DATA.
   (B)  SMALL  BUSINESSES SUBJECT TO THE REQUIREMENTS OF PARAGRAPH (A) OF
 THIS SUBDIVISION SHALL BE DEEMED TO BE IN COMPLIANCE WITH SUCH  REQUIRE-
 MENT  IF  THEY  IMPLEMENT  AND  MAINTAIN  REASONABLE SAFEGUARDS THAT ARE
 APPROPRIATE TO THE SIZE AND COMPLEXITY OF THE SMALL BUSINESS TO  PROTECT
 THE  SECURITY,  CONFIDENTIALITY AND INTEGRITY OF THE PRIVATE INFORMATION
 INCLUDING, BUT NOT LIMITED TO, DISPOSAL OF DATA.

 A. 8884--A                          6
 
   (C) A PERSON OR BUSINESS SHALL BE DEEMED  TO  BE  IN  COMPLIANCE  WITH
 PARAGRAPHS (A) AND (B) OF THIS SUBDIVISION IF IT EITHER:
   (I)  IS  A COMPLIANT REGULATED ENTITY AS DEFINED IN SUBDIVISION ONE OF
 THIS SECTION;
   (II) IS A CERTIFIED COMPLIANT ENTITY AS DEFINED IN SUBDIVISION ONE  OF
 THIS SECTION; OR
   (III) IMPLEMENTS A DATA SECURITY PROGRAM THAT INCLUDES THE FOLLOWING:
   (A)  ADMINISTRATIVE  SAFEGUARDS  SUCH  AS  THE FOLLOWING, IN WHICH THE
 PERSON OR BUSINESS:
   (1) DESIGNATES ONE  OR  MORE  EMPLOYEES  TO  COORDINATE  THE  SECURITY
 PROGRAM;
   (2) IDENTIFIES REASONABLY FORESEEABLE INTERNAL AND EXTERNAL RISKS;
   (3)  ASSESSES  THE  SUFFICIENCY  OF SAFEGUARDS IN PLACE TO CONTROL THE
 IDENTIFIED RISKS;
   (4) TRAINS AND MANAGES EMPLOYEES IN THE SECURITY PROGRAM PRACTICES AND
 PROCEDURES;
   (5) SELECTS SERVICE PROVIDERS CAPABLE OF MAINTAINING APPROPRIATE SAFE-
 GUARDS, AND REQUIRES THOSE SAFEGUARDS BY CONTRACT; AND
   (6) ADJUSTS THE SECURITY PROGRAM IN LIGHT OF BUSINESS CHANGES  OR  NEW
 CIRCUMSTANCES; AND
   (B) TECHNICAL SAFEGUARDS SUCH AS THE FOLLOWING, IN WHICH THE PERSON OR
 BUSINESS:
   (1) ASSESSES RISKS IN NETWORK AND SOFTWARE DESIGN;
   (2)  ASSESSES  RISKS IN INFORMATION PROCESSING, TRANSMISSION AND STOR-
 AGE;
   (3) DETECTS, PREVENTS AND RESPONDS TO ATTACKS OR SYSTEM FAILURES; AND
   (4) REGULARLY TESTS AND MONITORS THE EFFECTIVENESS  OF  KEY  CONTROLS,
 SYSTEMS AND PROCEDURES; AND
   (C)  PHYSICAL SAFEGUARDS SUCH AS THE FOLLOWING, IN WHICH THE PERSON OR
 BUSINESS:
   (1) ASSESSES RISKS OF INFORMATION STORAGE AND DISPOSAL;
   (2) DETECTS, PREVENTS AND RESPONDS TO INTRUSIONS;
   (3) PROTECTS AGAINST UNAUTHORIZED ACCESS TO OR USE OF PRIVATE INFORMA-
 TION DURING OR AFTER THE COLLECTION, TRANSPORTATION AND  DESTRUCTION  OR
 DISPOSAL OF THE INFORMATION; AND
   (4) DISPOSES OF PRIVATE INFORMATION WITHIN A REASONABLE AMOUNT OF TIME
 AFTER IT IS NO LONGER NEEDED FOR BUSINESS PURPOSES BY ERASING ELECTRONIC
 MEDIA SO THAT THE INFORMATION CANNOT BE READ OR RECONSTRUCTED.
   (D)  ANY  PERSON  OR BUSINESS REQUIRED TO COMPLY WITH PARAGRAPH (A) OR
 (B) OF THIS SUBDIVISION THAT FAILS  TO  COMPLY  WITH  SUCH  SUBDIVISIONS
 SHALL  BE  DEEMED  TO  HAVE VIOLATED SECTION THREE HUNDRED FORTY-NINE OF
 THIS CHAPTER, AND THE ATTORNEY GENERAL MAY BRING AN ACTION IN  THE  NAME
 AND  ON  BEHALF  OF  THE  PEOPLE OF THE STATE OF NEW YORK TO ENJOIN SUCH
 VIOLATIONS AND TO OBTAIN CIVIL PENALTIES  UNDER  SECTION  THREE  HUNDRED
 FIFTY-D OF THIS CHAPTER.
   (E) NOTHING IN THIS SECTION SHALL CREATE A PRIVATE RIGHT OF ACTION.
   3.  SAFE HARBOR FOR CERTIFIED COMPLIANT ENTITIES.  A CERTIFIED COMPLI-
 ANT ENTITY SHALL NOT BE SUBJECT TO AN ENFORCEMENT ACTION BY THE ATTORNEY
 GENERAL PURSUANT TO SUBDIVISION TWO OF THIS SECTION IF:
   (A) IT PROVIDES COPIES OF ITS  CERTIFICATIONS  OF  COMPLIANCE  TO  THE
 ATTORNEY GENERAL; AND
   (B)  THERE  IS  NO  EVIDENCE OF WILLFUL MISCONDUCT, BAD FAITH OR GROSS
 NEGLIGENCE.
   § 5. Paragraph (a) of subdivision 1 and subdivisions 2, 3, 6, 7 and  8
 of section 208 of the state technology law, paragraph (a) of subdivision
 1  and subdivisions 3 and 8 as added by chapter 442 of the laws of 2005,

