The New York State Senate

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

                                  5635

                       2019-2020 Regular Sessions

                          I N  A S S E M B L Y

                            February 14, 2019
                               ___________

Introduced  by  M.  of  A. DenDEKKER -- (at request of the Department of
  Law) -- read once and referred to the Committee  on  Consumer  Affairs
  and Protection

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. This act shall be known and may be cited as the "Stop Hacks
and Improve Electronic Data Security Act (SHIELD Act)".
  §  2. The article heading of article 39-F of the general business law,
as added by chapter 442 of the laws of  2005,  is  amended  to  read  as
follows:
           NOTIFICATION OF UNAUTHORIZED ACQUISITION OF PRIVATE
                 INFORMATION; DATA SECURITY PROTECTIONS
  §  3.  Subdivisions  1,  2,  3, 5, 6, 7 and 8 of section 899-aa of the
general business law, subdivisions 1, 2, 3, 5, 6 and 7 as added by chap-
ter 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 paragraph (a) of subdivision 8 as amended by section  6
of  part  N  of  chapter  55 of the laws of 2013, are amended 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 DATA ELEMENT OR THE COMBINATION
OF  personal information [or] PLUS the data element is not encrypted, or

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05343-01-9

A. 5635                             2

IS encrypted with an encryption key  that  has  also  been  ACCESSED  OR
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 OR OTHER INFORMA-
TION that would permit access to an individual's financial account;
  (4)  ACCOUNT  NUMBER,  CREDIT  OR  DEBIT CARD NUMBER, IF CIRCUMSTANCES
EXIST WHEREIN SUCH NUMBER COULD BE USED TO ACCESS AN INDIVIDUAL'S FINAN-
CIAL ACCOUNT WITHOUT ADDITIONAL IDENTIFYING INFORMATION, SECURITY  CODE,
ACCESS CODE, OR PASSWORD; OR
  (5)  BIOMETRIC INFORMATION, MEANING DATA GENERATED BY ELECTRONIC MEAS-
UREMENTS OF AN INDIVIDUAL'S UNIQUE PHYSICAL CHARACTERISTICS, SUCH  AS  A
FINGERPRINT, VOICE PRINT, RETINA OR IRIS IMAGE, OR OTHER UNIQUE PHYSICAL
REPRESENTATION  OR  DIGITAL  REPRESENTATION  OF BIOMETRIC DATA WHICH ARE
USED TO AUTHENTICATE OR ASCERTAIN 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
ACCESS  TO  OR acquisition OF, or ACCESS TO OR acquisition without valid
authorization, of  computerized  data  that  compromises  the  security,
confidentiality,  or  integrity  of [personal] PRIVATE information main-
tained  by  a  business.  Good  faith  ACCESS  TO,  OR  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 ACCESSED, OR IS REASONABLY
BELIEVED TO HAVE BEEN ACCESSED, BY AN UNAUTHORIZED PERSON  OR  A  PERSON
WITHOUT  VALID  AUTHORIZATION,  SUCH  BUSINESS MAY CONSIDER, AMONG OTHER
FACTORS, INDICATIONS THAT THE INFORMATION WAS VIEWED, COMMUNICATED WITH,
USED, OR ALTERED BY A PERSON WITHOUT VALID AUTHORIZATION OR BY AN  UNAU-
THORIZED PERSON.
  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

A. 5635                             3

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 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, ACCESSED OR 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
of this section, or any measures necessary to determine the scope of the
breach and restore the [reasonable] integrity of the system.
  (A) NOTICE TO AFFECTED PERSONS UNDER THIS SECTION IS NOT  REQUIRED  IF
THE  EXPOSURE  OF  PRIVATE  INFORMATION WAS AN INADVERTENT DISCLOSURE BY
PERSONS AUTHORIZED TO ACCESS PRIVATE  INFORMATION,  AND  THE  PERSON  OR
BUSINESS  REASONABLY  DETERMINES SUCH EXPOSURE WILL NOT LIKELY RESULT IN
MISUSE OF SUCH INFORMATION,  OR  FINANCIAL  OR  EMOTIONAL  HARM  TO  THE
AFFECTED PERSONS. SUCH A DETERMINATION MUST BE DOCUMENTED IN WRITING AND
MAINTAINED FOR AT LEAST FIVE YEARS. THE PERSON OR BUSINESS SHALL PROVIDE
THE  WRITTEN DETERMINATION TO THE STATE ATTORNEY GENERAL WITHIN TEN DAYS
AFTER THE DETERMINATION.
  (B) IF NOTICE OF THE BREACH OF THE SECURITY OF THE SYSTEM IS  MADE  TO
AFFECTED  PERSONS PURSUANT TO THE BREACH NOTIFICATION REQUIREMENTS UNDER
ANY OF THE FOLLOWING LAWS, NOTHING IN THIS  SECTION  SHALL  REQUIRE  ANY
ADDITIONAL  NOTICE  TO THOSE AFFECTED PERSONS, BUT NOTICE STILL SHALL BE
PROVIDED TO THE STATE ATTORNEY GENERAL, THE DEPARTMENT OF STATE AND  THE
OFFICE  OF  INFORMATION TECHNOLOGY SERVICES PURSUANT TO PARAGRAPH (A) OF
SUBDIVISION EIGHT OF THIS SECTION AND  TO  CONSUMER  REPORTING  AGENCIES
PURSUANT TO PARAGRAPH (B) OF SUBDIVISION EIGHT OF THIS SECTION:
  (I)  REGULATIONS PROMULGATED PURSUANT TO TITLE V OF THE FEDERAL GRAMM-
LEACH-BLILEY ACT (15 U.S.C. 6801 TO 6809), AS AMENDED FROM TIME TO TIME;
  (II) REGULATIONS IMPLEMENTING THE  HEALTH  INSURANCE  PORTABILITY  AND
ACCOUNTABILITY  ACT  OF  1996  (45 C.F.R. PARTS 160 AND 164), AS AMENDED
FROM TIME TO TIME, AND THE HEALTH INFORMATION  TECHNOLOGY  FOR  ECONOMIC
AND CLINICAL HEALTH ACT, AS AMENDED FROM TIME TO TIME;
  (III) PART FIVE HUNDRED OF TITLE TWENTY-THREE OF THE OFFICIAL COMPILA-
TION  OF  CODES,  RULES  AND  REGULATIONS  OF  THE STATE OF NEW YORK, AS
AMENDED FROM TIME TO TIME; OR
  (IV) ANY OTHER DATA SECURITY RULES AND REGULATIONS OF, AND  THE  STAT-
UTES  ADMINISTERED  BY, ANY OFFICIAL DEPARTMENT, DIVISION, COMMISSION OR
AGENCY OF THE FEDERAL OR NEW YORK STATE GOVERNMENT AS SUCH RULES,  REGU-
LATIONS  OR  STATUTES  ARE  INTERPRETED  BY  SUCH  DEPARTMENT, DIVISION,
COMMISSION OR AGENCY OR BY THE FEDERAL OR NEW YORK STATE COURTS.
  3. Any person or business  which  maintains  computerized  data  which
includes  private information which such person or business does not own
shall 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.

