Illinois Governor Vetoes Data Protection Bill; Suggests Revisions

by Alston & Bird

Illinois Governor Bruce Rauner vetoed a bill amending the state’s data breach notification law on August 21, 2015, saying in a letter to the General Assembly that the bill “goes too far, imposing duplicative and burdensome requirements that are out-of-step with other states.”  The bill, S.B. 1833, would have amended Illinois’ Personal Information Protection Act (“PIPA”).  Gov. Rauner took issue only with a few specific provisions and promised to sign the bill if the issues were addressed by the General Assembly.

In particular, the Governor disagreed with the addition of “consumer marketing information” and “geolocation information” to the definition of “personal information,” saying the inclusion of these types of information would constitute a “significant departure from the data protection laws of other states” and that “the unauthorized release of [this] information does not pose the same risk of identity theft that justifies the extraordinary and costly security and notice requirements imposed by [PIPA].”

“Consumer marketing information” would have been defined as “information related to a consumer’s online browsing history, online search history, or purchasing history, including, but not limited to, consumer profiles that are based upon the information” not held by a data collector with a direct relationship with the consumer.  “Geolocation information” would have been defined as “information generated or derived from the operation or use of an electronic communications device that is stored and sufficient to identify the street name and the name of the city or town in which an individual is located and the information is likely to enable someone to determine an individual’s regular pattern of behavior.”  Data collectors would only be required to notify the state Attorney General of data breaches involving geolocation information and consumer marketing information.

The governor also requested that the bill, which would have required notice of a breach to be given to the state Attorney General within 30 business days of discovery, be modified to require such notice within 45 calendar days to “ease the burden of compliance across multiple states[.]”

In addition, S.B. 1833 would have made Illinois the second state (in addition to California) to require website operators to post a privacy notice on their website.  Because California already requires this, and most large businesses already comply with the requirement, Gov. Rauner argues that the Illinois rule would “only increase the cost of compliance without adding value to consumers” and would be a “burdensome and costly mandate” for small businesses not subject to the California requirement.

Finally, the Governor’s proposed changes would also, among other things:

  • Strike from the definition of personal information the proposed addition of home address, telephone number, and email address in combination with either mother’s maiden name (when not part of an individual’s surname) or month, day, and year of birth;
  • Remove a proposed provision that would allow the Attorney General to publish the name of a data collector that suffers a breach, the types of personal information compromised, and the date range of the breach, following notification of the breach to the Attorney General; and
  • Remove a provision that would require an entity that merely maintains or stores but does not “own” or “license” the data involved in a breach to provide notice to the Attorney General.

Ultimately, Gov. Rauner’s veto is based on his position that data protection regulations must strike an appropriate balance between consumer protection and the burden placed on Illinois businesses.  The provisions he calls out in his letter will, he says, “hurt our economic competitiveness without providing commensurate benefit to Illinois consumers and residents whom the bill is intending to protect.”  The Illinois General Assembly will now have to determine whether they agree that the changes proposed by the governor strike the right balance.

Even if the provisions called out by Gov. Rauner are removed, S.B. 1833 would nonetheless constitute a significant amendment of PIPA.  Among other things, the bill:

  • Adds to the definition of personal information “health insurance information;” “medical information;” “unique biometric data;” and user name or email address in combination with a password or security question and answer that would permit access to an online account (“User Credentials”).
  • Revokes an existing exception from the definition of personal information for encrypted or redacted data elements if the keys to unencrypt or unredact the data have also been acquired through a breach of security.
  • In a provision similar to one in already in effect for California, requires notice of a breach of security involving User Credentials to be provided in electronic or other form directing the affected Illinois resident to change his or her username or password and security question or answer, as applicable, or to take other steps appropriate to protect all online accounts for which the resident uses the same user name or email address and password or security question and answer.
  • In the context of substitute notice, allows notification to “prominent local media” if the breach impacts residents in one geographic area, if reasonably calculated to give actual notice to persons for whom notice is required. (Currently, substitute notice must be given to “major statewide media.”
  • Requires notice to the Attorney General if the breach impacts more than 250 Illinois residents.
  • Provides that covered entities and business associates subject to and in compliance with the privacy and security standards for the protection of electronic health information established pursuant to the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Health Information Technology for Economic and Clinical Health (HITECH) Act are deemed to be in compliance with PIPA, provided that such entities provide notification to the Attorney General within 5 business days of notifying the Secretary of Health and Human Services of a data breach.

Accordingly, even if the Illinois bill is revised pursuant to the Gov. Rauner’s specifications, it will still make Illinois one of the more progressive states with regard to data breach notification legislation.

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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