 A. 8884--A                          7
 
 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)  "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 ACCESSED OR acquired:
   (1) social security number;
   (2) driver's license number or non-driver identification card  number;
 [or]
   (3)  account  number,  OR  credit or debit card number, in combination
 with any required IDENTIFYING INFORMATION, security code,  access  code,
 or  password  which  would  permit  access  to an individual's financial
 account;
   (4) ACCOUNT NUMBER, OR CREDIT OR DEBIT CARD NUMBER,  IF  CIRCUMSTANCES
 EXIST  WHEREIN  SUCH  NUMBER  COULD BE USED TO ACCESS TO AN INDIVIDUAL'S
 FINANCIAL ACCOUNT WITHOUT ADDITIONAL IDENTIFYING  INFORMATION,  SECURITY
 CODE, ACCESS CODE, OR PASSWORD; OR
   (5)  BIOMETRIC  INFORMATION, MEANING DATA GENERATED BY AUTOMATIC MEAS-
 UREMENTS OF AN INDIVIDUAL'S PHYSICAL CHARACTERISTICS, WHICH ARE USED  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
 that is lawfully made available to  the  general  public  from  federal,
 state, or local government records.
   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, ACCESSED OR
 acquired by a person without  valid  authorization  OR  AN  UNAUTHORIZED
 PERSON.   The disclosure shall be made in the most expedient time possi-
 ble 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] 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 NINE-
 TY DAYS OF THE NOTICE OF THE BREACH, THE OFFICE OF INFORMATION TECHNOLO-
 GY SERVICES SHALL DELIVER A REPORT ON THE SCOPE OF THE BREACH AND RECOM-
 MENDATIONS TO RESTORE AND IMPROVE THE SECURITY  OF  THE  SYSTEM  TO  THE
 STATE ENTITY.
   3.  Any  state  entity  that maintains computerized data that includes
 private information which such agency does  not  own  shall  notify  the
 owner  or  licensee  of the information of any breach of the security of
 the system immediately following discovery, if the  private  information
 was,  or is reasonably believed to have been, acquired by a person with-
 out valid authorization OR AN UNAUTHORIZED PERSON.

