Florida Overhauls Its Data Security Breach Notification Law Effective July 1, 2014

by Foley & Lardner LLP
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On June 20, 2014 Governor Rick Scott approved the Florida Information Protection Act of 2014, overhauling the requirements and steps companies must follow when faced with a potential or actual security breach resulting in the unauthorized disclosure of personal information. The text of the law can be found here. The law becomes effective July 1, 2014.

This action in Florida continues a line of recent data breach proposals and laws in a number of states, including California, New Mexico, Iowa, and Kentucky. Among other things, the law changes the definition of personal information that can trigger a notification requirement by adding health insurance, medical information, financial information and online account information, such as security questions and answers, email addresses, and passwords. Current law covers an individual’s first name or initial and last name, in combination with: (i) a social security number; (ii) drivers’ license or identification card number; (iii) or account number, credit or debit card number in combination with any required security code or password to access the account.

Notice to affected individuals is required as expeditiously as possible, but no later than 30 days after discovery of the breach or the business reasonably believes a breach occurred. Current laws require notification without unreasonable delay and no later than 45 days after discovery of the breach.

In the event of a data breach affecting 500 or more residents, written notice to the Attorney General is required no later than 30 days after discovery of the breach. If requested by the Attorney General, the company must provide a copy of its policies in place regarding breaches, steps taken to rectify the breach, and a police report, incident report, or computer forensics report to the Attorney General.

If the breach involves over 1,000 individuals, the company must also notify the major consumer reporting agencies (Experian, TransUnion and Equifax).

Notice is not required if, after the organization conducts an appropriate investigation and consults with relevant law enforcement agencies, the company reasonably determines that the breach has not and is not likely to result in identity theft or any other final harm to the affected individuals. The determination must be documented in writing, maintained for at least 5 years, and provided to the Attorney General within 30 days after the determination is made.

The law adds a requirement that businesses must use reasonable measures to protect and secure personal information in electronic form. While the law does not provide details on what these measures may be, in the event of a security breach the company will need to demonstrate at a minimum that it used commercially reasonable safeguards to protect personal information consistent with industry standards.

Finally, the law authorizes enforcement actions by the Attorney General under Florida’s Unfair and Deceptive Trade Practices Act for any violations. Civil penalties can be up to $500,000 - $1,000 per day for the first 30 days of violation, and $50,000 for each subsequent 30-day period for up to 180 days. If the violation continues for more than 180 days, the penalties can be up to $500,000.

Impact to Business

The law imposes additional and more stringent requirements for businesses that suffer a security breach exposing personal information of customers, employees or other individuals. The breach may be the result of a malicious hacker, disgruntled employee or inadvertent loss of a laptop or smart phone containing personal information. Businesses should modify their data breach incident response plans to comply with the new requirements (and, needless to say, develop a response plan if they do not have one). Companies should ensure that if a breach results in a request from the Attorney General for the companies’ applicable policies, those policies are consistent with the law and current best practices.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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