New York SHIELD Act Will Impose Noteworthy New Data Security & Breach Notification Requirements on Companies That Handle Data of New York Residents

Blank Rome LLP

Blank Rome LLP

As the risk of data breach events—both from malicious outsiders and negligent insiders—continues to rise with no end in sight, New York recently enacted the Stop Hacks and Improve Electronic Data Security Handling (“SHIELD”) Act, which provides key changes to the state’s data security and data breach notification laws. Significantly, the law applies to any business that collects or utilizes the data of New York residents, even if that business does not conduct any operations within the state. Covered businesses will need to take immediate action to get in compliance with New York’s SHIELD Act by the law’s March 21, 2020 effective date.

“Reasonable” Data Security Requirement

By far, the aspect of the SHIELD Act that has received the greatest attention—and for good reason—pertains to the new data security requirements that have been imposed under the law. Under the SHIELD Act, any individual or entity that processes the personal data of New York residents must “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.” Importantly, the law provides that a business will be deemed in compliance with the requirement to implement reasonable data security measures if it maintains a data security program that incorporates a detailed series of administrative, technical, and physical controls that are set forth in the law. In addition, businesses that are in compliance with the data security mandates of laws such as the GLBA, HIPAA, and HITECH are also deemed to be in compliance with the SHIELD Act’s reasonable security requirement. 

The SHIELD Act relaxes the standard for satisfying the reasonable security requirement for small businesses—those with fewer than 50 employees, less than three million dollars in gross annual revenue, or less than five million dollars in year-end total assets—by providing that those businesses are in compliance with the reasonable security aspect of the law if their security programs contain safeguards that are appropriate for the size and complexity of the business, the nature and scope of the business’s activities, and the sensitivity of the data the business collects on consumers.

Businesses that are found to have violated the law’s “reasonable” security requirement can be held liable for civil penalties of up to $5,000 per violation.

Expanded Definition of Protected “Private Information”

In addition, the SHIELD Act also expands the scope of the state’s prior breach notification law in several different respects. First, the law broadens the types of personal data that trigger data breach notification obligations. New York’s original breach notification law defined “private information”—information that is sufficient to trigger breach notice obligations—to include Social Security numbers; driver’s license or non-driver ID card numbers; and account, credit card, or debit card numbers in combination with any required security code, access code, or password that could be used to access an individual’s financial account. Under the SHIELD Act, “private information” now also includes account, credit card, or debit card numbers alone, and without any additional identifying information, if the information could be used to access an individual’s financial account; biometric data; and online account login credentials.

Broadened Applicability of Breach Notification Obligations

The SHIELD Act also expands the scope of the covered entities’ breach notification obligations by extending those obligations to cover all entities that process the private information of New York residents, regardless of whether those entities do business in the state. As such, a physical presence or conducting business in the state is not a prerequisite to falling under the scope of the SHIELD Act’s breach notice mandates.

Moreover, the SHIELD Act also broadens the circumstances that are sufficient to trigger notice to impacted individuals by providing that notice is required not only when data has been improperly acquired, but also that which has been improperly accessed as well—a very low threshold that encompasses actions such as viewing, using, or altering private information without valid authorization. As such, moving forward a much wider range of data breach incidents will trigger notice obligations on the part of the breached entity.

Breach Notification Requirements

Under the SHIELD Act, any person or business must disclose any breach of the security system to any resident of New York whose private information was, or is reasonably believed to have been, accessed or acquired by a person without valid authorization. In addition, in the event that a breach triggers notification obligations to New York residents, the breach victim must also notify the New York Attorney General, Department of State, and State Police regarding the number of impacted individuals and the timing, content, and distribution of the entity’s breach notices. In addition, the breach victim must also provide a template of the notice that was sent to impacted individuals as well. Where a breach impacts more than 5,000 New York residents, the breach victim must also provide notice to consumer reporting agencies.