 A. 8884--A                          8
 
   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 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, ACCESSED OR acquired by a person without
 valid 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 ACCESSED OR 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.
   § 6. This act shall take effect on the first of January next  succeed-
 ing the date on which it shall have become a law.

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8884--B
 
                           I N  A S S E M B L Y
 
                              January 4, 2018
                                ___________
 
 Introduced  by  M. of A. TITONE -- (at request of the Department of Law)
   -- read once and referred to the Committee  on  Consumer  Affairs  and
   Protection -- committee discharged, bill amended, ordered reprinted as
   amended  and recommitted to said committee -- again reported from said
   committee with amendments, ordered reprinted as amended and  recommit-
   ted 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. This act shall be known and may be cited as the "Stop Hacks
 and Improve Electronic Data Security Act (SHIELD Act)".
   §  2. The article heading of article 39-F of the general business law,
 as added by chapter 442 of the laws of  2005,  is  amended  to  read  as
 follows:
            NOTIFICATION OF UNAUTHORIZED ACQUISITION OF PRIVATE
                  INFORMATION; DATA SECURITY PROTECTIONS
   §  3.  Subdivisions  1,  2,  3, 5, 6, 7 and 8 of section 899-aa of the
 general business law, as added by chapter 442 of the laws of 2005, para-
 graph (c) of subdivision 1, paragraph (a) of subdivision 6 and  subdivi-
 sion  8  as amended by chapter 491 of the laws of 2005 and paragraph (a)
 of subdivision 8 as amended by section 6 of part N of chapter 55 of  the
 laws of 2013, are amended 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 DATA ELEMENT OR THE COMBINATION
 OF personal information [or] PLUS the data element is not encrypted,  or
 IS  encrypted  with  an  encryption  key  that has also been ACCESSED OR
 acquired:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD13619-09-8

 A. 8884--B                          2
 
   (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 OR OTHER INFORMA-
 TION that would permit access to an individual's financial account;
   (4)  ACCOUNT  NUMBER,  CREDIT  OR  DEBIT CARD NUMBER, IF CIRCUMSTANCES
 EXIST WHEREIN SUCH NUMBER COULD BE USED TO ACCESS AN INDIVIDUAL'S FINAN-
 CIAL ACCOUNT WITHOUT ADDITIONAL IDENTIFYING INFORMATION, SECURITY  CODE,
 ACCESS CODE, OR PASSWORD; OR
   (5)  BIOMETRIC INFORMATION, MEANING DATA GENERATED BY ELECTRONIC MEAS-
 UREMENTS OF AN INDIVIDUAL'S UNIQUE PHYSICAL CHARACTERISTICS, SUCH  AS  A
 FINGERPRINT, VOICE PRINT, RETINA OR IRIS IMAGE, OR OTHER UNIQUE PHYSICAL
 REPRESENTATION  OR  DIGITAL  REPRESENTATION  OF BIOMETRIC DATA WHICH ARE
 USED TO AUTHENTICATE OR ASCERTAIN 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
 ACCESS  TO  OR acquisition OF, or ACCESS TO OR acquisition without valid
 authorization, of  computerized  data  that  compromises  the  security,
 confidentiality,  or  integrity  of [personal] PRIVATE information main-
 tained  by  a  business.  Good  faith  ACCESS  TO,  OR  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 ACCESSED, OR IS REASONABLY
 BELIEVED TO HAVE BEEN ACCESSED, BY AN UNAUTHORIZED PERSON  OR  A  PERSON
 WITHOUT  VALID  AUTHORIZATION,  SUCH  BUSINESS MAY CONSIDER, AMONG OTHER
 FACTORS, INDICATIONS THAT THE INFORMATION WAS VIEWED, COMMUNICATED WITH,
 USED, OR ALTERED BY A PERSON WITHOUT VALID AUTHORIZATION OR BY AN  UNAU-
 THORIZED PERSON.
   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 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  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

