S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5232
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 7, 2017
                                ___________
 
 Introduced by M. of A. DINOWITZ, GOTTFRIED, GALEF, TITONE, COOK, ABINAN-
   TI,  ENGLEBRIGHT,  OTIS, FAHY, COLTON -- read once and referred to the
   Committee on Consumer Affairs and Protection
 
 AN ACT to amend the general business law, in relation to the  protection
   of personal information by businesses

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 899-aa of the general business  law,  as  added  by
 chapter  442  of the laws of 2005, paragraph (c) of subdivision 1, para-
 graph (a) of subdivision 6 and subdivision 8 as amended by  chapter  491
 of  the  laws  of  2005 and paragraph (a) of subdivision 8 as amended by
 section 6 of part N of chapter 55 of the laws of  2013,  is  amended  to
 read as follows:
   § 899-aa. SAFEGUARDING PERSONAL INFORMATION; [Notification;] NOTIFICA-
 TION,  person  without valid authorization has acquired private informa-
 tion.  1. As used in this section, the following terms  shall  have  the
 following 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 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;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD03435-01-7

 A. 5232                             2
 
   "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 information maintained by a business. Good faith acquisition of
 personal 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  unau-
 thorized 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 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  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.
   2.  Any  person or business which conducts business in New York state,
 and which owns or licenses  computerized  data  which  includes  private
 information shall:
   (A) DEVELOP, IMPLEMENT, AND MAINTAIN A COMPREHENSIVE INFORMATION SECU-
 RITY PROGRAM WHICH MUST BE CONSISTENT WITH THE SAFEGUARDS FOR PROTECTION
 OF PERSONAL INFORMATION AND INFORMATION OF A SIMILAR CHARACTER SET FORTH
 IN ANY STATE OR FEDERAL LAWS OR REGULATIONS BY WHICH THE PERSON WHO OWNS
 OR  LICENSES  SUCH  INFORMATION MAY BE REGULATED, AND THAT IS WRITTEN IN
 ONE OR MORE READILY ACCESSIBLE PARTS AND CONTAINS ADMINISTRATIVE,  TECH-
 NICAL, AND PHYSICAL SAFEGUARDS THAT ARE APPROPRIATE TO:
   (1)  THE  SIZE, SCOPE, AND TYPE OF BUSINESS OF THE PERSON OBLIGATED TO
 SAFEGUARD THE PERSONAL INFORMATION UNDER SUCH COMPREHENSIVE  INFORMATION
 SECURITY PROGRAM;
   (2) THE AMOUNT OF RESOURCES AVAILABLE TO SUCH PERSON OR BUSINESS;
   (3) THE AMOUNT OF STORED DATA; AND
   (4)  THE  NEED  FOR  SECURITY  AND  CONFIDENTIALITY  OF INFORMATION OF
 CUSTOMERS AND EMPLOYEES OF THE BUSINESS.
   (B) 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.  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] FIVE of this