A. 5635                             4

  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,  EXCEPT IF THE BREACHED INFORMATION INCLUDES 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 INSTEAD PROVIDE 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 USES TO
ACCESS 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.
  6.  (a)  whenever  the  attorney  general  shall believe from evidence
satisfactory to him OR HER that there is a violation of this article  he
OR  SHE  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  injunction,  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  conse-
quential  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] 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] THREE 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

A. 5635                             5

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, ACCESSED OR 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 ACCESSED OR 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 SHALL 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.
  §  4. The general business law is amended by adding a new section 899-
bb to read as follows:
  § 899-BB. DATA SECURITY PROTECTIONS. 1.  DEFINITIONS.  (A)  "COMPLIANT
REGULATED  ENTITY" SHALL MEAN ANY PERSON OR BUSINESS THAT IS SUBJECT TO,
AND IN COMPLIANCE WITH, ANY OF THE FOLLOWING DATA SECURITY REQUIREMENTS:
  (I) REGULATIONS PROMULGATED PURSUANT TO TITLE V OF THE FEDERAL  GRAMM-
LEACH-BLILEY ACT (15 U.S.C. 6801 TO 6809), AS AMENDED FROM TIME TO TIME;
  (II)  REGULATIONS  IMPLEMENTING  THE  HEALTH INSURANCE PORTABILITY AND
ACCOUNTABILITY ACT OF 1996 (45 C.F.R. PARTS 160  AND  164),  AS  AMENDED
FROM  TIME  TO  TIME, AND THE HEALTH INFORMATION TECHNOLOGY FOR ECONOMIC
AND CLINICAL HEALTH ACT, AS AMENDED FROM TIME TO TIME;
  (III) PART FIVE HUNDRED OF TITLE TWENTY-THREE OF THE OFFICIAL COMPILA-
TION OF CODES, RULES AND REGULATIONS  OF  THE  STATE  OF  NEW  YORK,  AS
AMENDED FROM TIME TO TIME; OR
  (IV)  ANY  OTHER DATA SECURITY RULES AND REGULATIONS OF, AND THE STAT-
UTES ADMINISTERED BY, ANY OFFICIAL DEPARTMENT, DIVISION,  COMMISSION  OR
AGENCY  OF THE FEDERAL OR NEW YORK STATE GOVERNMENT AS SUCH RULES, REGU-
LATIONS OR  STATUTES  ARE  INTERPRETED  BY  SUCH  DEPARTMENT,  DIVISION,
COMMISSION OR AGENCY OR BY THE FEDERAL OR NEW YORK STATE COURTS.
  (B)  "PRIVATE  INFORMATION"  SHALL HAVE THE SAME MEANING AS DEFINED IN
SECTION EIGHT HUNDRED NINETY-NINE-AA OF THIS ARTICLE.
  (C) "SMALL BUSINESS" SHALL MEAN ANY PERSON OR BUSINESS WITH (I)  FEWER
THAN  FIFTY  EMPLOYEES;  (II)  LESS  THAN THREE MILLION DOLLARS IN GROSS
ANNUAL REVENUE IN EACH OF THE LAST THREE FISCAL  YEARS;  OR  (III)  LESS
THAN  FIVE  MILLION  DOLLARS  IN  YEAR-END  TOTAL  ASSETS, CALCULATED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
  2. REASONABLE SECURITY REQUIREMENT. (A) ANY PERSON  OR  BUSINESS  THAT
OWNS OR LICENSES COMPUTERIZED DATA WHICH INCLUDES PRIVATE INFORMATION OF
A  RESIDENT OF NEW YORK SHALL 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.
  (B) A PERSON OR BUSINESS SHALL BE DEEMED  TO  BE  IN  COMPLIANCE  WITH
PARAGRAPH (A) OF THIS SUBDIVISION IF IT EITHER:
  (I)  IS  A COMPLIANT REGULATED ENTITY AS DEFINED IN SUBDIVISION ONE OF
THIS SECTION; OR