 A. 8884--B                          3
 
 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.
   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,
 or is reasonably believed to have been, ACCESSED OR acquired by a person
 without  valid authorization.   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] integrity of the system.
   (A)  NOTICE  TO AFFECTED PERSONS UNDER THIS SECTION IS NOT REQUIRED IF
 THE EXPOSURE OF PRIVATE INFORMATION WAS  AN  INADVERTENT  DISCLOSURE  BY
 PERSONS  AUTHORIZED  TO  ACCESS  PRIVATE  INFORMATION, AND THE PERSON OR
 BUSINESS REASONABLY DETERMINES SUCH EXPOSURE WILL NOT LIKELY  RESULT  IN
 MISUSE  OF  SUCH  INFORMATION,  OR  FINANCIAL  OR  EMOTIONAL HARM TO THE
 AFFECTED PERSONS. SUCH A DETERMINATION MUST BE DOCUMENTED IN WRITING AND
 MAINTAINED FOR AT LEAST FIVE YEARS. THE PERSON OR BUSINESS SHALL PROVIDE
 THE WRITTEN DETERMINATION TO THE STATE ATTORNEY GENERAL WITHIN TEN  DAYS
 AFTER THE DETERMINATION.
   (B)  IF  NOTICE OF THE BREACH OF THE SECURITY OF THE SYSTEM IS MADE TO
 AFFECTED PERSONS PURSUANT TO THE BREACH NOTIFICATION REQUIREMENTS  UNDER
 ANY  OF  THE  FOLLOWING  LAWS, NOTHING IN THIS SECTION SHALL REQUIRE ANY
 ADDITIONAL NOTICE TO THOSE AFFECTED PERSONS, BUT NOTICE STILL  SHALL  BE
 PROVIDED  TO THE STATE ATTORNEY GENERAL, THE DEPARTMENT OF STATE AND THE
 OFFICE OF INFORMATION TECHNOLOGY SERVICES PURSUANT TO PARAGRAPH  (A)  OF
 SUBDIVISION  EIGHT  OF  THIS  SECTION AND TO CONSUMER REPORTING AGENCIES
 PURSUANT TO PARAGRAPH (B) OF SUBDIVISION EIGHT OF THIS SECTION:
   (I) REGULATIONS PROMULGATED PURSUANT TO TITLE V OF THE FEDERAL  GRAMM-
 LEACH-BLILEY ACT (15 U.S.C. 6801 TO 6809), AS AMENDED FROM TIME TO TIME;
   (II)  REGULATIONS  IMPLEMENTING  THE  HEALTH INSURANCE PORTABILITY AND
 ACCOUNTABILITY ACT OF 1996 (45 C.F.R. PARTS 160  AND  164),  AS  AMENDED
 FROM  TIME  TO  TIME, AND THE HEALTH INFORMATION TECHNOLOGY FOR ECONOMIC
 AND CLINICAL HEALTH ACT, AS AMENDED FROM TIME TO TIME;
   (III) PART FIVE HUNDRED OF TITLE TWENTY-THREE OF THE OFFICIAL COMPILA-
 TION OF CODES, RULES AND REGULATIONS  OF  THE  STATE  OF  NEW  YORK,  AS
 AMENDED FROM TIME TO TIME; OR
   (IV)  ANY  OTHER DATA SECURITY RULES AND REGULATIONS OF, AND THE STAT-
 UTES ADMINISTERED BY, ANY OFFICIAL DEPARTMENT, DIVISION,  COMMISSION  OR
 AGENCY  OF THE FEDERAL OR NEW YORK STATE GOVERNMENT AS SUCH RULES, REGU-
 LATIONS OR  STATUTES  ARE  INTERPRETED  BY  SUCH  DEPARTMENT,  DIVISION,
 COMMISSION OR AGENCY OR BY THE FEDERAL OR NEW YORK STATE COURTS.
   3.  Any  person  or  business  which maintains computerized data which
 includes private information which such person or business does not  own
 shall  notify  the owner or licensee of the information of any breach of
 the security of the  system  immediately  following  discovery,  if  the
 private  information  was,  or  is  reasonably  believed  to  have been,
 acquired by a person without valid authorization.
   5. The notice required by this section shall be directly  provided  to
 the affected persons by one of the following methods:
   (a) written notice;