Importantly, the SHIELD Act provides an exemption from the law’s notice requirements for breaches that arise out of an inadvertent disclosure of private information, if the breach victim reasonably determines that the risk of misuse of the information, or harm to the impacted individuals, is not likely.

Businesses that are found to have violated the SHIELD Act’s breach notice provisions can be held liable for actual damages incurred by individuals entitled to receive notice if notification is not provided in accordance with the law. In addition, those businesses found to have committed knowing or reckless violations may be assessed penalties the greater of $5,000 or up to $20 per instance of failed notification, provided the latter does not exceed $250,000.

Compliance Steps

Critically, the SHIELD Act now expressly requires that covered entities “develop, implement, and maintain reasonable safeguards” to protect personal data from falling into the wrong hands. This particular facet of the SHIELD Act represents a growing trend among state-level legislators in enacting legislation geared toward requiring companies that handle sensitive personal data to tighten up and strengthen their data privacy and data security practices. In addition, the SHIELD Act greatly expands the scope of potential data breach events that are now sufficient to trigger breach notification requirements under New York law, which, in turn, greatly expands the potential that businesses will find themselves subject to the onerous data breach notification obligations of the SHIELD Act in the event the organization suffers a data compromise event—making it even more essential that businesses implement strong defensive data security strategies to curb the risk of data compromise events.

In terms of actionable compliance steps, businesses that handle the data of New York residents—even if they do not conduct any business in the state—should take immediate action to update their data security programs to incorporate the administrative, technical, and physical safeguards set forth in the SHIELD Act that will allow them to be “deemed” in compliance with the law’s reasonable security requirement. In doing so, businesses should also consider incorporating several other specific, essential data security controls that will significantly aid in combating the risk of data compromise events:

  • Perform periodic risk assessments to identify the primary risks to the personal information that is possessed by the entity, and implement any necessary modifications to the organization’s information security program so as to minimize the risk of these vulnerabilities being exploited by a data breach.
  • Maintain stringent password protection policies, which should encompass elements such as password expiration, complexity, and length. In addition, companies should also consider requiring multi-factor password authentication for all accounts.
  • Ensure that all company data is encrypted, both while at rest and in transit.
  • Utilize the principle of least privilege and grant employees only the minimal level of access or privilege that is necessary for the individual to carry out his or her job duties and responsibilities. Strategically tailoring access is an effective way to ensure the security of organizational data.
  • Utilize a strong firewall to protect the company’s systems by controlling the Internet traffic that flows in and out of its networks, as well as antivirus protection, which can serve as the last line of defense should a malicious attack make its way inside the perimeter of an organization’s network.
  • Monitor the use and transmission of electronic data by employees, with an eye toward unusual activity—especially if data is being pulled off the entity’s network—which can not only detect data leaks when they happen, but can discourage employees from taking unnecessary risks in connection with organizational data.

The Final Word

The ultimate impact of the SHIELD Act is significant and far-reaching, as all businesses that handle the private information of New York residents—regardless of whether the entity conducts business in the state—must comply with the new law. In particular, the SHIELD Act’s reasonable security and breach notification requirements substantially expand the potential scope of liability exposure faced by covered entities stemming from data breach incidents. Beyond that, the potential exists that the New York Attorney General may pursue civil penalties against companies that fail to implement reasonable data security safeguards, even in the absence of a data breach. Taken together, the SHIELD Act necessitates the implementation effective defensive data security controls to protect networks, systems, devices, and data from cyber attacks and other data compromise events. Importantly, because the process of building an effective information security program that comports with the SHIELD Act’s reasonable security requirements will be time-consuming and complex, businesses should take immediate action to update and enhance their data security and breach notification policies, practices, and protocols in order to ensure compliance by the law’s March 21, 2020 effective date.

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.

© Blank Rome LLP | Attorney Advertising

Written by:

Blank Rome LLP

Blank Rome LLP 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:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. 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. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our 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 are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy 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 our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.