 A. 5232                             3
 
 section,  or any measures necessary to determine the scope of the breach
 and restore the reasonable integrity of the system.
   3.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EVERY COMPREHEN-
 SIVE INFORMATION SECURITY PROGRAM PURSUANT TO PARAGRAPH (A) OF  SUBDIVI-
 SION TWO OF THIS SECTION SHALL INCLUDE, BUT NOT BE LIMITED TO:
   (A)  DESIGNATING  ONE  OR MORE EMPLOYEES TO MAINTAIN THE COMPREHENSIVE
 INFORMATION SECURITY PROGRAM;
   (B) IDENTIFYING AND  ASSESSING  REASONABLY  FORESEEABLE  INTERNAL  AND
 EXTERNAL RISKS TO THE SECURITY, CONFIDENTIALITY, AND/OR INTEGRITY OF ANY
 ELECTRONIC, PAPER, OR OTHER RECORDS CONTAINING PERSONAL INFORMATION, AND
 EVALUATING  AND  IMPROVING,  WHERE NECESSARY, THE CURRENT SAFEGUARDS FOR
 LIMITING SUCH RISKS, INCLUDING, BUT NOT LIMITED TO:
   (1) PROVIDING ONGOING EMPLOYEE TRAINING;
   (2) MONITORING EMPLOYEE COMPLIANCE WITH POLICIES AND PROCEDURES; AND
   (3) IDENTIFYING MEANS FOR DETECTING  AND  PREVENTING  SECURITY  SYSTEM
 FAILURES.
   (C)  DEVELOPING  SECURITY POLICIES FOR EMPLOYEES RELATING TO THE STOR-
 AGE, ACCESS, AND TRANSPORTATION OF RECORDS CONTAINING PERSONAL  INFORMA-
 TION OUTSIDE OF BUSINESS PREMISES;
   (D) IMPOSING DISCIPLINARY MEASURES FOR VIOLATIONS OF THE COMPREHENSIVE
 INFORMATION SECURITY PROGRAM RULES;
   (E)  PREVENTING  TERMINATED OR FORMER EMPLOYEES FROM ACCESSING RECORDS
 CONTAINING PERSONAL INFORMATION;
   (F) OVERSEEING THIRD-PARTY SERVICE PROVIDERS BY:
   (1) TAKING REASONABLE STEPS TO SELECT AND RETAIN  THIRD-PARTY  SERVICE
 PROVIDERS  THAT ARE CAPABLE OF MAINTAINING APPROPRIATE SECURITY MEASURES
 TO PROTECT SUCH PERSONAL INFORMATION CONSISTENT  WITH  THESE  PROVISIONS
 AND ANY APPLICABLE FEDERAL LAWS OR REGULATIONS; AND
   (2) REQUIRING SUCH THIRD-PARTY SERVICE PROVIDERS BY CONTRACT TO IMPLE-
 MENT AND MAINTAIN SUCH APPROPRIATE SECURITY MEASURES FOR PERSONAL INFOR-
 MATION;  PROVIDED, HOWEVER, THAT UNTIL OCTOBER FIRST, TWO THOUSAND EIGH-
 TEEN,  A  CONTRACT  A  PERSON  OR  BUSINESS  HAS  ENTERED  INTO  WITH  A
 THIRD-PARTY  SERVICE  PROVIDER  TO  PERFORM SERVICES FOR OR FUNCTIONS ON
 BEHALF OF SUCH PERSON OR  BUSINESS  SATISFIES  THE  PROVISIONS  OF  THIS
 SUBPARAGRAPH  EVEN IF THE CONTRACT A PERSON OR BUSINESS HAS ENTERED INTO
 WITH A THIRD-PARTY SERVICE PROVIDER DOES NOT INCLUDE A REQUIREMENT  THAT
 THE  THIRD-PARTY SERVICE PROVIDER MAINTAINS SUCH APPROPRIATE SAFEGUARDS,
 AS LONG AS SAID PERSON OR BUSINESS ENTERED INTO THE  CONTRACT  NO  LATER
 THAN OCTOBER FIRST, TWO THOUSAND SIXTEEN.
   (G)  PLACING  REASONABLE  RESTRICTIONS UPON PHYSICAL ACCESS TO RECORDS
 CONTAINING PERSONAL INFORMATION, AND STORAGE OF SUCH RECORDS AND DATA IN
 LOCKED FACILITIES, STORAGE AREAS, OR CONTAINERS;
   (H) ENSURING THAT THE COMPREHENSIVE INFORMATION  SECURITY  PROGRAM  IS
 SEPARATING  IN  A  MANNER  REASONABLY CALCULATED TO PREVENT UNAUTHORIZED
 ACCESS TO OR UNAUTHORIZED USE OF  PERSONAL  INFORMATION,  AND  UPGRADING
 INFORMATION SAFEGUARDS AS NECESSARY TO LIMIT RISKS;
   (I)  REVIEWING THE SCOPE OF THE SECURITY MEASURES AT LEAST ANNUALLY OR
 WHENEVER THERE IS A MATERIAL  CHANGE  IN  BUSINESS  PRACTICES  THAT  MAY
 REASONABLY  JEOPARDIZE  THE  SECURITY OR INTEGRITY OF RECORDS CONTAINING
 PERSONAL INFORMATION; AND
   (J) DOCUMENTING RESPONSIVE ACTIONS TAKEN IN CONNECTION WITH ANY  INCI-
 DENT  INVOLVING A BREACH OF SECURITY, AND MANDATORY POST-INCIDENT REVIEW
 OF EVENTS AND ACTIONS TAKEN, IF ANY, TO MAKE CHANGES IN  BUSINESS  PRAC-
 TICES RELATING TO PROTECTION OF PERSONAL INFORMATION.