 A. 8884--B                          4
 
   (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,  EXCEPT IF THE BREACHED INFORMATION INCLUDES 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 INSTEAD PROVIDE 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 USES TO
 ACCESS 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.
   6.  (a)  whenever  the  attorney  general  shall believe from evidence
 satisfactory to him OR HER that there is a violation of this article  he
 OR  SHE  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  injunction,  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  conse-
 quential  financial  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] THREE 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

 A. 8884--B                          5
 
 description of the categories of information that were, or  are  reason-
 ably  believed  to  have  been, ACCESSED OR acquired by a person without
 valid authorization, including specification of which of the elements of
 personal  information  and  private  information were, or are reasonably
 believed to have been, so ACCESSED OR 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 SHALL 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.
   §  4. The general business law is amended by adding a new section 899-
 bb to read as follows:
   § 899-BB. DATA SECURITY PROTECTIONS. 1.  DEFINITIONS.  (A)  "COMPLIANT
 REGULATED  ENTITY" SHALL MEAN ANY PERSON OR BUSINESS THAT IS SUBJECT TO,
 AND IN COMPLIANCE WITH, ANY OF THE FOLLOWING DATA SECURITY REQUIREMENTS:
   (I) REGULATIONS PROMULGATED PURSUANT TO TITLE V OF THE FEDERAL  GRAMM-
 LEACH-BLILEY ACT (15 U.S.C. 6801 TO 6809), AS AMENDED FROM TIME TO TIME;
   (II)  REGULATIONS  IMPLEMENTING  THE  HEALTH INSURANCE PORTABILITY AND
 ACCOUNTABILITY ACT OF 1996 (45 C.F.R. PARTS 160  AND  164),  AS  AMENDED
 FROM  TIME  TO  TIME, AND THE HEALTH INFORMATION TECHNOLOGY FOR ECONOMIC
 AND CLINICAL HEALTH ACT, AS AMENDED FROM TIME TO TIME;
   (III) PART FIVE HUNDRED OF TITLE TWENTY-THREE OF THE OFFICIAL COMPILA-
 TION OF CODES, RULES AND REGULATIONS  OF  THE  STATE  OF  NEW  YORK,  AS
 AMENDED FROM TIME TO TIME; OR
   (IV)  ANY  OTHER DATA SECURITY RULES AND REGULATIONS OF, AND THE STAT-
 UTES ADMINISTERED BY, ANY OFFICIAL DEPARTMENT, DIVISION,  COMMISSION  OR
 AGENCY  OF THE FEDERAL OR NEW YORK STATE GOVERNMENT AS SUCH RULES, REGU-
 LATIONS OR  STATUTES  ARE  INTERPRETED  BY  SUCH  DEPARTMENT,  DIVISION,
 COMMISSION OR AGENCY OR BY THE FEDERAL OR NEW YORK STATE COURTS.
   (B)  "PRIVATE  INFORMATION"  SHALL HAVE THE SAME MEANING AS DEFINED IN
 SECTION EIGHT HUNDRED NINETY-NINE-AA OF THIS ARTICLE.
   (C) "SMALL BUSINESS" SHALL MEAN ANY PERSON OR BUSINESS WITH (I)  FEWER
 THAN  FIFTY  EMPLOYEES;  (II)  LESS  THAN THREE MILLION DOLLARS IN GROSS
 ANNUAL REVENUE IN EACH OF THE LAST THREE FISCAL  YEARS;  OR  (III)  LESS
 THAN  FIVE  MILLION  DOLLARS  IN  YEAR-END  TOTAL  ASSETS, CALCULATED IN
 ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
   2. REASONABLE SECURITY REQUIREMENT. (A) ANY PERSON  OR  BUSINESS  THAT
 OWNS OR LICENSES COMPUTERIZED DATA WHICH INCLUDES PRIVATE INFORMATION OF
 A  RESIDENT OF NEW YORK SHALL DEVELOP, IMPLEMENT AND MAINTAIN REASONABLE
 SAFEGUARDS TO PROTECT THE SECURITY, CONFIDENTIALITY AND INTEGRITY OF THE
 PRIVATE INFORMATION INCLUDING, BUT NOT LIMITED TO, DISPOSAL OF DATA.
   (B) A PERSON OR BUSINESS SHALL BE DEEMED  TO  BE  IN  COMPLIANCE  WITH
 PARAGRAPH (A) OF THIS SUBDIVISION IF IT EITHER:
   (I)  IS  A COMPLIANT REGULATED ENTITY AS DEFINED IN SUBDIVISION ONE OF
 THIS SECTION; OR
   (II) IMPLEMENTS A DATA SECURITY PROGRAM THAT INCLUDES THE FOLLOWING:
   (A) REASONABLE ADMINISTRATIVE SAFEGUARDS SUCH  AS  THE  FOLLOWING,  IN
 WHICH THE PERSON OR BUSINESS:

