S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                10475--A

                          I N  A S S E M B L Y

                              May 27, 2016
                               ___________

Introduced  by M. of A. DINOWITZ -- Multi-Sponsored by -- M. of A. HOOP-
  ER, SIMON -- read once and  referred  to  the  Committee  on  Consumer
  Affairs  and  Protection  -- reported and referred to the Committee on
  Codes -- reported and referred to the Committee on Ways and  Means  --
  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. Subdivisions 1, 2, 5, 6, 7, 8 and 9 of  section  899-aa  of
the  general  business law, as added by chapter 442 of the laws of 2005,
paragraph (c) of subdivision 1,  paragraph  (a)  of  subdivision  6  and
subdivision  8  as  amended by chapter 491 of the laws of 2005 and para-
graph (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 acquired:
  (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 that would permit
access to an individual's financial account; OR

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09470-15-6
              

A. 10475--A                         2

  (4) BIOMETRIC INFORMATION, MEANING DATA GENERATED BY  AUTOMATIC  MEAS-
UREMENTS  OF AN INDIVIDUAL'S PHYSICAL CHARACTERISTICS, WHICH ARE USED BY
THE OWNER OR LICENSEE 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
acquisition or acquisition without valid authorization  of  computerized
data  that  compromises  the  security, confidentiality, or integrity of
[personal] PRIVATE information maintained  by  a  business.  Good  faith
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 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
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] PUBLICLY POSTED ON ITS WEBSITE.
  (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,

A. 10475--A                         3

or is reasonably believed to have been, acquired  by  a  person  without
valid  authorization OR BY AN UNAUTHORIZED PERSON.  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 system.
  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, PROVIDED THE BREACHED INFORMATION DOES NOT  INCLUDE  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 NOT COMPLY WITH THIS SECTION BY PROVIDING
NOTICE TO THAT E-MAIL  ACCOUNT,  BUT  SHALL  INSTEAD  COMPLY  WITH  THIS
SECTION BY 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 ACCESSES 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

A. 10475--A                         4

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 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, acquired by a person without valid  authori-
zation OR BY 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 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 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.
  9. THE DEPARTMENT  OF  STATE  SHALL  RECEIVE  COMPLAINTS  PURSUANT  TO
SECTION NINETY-FOUR-A OF THE EXECUTIVE LAW RELATING TO ANY BREACH OF THE
SECURITY OF THE SYSTEM, MAKE REFERRALS AS APPROPRIATE AND IN COOPERATION
WITH THE STATE ATTORNEY GENERAL AND THE OFFICE OF INFORMATION TECHNOLOGY
SERVICES  DEVELOP, REGULARLY UPDATE AND MAKE PUBLICLY AVAILABLE INFORMA-
TION RELATING TO HOW TO RESPOND TO A  BREACH  OF  THE  SECURITY  OF  THE
SYSTEM AND BEST PRACTICES FOR HOW TO PREVENT A BREACH OF THE SECURITY OF
THE SYSTEM.
  10.  The  provisions  of  this  section  shall  be exclusive and shall
preempt any provisions of local law, ordinance or code, and no  locality
shall impose requirements that are inconsistent with or more restrictive
than those set forth in this section.
  S  2. Paragraphs (a) and (d) of subdivision 1 and subdivisions 2, 6, 7
and 8 of section 208 of the state technology law, paragraphs (a) and (d)
of subdivision 1 and subdivision 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. 10475--A                         5

  (a) "Private information" shall  mean:  (I)  personal  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 acquired:
  (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 which would permit
access to an individual's financial account; OR
  (4) BIOMETRIC INFORMATION, MEANING DATA GENERATED BY  AUTOMATIC  MEAS-
UREMENTS  OF AN INDIVIDUAL'S PHYSICAL CHARACTERISTICS, WHICH ARE USED BY
THE OWNER OR LICENSEE 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 ACCOUNTABILITY
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.
  (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
be compiled by the state attorney general and [furnished upon request to
state entities required to make a notification under subdivision two  of
this section] PUBLICLY POSTED ON ITS WEBSITE.
  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, acquired by a
person without valid authorization  OR  AN  UNAUTHORIZED  PERSON.    The
disclosure 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 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.
  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 THE WEBSITES  FOR  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
reasonably  believed  to  have  been, acquired by a person without valid

A. 10475--A                         6

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 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.
  S 3. This act shall take effect January 1, 2017.