 A. 5232                             4
 
   [3.]4.  Any person or business which maintains computerized data which
 includes private information which such person or business does not  own
 shall:
   (A) INCLUDE IN ITS WRITTEN, COMPREHENSIVE INFORMATION SECURITY PROGRAM
 THE  ESTABLISHMENT  AND  MAINTENANCE  OF  A SECURITY SYSTEM COVERING ITS
 COMPUTERS, INCLUDING ANY WIRELESS SYSTEM, THAT, AT A MINIMUM, AND TO THE
 EXTENT TECHNICALLY FEASIBLE, INCLUDE THE FOLLOWING ELEMENTS:
   (1) SECURE USER AUTHENTICATION PROTOCOLS INCLUDING:
   (I) CONTROL OF USER IDENTIFICATIONS AND OTHER IDENTIFIERS;
   (II) A REASONABLY SECURE METHOD OF ASSIGNING AND SELECTING  PASSWORDS,
 OR  USE  OF  UNIQUE IDENTIFIER TECHNOLOGIES, SUCH AS BIOMETRICS OR TOKEN
 DEVICES;
   (III) CONTROL OF DATA SECURITY PASSWORDS TO ENSURE THAT SUCH PASSWORDS
 ARE KEPT IN A LOCATION AND/OR FORMAT THAT DOES NOT COMPROMISE THE  SECU-
 RITY OF THE DATA THEY PROTECT;
   (IV) RESTRICTING ACCESS TO ACTIVE USERS AND ACTIVE USER ACCOUNTS ONLY;
 AND
   (V) BLOCKING ACCESS TO USER IDENTIFICATION AFTER MULTIPLE UNSUCCESSFUL
 ATTEMPTS  TO  GAIN  ACCESS  OR  THE  LIMITATION PLACED ON ACCESS FOR THE
 PARTICULAR SYSTEM;
   (2) SECURE ACCESS CONTROL MEASURES THAT:
   (I) RESTRICT ACCESS TO RECORDS AND FILES CONTAINING PERSONAL  INFORMA-
 TION TO THOSE WHO NEED SUCH INFORMATION TO PERFORM THEIR JOB DUTIES; AND
   (II)  ASSIGN  UNIQUE  IDENTIFICATIONS  PLUS  PASSWORDS,  WHICH ARE NOT
 VENDOR-SUPPLIED DEFAULT PASSWORDS, TO EACH PERSON WITH  COMPUTER  ACCESS
 THAT  ARE  REASONABLY DESIGNED TO MAINTAIN THE INTEGRITY OF THE SECURITY
 OF THE ACCESS CONTROLS;
   (3)  ENCRYPTION  OF  ALL  TRANSMITTED  RECORDS  AND  FILES  CONTAINING
 PERSONAL  INFORMATION  THAT  WILL  TRAVEL  ACROSS  PUBLIC  NETWORKS, AND
 ENCRYPTION OF ALL DATA CONTAINING PERSONAL INFORMATION TO BE TRANSMITTED
 WIRELESSLY;
   (4) REASONABLE MONITORING OF SYSTEMS FOR UNAUTHORIZED USE OF OR ACCESS
 TO PERSONAL INFORMATION;
   (5) ENCRYPTION OF ALL PERSONAL INFORMATION STORED ON LAPTOPS OR  OTHER
 PORTABLE DEVICES;
   (6)  FOR  FILES  CONTAINING  PERSONAL  INFORMATION ON A SYSTEM THAT IS
 CONNECTED TO THE INTERNET,  FIREWALL  PROTECTION  AND  OPERATING  SYSTEM
 SECURITY  PATCHES  REASONABLY  DESIGNED TO MAINTAIN THE INTEGRITY OF THE
 PERSONAL INFORMATION;
   (7)  SYSTEM  SECURITY  AGENT  SOFTWARE  WHICH  MUST  INCLUDE   MALWARE
 PROTECTION AND VIRUS DEFINITIONS, OR A VERSION OF SUCH SOFTWARE THAT CAN
 STILL BE SUPPORTED WITH UP-TO-DATE PATCHES AND VIRUS DEFINITIONS, AND IS
 SET TO RECEIVE THE MOST CURRENT SECURITY UPDATES ON A REGULAR BASIS; AND
   (8)  EDUCATION  AND  TRAINING  OF  EMPLOYEES  ON THE PROPER USE OF THE
 COMPUTER SECURITY SYSTEM AND  THE  IMPORTANCE  OF  PERSONAL  INFORMATION
 SECURITY.
   (B)  notify  the owner or licensee of the information of any breach of
 the security of the  system  immediately  following  discovery,  if  the
 private  information  was,  or  is  reasonably  believed  to  have been,
 acquired by a person without valid authorization.
   [4.] 5. The notification required by this section may be delayed if  a
 law enforcement agency determines that such notification impedes a crim-
 inal  investigation.  The notification required by this section shall be
 made after such law enforcement agency determines that such notification
 does not compromise such investigation.

 A. 5232                             5
 
   [5.] 6. 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;
   (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.
   [6.] 7. (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
 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  dollars  per  instance  of  failed  notification, provided that the
 latter amount shall not exceed one 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  the
 date of the act complained of or the date of discovery of such act.
   [7.]  8.  Regardless  of  the method by which notice is provided, such
 notice shall include contact information  for  the  person  or  business
 making  the notification and a description of the categories of informa-
 tion that were, or are reasonably believed to have been, acquired  by  a
 person  without valid authorization, including specification of which of
 the elements of personal information and private  information  were,  or
 are reasonably believed to have been, so acquired.
   [8.]  9.  (a) In the event that any New York residents are to be noti-
 fied, the person or business shall notify the  state  attorney  general,
 the  department  of  state  and  the  division of state police 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.

 A. 5232                             6
 
   (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.]  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.
   §  2.  This act shall take effect immediately; provided, however, that
 the provisions of this act shall apply to any  person  or  business  who
 owns or licenses personal information about a resident of New York with-
 in  eighteen  months  after such effective date, provided, further, that
 any person or business may come into compliance  before  such  effective
 date.