New California Law Protects Online Account Information

by Morgan Lewis
Contact

As of January 1, security breach notifications must be provided to consumers when certain account information is compromised.

On September 27, California Governor Jerry Brown signed into law Senate Bill No. 46 (S.B. 46), a new data breach notification law that expands consumer protections by requiring that security breach notifications be provided when passwords, usernames, or security questions or answers that would permit access to an online account are breached. California’s existing data breach notification law requires that consumers be alerted only when a security breach has exposed Social Security numbers, driver’s license numbers, credit card numbers, or medical or health insurance information. No notification is currently required when other online account information is breached. S.B. 46 will take effect on January 1, 2014.

Overview of S.B. 46

Both the existing law and the newly enacted S.B. 46 apply to any agency or any person or business that conducts business in California and owns or licenses computerized data that includes personal information. These persons or businesses are required to notify any resident of California whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person. Specifically, S.B. 46 expands the definition of “personal information” to now include either of the following pieces of unencrypted information:

  • An individual’s first name or first initial and last name, in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted:
    • Social Security number
    • Driver’s license number of California identification card number
    • Account number or 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
    • Medical information
    • Health insurance information
  • A username or email address, in combination with a password or security question and answer that would permit access to an online account

S.B. 46 also imposes additional requirements on the disclosure of a security breach in situations where the breach involves personal information that would permit access to an online or email account. Specifically, if the breach includes a username or email address, in combination with a password or security question and answer that would permit access to an online account, and does not include any of the other information in the above definition of “personal information,” the person or business may notify the consumer in an electronic form that directs the consumer to promptly change his or her password and security question or answer, as applicable, or to take other steps appropriate to protect the online account with the business and all other online accounts for which the person uses the same username or email address and password or security question or answer.

However, if the breach includes a username or email address, in combination with a password or security question and answer that would permit access to an email account furnished by a business, the person or business must not provide the security breach notification to that email address. Instead, the person or business must comply by providing notice in one of the following methods:

  • Written notice
  • Electronic notice, if the notice provided is consistent with the provisions regarding electronic records and signatures set forth in section 7001 of title 15 of the U.S. Code
  • Substitute notice, if the person or business demonstrates that the cost of providing notice would exceed $250,000, that the affected class of subject persons to be notified exceeds 500,000, or that the person or business does not have sufficient contact information

Substitute notice shall consist of all of the following: (a) email notice when the person or business has an email address for the subject persons; (b) conspicuous posting of the notice on the Internet website of the person or business, if the person or business maintains one; and (c) notification to major statewide media. Alternatively, clear and conspicuous notice may be delivered to the resident online when the resident is connected to the online account from an Internet Protocol address or online location from which the person or business knows the resident customarily accesses the account.

The law also expressly allows people and businesses to provide notice pursuant to their own notification procedures that are part of an information security policy for the treatment of personal information as long as those procedures are otherwise consistent with the timing requirements of the statute.

Notification Requirements

The requirements for what the notification must contain remain the same as under the existing law. Specifically, the notification must be written in plain language and include, at a minimum, the following information:

  • The name and contact information of the reporting person or business
  • A list of the types of personal information that were or are reasonably believed to have been the subject of a breach
  • The following, if it is possible to determine this information at the time the notice is provided:
    • The date of the breach
    • The estimated date of the breach
    • The date range within which the breach occurred
  • Whether notification was delayed as a result of a law enforcement investigation, if that information is possible to determine at the time the notice is provided
  • A general description of the breach incident, if that information is possible to determine at the time the notice is provided
  • The toll-free telephone numbers and addresses of the major credit reporting agencies, if the breach exposed a Social Security number or a driver’s license or California identification card number

The security breach notification may also include information about what the person or business has done to protect consumers whose information has been breached or advice on steps that the consumers whose information has been breached may take to protect themselves. If a notification must be given to more than 500 California residents as a result of a single breach, the reporting person or business must submit a sample copy of the notification to the state Attorney General.

Implications

The expanded law applies to all agencies, people, and businesses that conduct business in California and that own or license computerized data that includes personal information, as defined in the statute, and requires that security breach notifications must be made to residents of California. California is one of 49 states that have enacted a variety of laws addressing security breach notifications when personally identifiable information is potentially compromised. Individuals and companies should be thoughtful about their collection of personally identifiable information, maintain such information in a secure and encrypted manner to the extent possible, and implement policies to address security breaches in a timely and lawful manner in the event that they occur.

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.

© Morgan Lewis | Attorney Advertising

Written by:

Morgan Lewis
Contact
more
less

Morgan Lewis on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.