 A. 8884--B                          6
 
   (1)  DESIGNATES  ONE  OR  MORE  EMPLOYEES  TO  COORDINATE THE SECURITY
 PROGRAM;
   (2) IDENTIFIES REASONABLY FORESEEABLE INTERNAL AND EXTERNAL RISKS;
   (3)  ASSESSES  THE  SUFFICIENCY  OF SAFEGUARDS IN PLACE TO CONTROL THE
 IDENTIFIED RISKS;
   (4) TRAINS AND MANAGES EMPLOYEES IN THE SECURITY PROGRAM PRACTICES AND
 PROCEDURES;
   (5) SELECTS SERVICE PROVIDERS CAPABLE OF MAINTAINING APPROPRIATE SAFE-
 GUARDS, AND REQUIRES THOSE SAFEGUARDS BY CONTRACT; AND
   (6) ADJUSTS THE SECURITY PROGRAM IN LIGHT OF BUSINESS CHANGES  OR  NEW
 CIRCUMSTANCES; AND
   (B)  REASONABLE  TECHNICAL  SAFEGUARDS SUCH AS THE FOLLOWING, IN WHICH
 THE PERSON OR BUSINESS:
   (1) ASSESSES RISKS IN NETWORK AND SOFTWARE DESIGN;
   (2) ASSESSES RISKS IN INFORMATION PROCESSING, TRANSMISSION  AND  STOR-
 AGE;
   (3) DETECTS, PREVENTS AND RESPONDS TO ATTACKS OR SYSTEM FAILURES; AND
   (4)  REGULARLY  TESTS  AND MONITORS THE EFFECTIVENESS OF KEY CONTROLS,
 SYSTEMS AND PROCEDURES; AND
   (C) REASONABLE PHYSICAL SAFEGUARDS SUCH AS THE FOLLOWING, IN WHICH THE
 PERSON OR BUSINESS:
   (1) ASSESSES RISKS OF INFORMATION STORAGE AND DISPOSAL;
   (2) DETECTS, PREVENTS AND RESPONDS TO INTRUSIONS;
   (3) PROTECTS AGAINST UNAUTHORIZED ACCESS TO OR USE OF PRIVATE INFORMA-
 TION DURING OR AFTER THE COLLECTION, TRANSPORTATION AND  DESTRUCTION  OR
 DISPOSAL OF THE INFORMATION; AND
   (4) DISPOSES OF PRIVATE INFORMATION WITHIN A REASONABLE AMOUNT OF TIME
 AFTER IT IS NO LONGER NEEDED FOR BUSINESS PURPOSES BY ERASING ELECTRONIC
 MEDIA SO THAT THE INFORMATION CANNOT BE READ OR RECONSTRUCTED.
   (C) A SMALL BUSINESS AS DEFINED IN PARAGRAPH (C) OF SUBDIVISION ONE OF
 THIS  SECTION COMPLIES WITH SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDI-
 VISION TWO OF THIS SECTION IF  THE  SMALL  BUSINESS'S  SECURITY  PROGRAM
 CONTAINS  REASONABLE  ADMINISTRATIVE,  TECHNICAL AND PHYSICAL SAFEGUARDS
 THAT ARE APPROPRIATE FOR THE SIZE AND COMPLEXITY OF THE SMALL  BUSINESS,
 THE  NATURE AND SCOPE OF THE SMALL BUSINESS'S ACTIVITIES, AND THE SENSI-
 TIVITY OF THE PERSONAL INFORMATION THE SMALL BUSINESS COLLECTS  FROM  OR
 ABOUT CONSUMERS.
   (D)  ANY PERSON OR BUSINESS THAT FAILS TO COMPLY WITH THIS SUBDIVISION
 SHALL BE DEEMED TO HAVE VIOLATED SECTION  THREE  HUNDRED  FORTY-NINE  OF
 THIS  CHAPTER,  AND THE ATTORNEY GENERAL MAY BRING AN ACTION IN THE NAME
 AND ON BEHALF OF THE PEOPLE OF THE STATE OF  NEW  YORK  TO  ENJOIN  SUCH
 VIOLATIONS  AND  TO  OBTAIN  CIVIL PENALTIES UNDER SECTION THREE HUNDRED
 FIFTY-D OF THIS CHAPTER.
   (E) NOTHING IN THIS SECTION SHALL CREATE A PRIVATE RIGHT OF ACTION.
   § 5. Paragraph (a) of subdivision 1 and subdivisions 2, 3, 6, 7 and  8
 of section 208 of the state technology law, paragraph (a) of subdivision
 1  and subdivisions 3 and 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) "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 DATA ELEMENT OR THE COMBINATION
 OF  personal  information [or] PLUS the data element is not encrypted or