A. 5635                             6

  (II) IMPLEMENTS A DATA SECURITY PROGRAM THAT INCLUDES THE FOLLOWING:
  (A)  REASONABLE  ADMINISTRATIVE  SAFEGUARDS  SUCH AS THE FOLLOWING, IN
WHICH THE PERSON OR BUSINESS:
  (1) DESIGNATES ONE  OR  MORE  EMPLOYEES  TO  COORDINATE  THE  SECURITY
PROGRAM;
  (2) IDENTIFIES REASONABLY FORESEEABLE INTERNAL AND EXTERNAL RISKS;
  (3)  ASSESSES  THE  SUFFICIENCY  OF SAFEGUARDS IN PLACE TO CONTROL THE
IDENTIFIED RISKS;
  (4) TRAINS AND MANAGES EMPLOYEES IN THE SECURITY PROGRAM PRACTICES AND
PROCEDURES;
  (5) SELECTS SERVICE PROVIDERS CAPABLE OF MAINTAINING APPROPRIATE SAFE-
GUARDS, AND REQUIRES THOSE SAFEGUARDS BY CONTRACT; AND
  (6) ADJUSTS THE SECURITY PROGRAM IN LIGHT OF BUSINESS CHANGES  OR  NEW
CIRCUMSTANCES; AND
  (B)  REASONABLE  TECHNICAL  SAFEGUARDS SUCH AS THE FOLLOWING, IN WHICH
THE PERSON OR BUSINESS:
  (1) ASSESSES RISKS IN NETWORK AND SOFTWARE DESIGN;
  (2) ASSESSES RISKS IN INFORMATION PROCESSING, TRANSMISSION  AND  STOR-
AGE;
  (3) DETECTS, PREVENTS AND RESPONDS TO ATTACKS OR SYSTEM FAILURES; AND
  (4)  REGULARLY  TESTS  AND MONITORS THE EFFECTIVENESS OF KEY CONTROLS,
SYSTEMS AND PROCEDURES; AND
  (C) REASONABLE PHYSICAL SAFEGUARDS SUCH AS THE FOLLOWING, IN WHICH THE
PERSON OR BUSINESS:
  (1) ASSESSES RISKS OF INFORMATION STORAGE AND DISPOSAL;
  (2) DETECTS, PREVENTS AND RESPONDS TO INTRUSIONS;
  (3) PROTECTS AGAINST UNAUTHORIZED ACCESS TO OR USE OF PRIVATE INFORMA-
TION DURING OR AFTER THE COLLECTION, TRANSPORTATION AND  DESTRUCTION  OR
DISPOSAL OF THE INFORMATION; AND
  (4) DISPOSES OF PRIVATE INFORMATION WITHIN A REASONABLE AMOUNT OF TIME
AFTER IT IS NO LONGER NEEDED FOR BUSINESS PURPOSES BY ERASING ELECTRONIC
MEDIA SO THAT THE INFORMATION CANNOT BE READ OR RECONSTRUCTED.
  (C) A SMALL BUSINESS AS DEFINED IN PARAGRAPH (C) OF SUBDIVISION ONE OF
THIS  SECTION COMPLIES WITH SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDI-
VISION TWO OF THIS SECTION IF  THE  SMALL  BUSINESS'S  SECURITY  PROGRAM
CONTAINS  REASONABLE  ADMINISTRATIVE,  TECHNICAL AND PHYSICAL SAFEGUARDS
THAT ARE APPROPRIATE FOR THE SIZE AND COMPLEXITY OF THE SMALL  BUSINESS,
THE  NATURE AND SCOPE OF THE SMALL BUSINESS'S ACTIVITIES, AND THE SENSI-
TIVITY OF THE PERSONAL INFORMATION THE SMALL BUSINESS COLLECTS  FROM  OR
ABOUT CONSUMERS.
  (D)  ANY PERSON OR BUSINESS THAT FAILS TO COMPLY WITH THIS SUBDIVISION
SHALL BE DEEMED TO HAVE VIOLATED SECTION  THREE  HUNDRED  FORTY-NINE  OF
THIS  CHAPTER,  AND THE ATTORNEY GENERAL MAY BRING AN ACTION IN THE NAME
AND ON BEHALF OF THE PEOPLE OF THE STATE OF  NEW  YORK  TO  ENJOIN  SUCH
VIOLATIONS  AND  TO  OBTAIN  CIVIL PENALTIES UNDER SECTION THREE HUNDRED
FIFTY-D OF THIS CHAPTER.
  (E) NOTHING IN THIS SECTION SHALL CREATE A PRIVATE RIGHT OF ACTION.
  § 5. Paragraph (a) of subdivision 1 and subdivisions 2, 3, 6, 7 and  8
of section 208 of the state technology law, paragraph (a) of subdivision
1  and subdivisions 3 and 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) "Private information" shall mean EITHER: (I) personal  information
CONSISTING OF ANY INFORMATION in combination with any one or more of the

A. 5635                             7

following data elements, when either the DATA ELEMENT OR THE COMBINATION
OF  personal  information [or] PLUS the data element is not encrypted or
encrypted with  an  encryption  key  that  has  also  been  ACCESSED  OR
acquired:
  (1) social security number;
  (2)  driver's license number or non-driver identification card number;
[or]
  (3) account number, OR credit or debit  card  number,  in  combination
with  any  required IDENTIFYING INFORMATION, security code, access code,
or password which would  permit  access  to  an  individual's  financial
account;
  (4)  ACCOUNT  NUMBER, OR CREDIT OR DEBIT CARD NUMBER, IF CIRCUMSTANCES
EXIST WHEREIN SUCH NUMBER COULD BE USED TO  ACCESS  TO  AN  INDIVIDUAL'S
FINANCIAL  ACCOUNT  WITHOUT ADDITIONAL IDENTIFYING INFORMATION, SECURITY
CODE, ACCESS CODE, OR PASSWORD; OR
  (5) BIOMETRIC INFORMATION, MEANING DATA GENERATED BY ELECTRONIC  MEAS-
UREMENTS  OF  AN  INDIVIDUAL'S  UNIQUE PHYSICAL CHARACTERISTICS, SUCH AS
FINGERPRINT, VOICE PRINT, OR RETINA OR IRIS IMAGE, OR OTHER UNIQUE PHYS-
ICAL REPRESENTATION OR DIGITAL REPRESENTATION WHICH ARE USED TO  AUTHEN-
TICATE OR ASCERTAIN 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
that is lawfully made available to  the  general  public  from  federal,
state, or local government records.
  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, ACCESSED OR
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 of this section, or any measures necessary
to determine the scope of the breach and restore the [reasonable] integ-
rity 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.
  (A) NOTICE TO AFFECTED PERSONS UNDER THIS SECTION IS NOT  REQUIRED  IF
THE  EXPOSURE  OF  PRIVATE  INFORMATION WAS AN INADVERTENT DISCLOSURE BY
PERSONS AUTHORIZED TO ACCESS PRIVATE INFORMATION, AND THE  STATE  ENTITY
REASONABLY  DETERMINES SUCH EXPOSURE WILL NOT LIKELY RESULT IN MISUSE OF
SUCH INFORMATION,  OR  FINANCIAL  OR  EMOTIONAL  HARM  TO  THE  AFFECTED
PERSONS.  SUCH  A  DETERMINATION MUST BE DOCUMENTED IN WRITING AND MAIN-
TAINED FOR AT LEAST FIVE YEARS. THE STATE ENTITY SHALL PROVIDE THE WRIT-
TEN DETERMINATION TO THE STATE ATTORNEY GENERAL WITHIN  TEN  DAYS  AFTER
THE DETERMINATION.

A. 5635                             8

  (B)  IF  NOTICE OF THE BREACH OF THE SECURITY OF THE SYSTEM IS MADE TO
AFFECTED PERSONS PURSUANT TO THE BREACH NOTIFICATION REQUIREMENTS  UNDER
ANY  OF  THE  FOLLOWING  LAWS, NOTHING IN THIS SECTION SHALL REQUIRE ANY
ADDITIONAL NOTICE TO THOSE AFFECTED PERSONS, BUT NOTICE STILL  SHALL  BE
PROVIDED  TO THE STATE ATTORNEY GENERAL, THE DEPARTMENT OF STATE AND THE
OFFICE OF INFORMATION TECHNOLOGY SERVICES PURSUANT TO PARAGRAPH  (A)  OF
SUBDIVISION  SEVEN  OF  THIS  SECTION AND TO CONSUMER REPORTING AGENCIES
PURSUANT TO PARAGRAPH (B) OF SUBDIVISION SEVEN OF THIS SECTION:
  (I) REGULATIONS PROMULGATED PURSUANT TO TITLE V OF THE FEDERAL  GRAMM-
LEACH-BLILEY ACT (15 U.S.C. 6801 TO 6809), AS AMENDED FROM TIME TO TIME;
  (II)  REGULATIONS  IMPLEMENTING  THE  HEALTH INSURANCE PORTABILITY AND
ACCOUNTABILITY ACT OF 1996 (45 C.F.R. PARTS 160  AND  164),  AS  AMENDED
FROM  TIME  TO  TIME, AND THE HEALTH INFORMATION TECHNOLOGY FOR ECONOMIC
AND CLINICAL HEALTH ACT, AS AMENDED FROM TIME TO TIME;
  (III) PART FIVE HUNDRED OF TITLE TWENTY-THREE OF THE OFFICIAL COMPILA-
TION OF CODES, RULES AND REGULATIONS  OF  THE  STATE  OF  NEW  YORK,  AS
AMENDED FROM TIME TO TIME; OR
  (IV)  ANY  OTHER DATA SECURITY RULES AND REGULATIONS OF, AND THE STAT-
UTES ADMINISTERED BY, ANY OFFICIAL DEPARTMENT, DIVISION,  COMMISSION  OR
AGENCY  OF THE FEDERAL OR NEW YORK STATE GOVERNMENT AS SUCH RULES, REGU-
LATIONS OR  STATUTES  ARE  INTERPRETED  BY  SUCH  DEPARTMENT,  DIVISION,
COMMISSION OR AGENCY OR BY THE FEDERAL OR NEW YORK STATE COURTS.
  3.  Any  state  entity  that maintains computerized data that includes
private information which such agency does  not  own  shall  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 with-
out valid authorization.
  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 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, ACCESSED OR 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 ACCESSED OR 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

A. 5635                             9

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.
  §  6.  This  act shall take effect on the ninetieth day after it shall
have become a law; provided, however, that  section  four  of  this  act
shall  take  effect  on the two hundred fortieth day after it shall have
become a law.