 A. 8884--B                          7
 
 encrypted with  an  encryption  key  that  has  also  been  ACCESSED  OR
 acquired:
   (1) social security number;
   (2)  driver's license number or non-driver identification card number;
 [or]
   (3) account number, OR credit or debit  card  number,  in  combination
 with  any  required IDENTIFYING INFORMATION, security code, access code,
 or password which would  permit  access  to  an  individual's  financial
 account;
   (4)  ACCOUNT  NUMBER, OR CREDIT OR DEBIT CARD NUMBER, IF CIRCUMSTANCES
 EXIST WHEREIN SUCH NUMBER COULD BE USED TO  ACCESS  TO  AN  INDIVIDUAL'S
 FINANCIAL  ACCOUNT  WITHOUT ADDITIONAL IDENTIFYING INFORMATION, SECURITY
 CODE, ACCESS CODE, OR PASSWORD; OR
   (5) BIOMETRIC INFORMATION, MEANING DATA GENERATED BY ELECTRONIC  MEAS-
 UREMENTS  OF  AN  INDIVIDUAL'S  UNIQUE PHYSICAL CHARACTERISTICS, SUCH AS
 FINGERPRINT, VOICE PRINT, OR RETINA OR IRIS IMAGE, OR OTHER UNIQUE PHYS-
 ICAL REPRESENTATION OR DIGITAL REPRESENTATION WHICH ARE USED TO  AUTHEN-
 TICATE OR ASCERTAIN 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
 that is lawfully made available to  the  general  public  from  federal,
 state, or local government records.
   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, ACCESSED OR
 acquired by a person without valid authorization.  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 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.
   (A) NOTICE TO AFFECTED PERSONS UNDER THIS SECTION IS NOT  REQUIRED  IF
 THE  EXPOSURE  OF  PRIVATE  INFORMATION WAS AN INADVERTENT DISCLOSURE BY
 PERSONS AUTHORIZED TO ACCESS PRIVATE INFORMATION, AND THE  STATE  ENTITY
 REASONABLY  DETERMINES SUCH EXPOSURE WILL NOT LIKELY RESULT IN MISUSE OF
 SUCH INFORMATION,  OR  FINANCIAL  OR  EMOTIONAL  HARM  TO  THE  AFFECTED
 PERSONS.  SUCH  A  DETERMINATION MUST BE DOCUMENTED IN WRITING AND MAIN-
 TAINED FOR AT LEAST FIVE YEARS. THE STATE ENTITY SHALL PROVIDE THE WRIT-
 TEN DETERMINATION TO THE STATE ATTORNEY GENERAL WITHIN  TEN  DAYS  AFTER
 THE DETERMINATION.
   (B)  IF  NOTICE OF THE BREACH OF THE SECURITY OF THE SYSTEM IS MADE TO
 AFFECTED PERSONS PURSUANT TO THE BREACH NOTIFICATION REQUIREMENTS  UNDER
 ANY  OF  THE  FOLLOWING  LAWS, NOTHING IN THIS SECTION SHALL REQUIRE ANY