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

                                 5635--A

                       2019-2020 Regular Sessions

                          I N  A S S E M B L Y

                            February 14, 2019
                               ___________

Introduced  by  M.  of  A. DenDEKKER -- (at request of the Department of
  Law) -- 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. This act shall be known and may be cited as the "Stop Hacks
and Improve Electronic Data Security Act (SHIELD Act)".
  §  2. The article heading of article 39-F of the general business law,
as added by chapter 442 of the laws of  2005,  is  amended  to  read  as
follows:
           NOTIFICATION OF UNAUTHORIZED ACQUISITION OF PRIVATE
                 INFORMATION; DATA SECURITY PROTECTIONS
  §  3.  Subdivisions  1,  2,  3, 5, 6, 7 and 8 of section 899-aa of the
general business law, subdivisions 1, 2, 3, 5, 6 and 7 as added by chap-
ter 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 paragraph (a) of subdivision 8 as amended by section  6
of  part  N  of  chapter  55 of the laws of 2013, are amended 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

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

                                                           LBD05343-02-9

A. 5635--A                          2

following data elements, when either the DATA ELEMENT OR THE COMBINATION
OF  personal information [or] PLUS the data element is not encrypted, or
IS encrypted with an encryption key  that  has  also  been  ACCESSED  OR
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 OR OTHER INFORMA-
TION that would permit access to an individual's financial account;
  (4)  ACCOUNT  NUMBER,  CREDIT  OR  DEBIT CARD NUMBER, IF CIRCUMSTANCES
EXIST WHEREIN SUCH NUMBER COULD BE USED TO ACCESS AN INDIVIDUAL'S FINAN-
CIAL ACCOUNT WITHOUT ADDITIONAL IDENTIFYING INFORMATION, SECURITY  CODE,
ACCESS CODE, OR PASSWORD; OR
  (5)  BIOMETRIC INFORMATION, MEANING DATA GENERATED BY ELECTRONIC MEAS-
UREMENTS OF AN INDIVIDUAL'S UNIQUE PHYSICAL CHARACTERISTICS, SUCH  AS  A
FINGERPRINT, VOICE PRINT, RETINA OR IRIS IMAGE, OR OTHER UNIQUE PHYSICAL
REPRESENTATION  OR  DIGITAL  REPRESENTATION  OF BIOMETRIC DATA WHICH ARE
USED TO AUTHENTICATE OR ASCERTAIN 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
ACCESS  TO  OR acquisition OF, or ACCESS TO OR acquisition without valid
authorization, of  computerized  data  that  compromises  the  security,
confidentiality,  or  integrity  of [personal] PRIVATE information main-
tained  by  a  business.  Good  faith  ACCESS  TO,  OR  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 ACCESSED, OR IS REASONABLY
BELIEVED TO HAVE BEEN ACCESSED, BY AN UNAUTHORIZED PERSON  OR  A  PERSON
WITHOUT  VALID  AUTHORIZATION,  SUCH  BUSINESS MAY CONSIDER, AMONG OTHER
FACTORS, INDICATIONS THAT THE INFORMATION WAS VIEWED, COMMUNICATED WITH,
USED, OR ALTERED BY A PERSON WITHOUT VALID AUTHORIZATION OR BY AN  UNAU-
THORIZED PERSON.
  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.

A. 5635--A                          3

  (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 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, ACCESSED OR 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
of this section, or any measures necessary to determine the scope of the
breach and restore the [reasonable] integrity of the system.
  (A) NOTICE TO AFFECTED PERSONS UNDER THIS SECTION IS NOT  REQUIRED  IF
THE  EXPOSURE  OF  PRIVATE  INFORMATION WAS AN INADVERTENT DISCLOSURE BY
PERSONS AUTHORIZED TO ACCESS PRIVATE  INFORMATION,  AND  THE  PERSON  OR
BUSINESS  REASONABLY  DETERMINES SUCH EXPOSURE WILL NOT LIKELY RESULT IN
MISUSE OF SUCH INFORMATION, OR FINANCIAL HARM TO THE AFFECTED PERSONS OR
EMOTIONAL HARM IN THE CASE OF UNKNOWN DISCLOSURE OF  ONLINE  CREDENTIALS
AS  FOUND  IN  SUBPARAGRAPH  (II) OF PARAGRAPH (B) OF SUBDIVISION ONE OF
THIS SECTION. SUCH A DETERMINATION MUST BE  DOCUMENTED  IN  WRITING  AND
MAINTAINED  FOR  AT  LEAST FIVE YEARS. IF THE INCIDENT AFFECTS OVER FIVE
HUNDRED RESIDENTS OF NEW YORK, THE PERSON OR BUSINESS SHALL PROVIDE  THE
WRITTEN  DETERMINATION  TO  THE  STATE  ATTORNEY GENERAL WITHIN TEN DAYS
AFTER THE DETERMINATION.
  (B) IF NOTICE OF THE BREACH OF THE SECURITY OF THE SYSTEM IS  MADE  TO
AFFECTED  PERSONS PURSUANT TO THE BREACH NOTIFICATION REQUIREMENTS UNDER
ANY OF THE FOLLOWING LAWS, NOTHING IN THIS  SECTION  SHALL  REQUIRE  ANY
ADDITIONAL  NOTICE  TO THOSE AFFECTED PERSONS, BUT NOTICE STILL SHALL BE
PROVIDED TO THE STATE ATTORNEY GENERAL, THE DEPARTMENT OF STATE AND  THE
DIVISION  OF STATE POLICE PURSUANT TO PARAGRAPH (A) OF SUBDIVISION EIGHT
OF THIS SECTION AND TO CONSUMER REPORTING AGENCIES PURSUANT TO PARAGRAPH
(B) OF SUBDIVISION EIGHT OF THIS SECTION:
  (I) REGULATIONS PROMULGATED PURSUANT TO TITLE V OF THE FEDERAL  GRAMM-
LEACH-BLILEY ACT (15 U.S.C. 6801 TO 6809), AS AMENDED FROM TIME TO TIME;
  (II)  REGULATIONS  IMPLEMENTING  THE  HEALTH INSURANCE PORTABILITY AND
ACCOUNTABILITY ACT OF 1996 (45 C.F.R. PARTS 160  AND  164),  AS  AMENDED
FROM  TIME  TO  TIME, AND THE HEALTH INFORMATION TECHNOLOGY FOR ECONOMIC
AND CLINICAL HEALTH ACT, AS AMENDED FROM TIME TO TIME;
  (III) PART FIVE HUNDRED OF TITLE TWENTY-THREE OF THE OFFICIAL COMPILA-
TION OF CODES, RULES AND REGULATIONS  OF  THE  STATE  OF  NEW  YORK,  AS
AMENDED FROM TIME TO TIME; OR
  (IV)  ANY  OTHER DATA SECURITY RULES AND REGULATIONS OF, AND THE STAT-
UTES ADMINISTERED BY, ANY OFFICIAL DEPARTMENT, DIVISION,  COMMISSION  OR
AGENCY  OF THE FEDERAL OR NEW YORK STATE GOVERNMENT AS SUCH RULES, REGU-
LATIONS OR  STATUTES  ARE  INTERPRETED  BY  SUCH  DEPARTMENT,  DIVISION,
COMMISSION OR AGENCY OR BY THE FEDERAL OR NEW YORK STATE COURTS.

A. 5635--A                          4

  3.  Any  person  or  business  which maintains computerized data which
includes private information which such person or business does not  own
shall  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,
ACCESSED OR acquired by a person without valid authorization.
  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,  EXCEPT IF THE BREACHED INFORMATION INCLUDES 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 INSTEAD PROVIDE 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 USES TO
ACCESS 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.
  6.  (a)  whenever  the  attorney  general  shall believe from evidence
satisfactory to him OR HER that there is a violation of this article  he
OR  SHE  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  injunction,  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  conse-
quential  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] 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] THREE years [immediately]

A. 5635--A                          5

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. IN NO EVENT
SHALL AN ACTION BE BROUGHT AFTER SIX YEARS FROM THE DATE OF DISCOVERY OF
THE BREACH OF PRIVATE INFORMATION BY THE COMPANY UNLESS THE COMPANY TOOK
STEPS TO HIDE THE BREACH.
  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, ACCESSED OR 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 ACCESSED OR 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 as to the timing,
content and distribution  of  the  notices  and  approximate  number  of
affected  persons AND SHALL 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 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.
  §  4. The general business law is amended by adding a new section 899-
bb to read as follows:
  § 899-BB. DATA SECURITY PROTECTIONS. 1.  DEFINITIONS.  (A)  "COMPLIANT
REGULATED  ENTITY" SHALL MEAN ANY PERSON OR BUSINESS THAT IS SUBJECT TO,
AND IN COMPLIANCE WITH, ANY OF THE FOLLOWING DATA SECURITY REQUIREMENTS:
  (I) REGULATIONS PROMULGATED PURSUANT TO TITLE V OF THE FEDERAL  GRAMM-
LEACH-BLILEY ACT (15 U.S.C. 6801 TO 6809), AS AMENDED FROM TIME TO TIME;
  (II)  REGULATIONS  IMPLEMENTING  THE  HEALTH INSURANCE PORTABILITY AND
ACCOUNTABILITY ACT OF 1996 (45 C.F.R. PARTS 160  AND  164),  AS  AMENDED
FROM  TIME  TO  TIME, AND THE HEALTH INFORMATION TECHNOLOGY FOR ECONOMIC
AND CLINICAL HEALTH ACT, AS AMENDED FROM TIME TO TIME;
  (III) PART FIVE HUNDRED OF TITLE TWENTY-THREE OF THE OFFICIAL COMPILA-
TION OF CODES, RULES AND REGULATIONS  OF  THE  STATE  OF  NEW  YORK,  AS
AMENDED FROM TIME TO TIME; OR
  (IV)  ANY  OTHER DATA SECURITY RULES AND REGULATIONS OF, AND THE STAT-
UTES ADMINISTERED BY, ANY OFFICIAL DEPARTMENT, DIVISION,  COMMISSION  OR
AGENCY  OF THE FEDERAL OR NEW YORK STATE GOVERNMENT AS SUCH RULES, REGU-
LATIONS OR  STATUTES  ARE  INTERPRETED  BY  SUCH  DEPARTMENT,  DIVISION,
COMMISSION OR AGENCY OR BY THE FEDERAL OR NEW YORK STATE COURTS.
  (B)  "PRIVATE  INFORMATION"  SHALL HAVE THE SAME MEANING AS DEFINED IN
SECTION EIGHT HUNDRED NINETY-NINE-AA OF THIS ARTICLE.
  (C) "SMALL BUSINESS" SHALL MEAN ANY PERSON OR BUSINESS WITH (I)  FEWER
THAN  FIFTY  EMPLOYEES;  (II)  LESS  THAN THREE MILLION DOLLARS IN GROSS
ANNUAL REVENUE IN EACH OF THE LAST THREE FISCAL  YEARS;  OR  (III)  LESS
THAN  FIVE  MILLION  DOLLARS  IN  YEAR-END  TOTAL  ASSETS, CALCULATED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.