 A. 8884--B                          8
 
 ADDITIONAL NOTICE TO THOSE AFFECTED PERSONS, BUT NOTICE STILL  SHALL  BE
 PROVIDED  TO THE STATE ATTORNEY GENERAL, THE DEPARTMENT OF STATE AND THE
 OFFICE OF INFORMATION TECHNOLOGY SERVICES PURSUANT TO PARAGRAPH  (A)  OF
 SUBDIVISION  SEVEN  OF  THIS  SECTION AND TO CONSUMER REPORTING AGENCIES
 PURSUANT TO PARAGRAPH (B) OF SUBDIVISION SEVEN OF THIS SECTION:
   (I) REGULATIONS PROMULGATED PURSUANT TO TITLE V OF THE FEDERAL  GRAMM-
 LEACH-BLILEY ACT (15 U.S.C. 6801 TO 6809), AS AMENDED FROM TIME TO TIME;
   (II)  REGULATIONS  IMPLEMENTING  THE  HEALTH INSURANCE PORTABILITY AND
 ACCOUNTABILITY ACT OF 1996 (45 C.F.R. PARTS 160  AND  164),  AS  AMENDED
 FROM  TIME  TO  TIME, AND THE HEALTH INFORMATION TECHNOLOGY FOR ECONOMIC
 AND CLINICAL HEALTH ACT, AS AMENDED FROM TIME TO TIME;
   (III) PART FIVE HUNDRED OF TITLE TWENTY-THREE OF THE OFFICIAL COMPILA-
 TION OF CODES, RULES AND REGULATIONS  OF  THE  STATE  OF  NEW  YORK,  AS
 AMENDED FROM TIME TO TIME; OR
   (IV)  ANY  OTHER DATA SECURITY RULES AND REGULATIONS OF, AND THE STAT-
 UTES ADMINISTERED BY, ANY OFFICIAL DEPARTMENT, DIVISION,  COMMISSION  OR
 AGENCY  OF THE FEDERAL OR NEW YORK STATE GOVERNMENT AS SUCH RULES, REGU-
 LATIONS OR  STATUTES  ARE  INTERPRETED  BY  SUCH  DEPARTMENT,  DIVISION,
 COMMISSION OR AGENCY OR BY THE FEDERAL OR NEW YORK STATE COURTS.
   3.  Any  state  entity  that maintains computerized data that includes
 private information which such agency does  not  own  shall  notify  the
 owner  or  licensee  of the information of any breach of the security of
 the system immediately following discovery, if the  private  information
 was,  or is reasonably believed to have been, acquired by a person with-
 out valid authorization.
   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 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, ACCESSED OR acquired  by  a  person  without
 valid authorization, including specification of which of the elements of
 personal  information  and  private  information were, or are reasonably
 believed to have been, so ACCESSED OR 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

 A. 8884--B                          9
 
 section or alternatively shall adopt a local  law  which  is  consistent
 with this section.
   §  6.  This  act shall take effect on the ninetieth day after it shall
 have become a law; provided, however, that  section  four  of  this  act
 shall  take  effect  on the two hundred fortieth day after it shall have
 become a law.