A. 5635--A                          6

  2. REASONABLE SECURITY REQUIREMENT. (A) ANY PERSON  OR  BUSINESS  THAT
OWNS OR LICENSES COMPUTERIZED DATA WHICH INCLUDES PRIVATE INFORMATION OF
A  RESIDENT OF NEW YORK SHALL 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.
  (B)  A  PERSON  OR  BUSINESS  SHALL BE DEEMED TO BE IN COMPLIANCE WITH
PARAGRAPH (A) OF THIS SUBDIVISION IF IT EITHER:
  (I) IS A COMPLIANT REGULATED ENTITY AS DEFINED IN SUBDIVISION  ONE  OF
THIS SECTION; OR
  (II) IMPLEMENTS A DATA SECURITY PROGRAM THAT INCLUDES THE FOLLOWING:
  (A)  REASONABLE  ADMINISTRATIVE  SAFEGUARDS  SUCH AS THE FOLLOWING, IN
WHICH THE PERSON OR BUSINESS:
  (1) DESIGNATES ONE  OR  MORE  EMPLOYEES  TO  COORDINATE  THE  SECURITY
PROGRAM;
  (2) IDENTIFIES REASONABLY FORESEEABLE INTERNAL AND EXTERNAL RISKS;
  (3)  ASSESSES  THE  SUFFICIENCY  OF SAFEGUARDS IN PLACE TO CONTROL THE
IDENTIFIED RISKS;
  (4) TRAINS AND MANAGES EMPLOYEES IN THE SECURITY PROGRAM PRACTICES AND
PROCEDURES;
  (5) SELECTS SERVICE PROVIDERS CAPABLE OF MAINTAINING APPROPRIATE SAFE-
GUARDS, AND REQUIRES THOSE SAFEGUARDS BY CONTRACT; AND
  (6) ADJUSTS THE SECURITY PROGRAM IN LIGHT OF BUSINESS CHANGES  OR  NEW
CIRCUMSTANCES; AND
  (B)  REASONABLE  TECHNICAL  SAFEGUARDS SUCH AS THE FOLLOWING, IN WHICH
THE PERSON OR BUSINESS:
  (1) ASSESSES RISKS IN NETWORK AND SOFTWARE DESIGN;
  (2) ASSESSES RISKS IN INFORMATION PROCESSING, TRANSMISSION  AND  STOR-
AGE;
  (3) DETECTS, PREVENTS AND RESPONDS TO ATTACKS OR SYSTEM FAILURES; AND
  (4)  REGULARLY  TESTS  AND MONITORS THE EFFECTIVENESS OF KEY CONTROLS,
SYSTEMS AND PROCEDURES; AND
  (C) REASONABLE PHYSICAL SAFEGUARDS SUCH AS THE FOLLOWING, IN WHICH THE
PERSON OR BUSINESS:
  (1) ASSESSES RISKS OF INFORMATION STORAGE AND DISPOSAL;
  (2) DETECTS, PREVENTS AND RESPONDS TO INTRUSIONS;
  (3) PROTECTS AGAINST UNAUTHORIZED ACCESS TO OR USE OF PRIVATE INFORMA-
TION DURING OR AFTER THE COLLECTION, TRANSPORTATION AND  DESTRUCTION  OR
DISPOSAL OF THE INFORMATION; AND
  (4) DISPOSES OF PRIVATE INFORMATION WITHIN A REASONABLE AMOUNT OF TIME
AFTER IT IS NO LONGER NEEDED FOR BUSINESS PURPOSES BY ERASING ELECTRONIC
MEDIA SO THAT THE INFORMATION CANNOT BE READ OR RECONSTRUCTED.
  (C) A SMALL BUSINESS AS DEFINED IN PARAGRAPH (C) OF SUBDIVISION ONE OF
THIS  SECTION COMPLIES WITH SUBPARAGRAPH (II) OF PARAGRAPH (B) OF SUBDI-
VISION TWO OF THIS SECTION IF  THE  SMALL  BUSINESS'S  SECURITY  PROGRAM
CONTAINS  REASONABLE  ADMINISTRATIVE,  TECHNICAL AND PHYSICAL SAFEGUARDS
THAT ARE APPROPRIATE FOR THE SIZE AND COMPLEXITY OF THE SMALL  BUSINESS,
THE  NATURE AND SCOPE OF THE SMALL BUSINESS'S ACTIVITIES, AND THE SENSI-
TIVITY OF THE PERSONAL INFORMATION THE SMALL BUSINESS COLLECTS  FROM  OR
ABOUT CONSUMERS.
  (D)  ANY PERSON OR BUSINESS THAT FAILS TO COMPLY WITH THIS SUBDIVISION
SHALL BE DEEMED TO HAVE VIOLATED SECTION  THREE  HUNDRED  FORTY-NINE  OF
THIS  CHAPTER,  AND THE ATTORNEY GENERAL MAY BRING AN ACTION IN THE NAME
AND ON BEHALF OF THE PEOPLE OF THE STATE OF  NEW  YORK  TO  ENJOIN  SUCH
VIOLATIONS  AND  TO  OBTAIN  CIVIL PENALTIES UNDER SECTION THREE HUNDRED
FIFTY-D OF THIS CHAPTER.
  (E) NOTHING IN THIS SECTION SHALL CREATE A PRIVATE RIGHT OF ACTION.

A. 5635--A                          7

  § 5. Paragraph (a) of subdivision 1 and subdivisions 2, 3, 6, 7 and  8
of section 208 of the state technology law, paragraph (a) of subdivision
1  and subdivisions 3 and 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)  "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 DATA ELEMENT OR THE COMBINATION
OF personal information [or] PLUS the data element is not  encrypted  or
encrypted  with  an  encryption  key  that  has  also  been  ACCESSED OR
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 OR OTHER INFORMA-
TION which would permit access to an individual's financial account;
  (4) ACCOUNT NUMBER, OR CREDIT OR DEBIT CARD NUMBER,  IF  CIRCUMSTANCES
EXIST  WHEREIN  SUCH  NUMBER  COULD BE USED TO ACCESS TO AN INDIVIDUAL'S
FINANCIAL ACCOUNT WITHOUT ADDITIONAL IDENTIFYING  INFORMATION,  SECURITY
CODE, ACCESS CODE, OR PASSWORD; OR
  (5)  BIOMETRIC INFORMATION, MEANING DATA GENERATED BY ELECTRONIC MEAS-
UREMENTS OF AN INDIVIDUAL'S UNIQUE  PHYSICAL  CHARACTERISTICS,  SUCH  AS
FINGERPRINT, VOICE PRINT, OR RETINA OR IRIS IMAGE, OR OTHER UNIQUE PHYS-
ICAL  REPRESENTATION OR DIGITAL REPRESENTATION WHICH ARE USED TO AUTHEN-
TICATE OR ASCERTAIN 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
that  is  lawfully  made  available  to the general public from federal,
state, or local government records.
  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,  ACCESSED  OR
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 of this section, or any measures  necessary
to determine the scope of the breach and restore the [reasonable] integ-
rity  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.
  (A)  NOTICE  TO AFFECTED PERSONS UNDER THIS SECTION IS NOT REQUIRED IF
THE EXPOSURE OF PRIVATE INFORMATION WAS  AN  INADVERTENT  DISCLOSURE  BY

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PERSONS  AUTHORIZED  TO ACCESS PRIVATE INFORMATION, AND THE STATE ENTITY
REASONABLY DETERMINES SUCH EXPOSURE WILL NOT LIKELY RESULT IN MISUSE  OF
SUCH  INFORMATION,  OR  FINANCIAL  OR  EMOTIONAL  HARM  TO  THE AFFECTED
PERSONS.  SUCH  A  DETERMINATION MUST BE DOCUMENTED IN WRITING AND MAIN-
TAINED FOR AT LEAST FIVE YEARS.  IF  THE  INCIDENT  AFFECTED  OVER  FIVE
HUNDRED  RESIDENTS OF NEW YORK, THE STATE ENTITY SHALL PROVIDE THE WRIT-
TEN DETERMINATION TO THE STATE ATTORNEY GENERAL WITHIN  TEN  DAYS  AFTER
THE DETERMINATION.
  (B)  IF  NOTICE OF THE BREACH OF THE SECURITY OF THE SYSTEM IS MADE TO
AFFECTED PERSONS PURSUANT TO THE BREACH NOTIFICATION REQUIREMENTS  UNDER
ANY  OF  THE  FOLLOWING  LAWS, NOTHING IN THIS SECTION SHALL REQUIRE ANY
ADDITIONAL NOTICE TO THOSE AFFECTED PERSONS, BUT NOTICE STILL  SHALL  BE
PROVIDED  TO THE STATE ATTORNEY GENERAL, THE DEPARTMENT OF STATE AND THE
OFFICE OF INFORMATION TECHNOLOGY SERVICES PURSUANT TO PARAGRAPH  (A)  OF
SUBDIVISION  SEVEN  OF  THIS  SECTION AND TO CONSUMER REPORTING AGENCIES
PURSUANT TO PARAGRAPH (B) OF SUBDIVISION SEVEN OF THIS SECTION:
  (I) REGULATIONS PROMULGATED PURSUANT TO TITLE V OF THE FEDERAL  GRAMM-
LEACH-BLILEY ACT (15 U.S.C. 6801 TO 6809), AS AMENDED FROM TIME TO TIME;
  (II)  REGULATIONS  IMPLEMENTING  THE  HEALTH INSURANCE PORTABILITY AND
ACCOUNTABILITY ACT OF 1996 (45 C.F.R. PARTS 160  AND  164),  AS  AMENDED
FROM  TIME  TO  TIME, AND THE HEALTH INFORMATION TECHNOLOGY FOR ECONOMIC
AND CLINICAL HEALTH ACT, AS AMENDED FROM TIME TO TIME;
  (III) PART FIVE HUNDRED OF TITLE TWENTY-THREE OF THE OFFICIAL COMPILA-
TION OF CODES, RULES AND REGULATIONS  OF  THE  STATE  OF  NEW  YORK,  AS
AMENDED FROM TIME TO TIME; OR
  (IV)  ANY  OTHER DATA SECURITY RULES AND REGULATIONS OF, AND THE STAT-
UTES ADMINISTERED BY, ANY OFFICIAL DEPARTMENT, DIVISION,  COMMISSION  OR
AGENCY  OF THE FEDERAL OR NEW YORK STATE GOVERNMENT AS SUCH RULES, REGU-
LATIONS OR  STATUTES  ARE  INTERPRETED  BY  SUCH  DEPARTMENT,  DIVISION,
COMMISSION OR AGENCY OR BY THE FEDERAL OR NEW YORK STATE COURTS.
  3.  Any  state  entity  that maintains computerized data that includes
private information which such agency does  not  own  shall  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 with-
out valid authorization.
  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 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, ACCESSED OR 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 ACCESSED OR 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

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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.
  § 6. This act shall take effect on the ninetieth day  after  it  shall
have  become  a  law;  provided,  however, that section four of this act
shall take effect on the two hundred fortieth day after  it  shall  have
become a law.