On June 30, 2015, Connecticut Governor Dannel Malloy signed into law Senate Bill 949, “An Act Improving Data Security and Agency Effectiveness”, a data privacy and security bill that creates stricter data breach response requirements.  S.B. 949 specifies that an entity that experiences a data breach must give notice to those affected no “later than [90] days after discovery of such breach, unless a shorter time is required under federal law.”  Previously, Connecticut law only required entities to provide notice of a data privacy breach to affected individuals “without unreasonable delay.”

During a press conference on June 2, 2015, Attorney General George Jepsen clarified that 90 days is the floor – not the ceiling.  He stated that “[t]here may be circumstances under which it is unreasonable to delay notification for 90 days.”  Projected to become effective October 1, 2015, S.B. 949 also requires entities affected by breaches to provide at least one year of free identity theft prevention services for breaches involving the resident’s name and Social Security number.

On October 24, the Federal Communications Commission (FCC) threw its hat into the data security regulation ring when it announced it intends to fine two telecommunications companies $10 million for allegedly failing to safeguard the personal information of their customers.

Both TerraCom, Inc. (TerraCom) and YourTel America, Inc. (YourTel) allegedly collected customers’ personal information, including names, addresses, Social Security numbers, and driver’s licenses, and stored it on servers that were widely available on public websites online through a simple Google search.  The information could be accessed by “anyone in the world” exposing their customers “to an unacceptable risk of identity theft and other serious consumer harms.”

According to the FCC, TerraCom and YourTel violated Sections 201(b) and 222(a) of the Communications Act of 1934 by:

  • Failing to properly protect the confidentiality of consumers’ personal information, including names, addresses, Social Security numbers, driver’s licenses;
  • Failing to employ reasonable data security practices to protect consumer information;
  • Engaging in deceptive and misleading practices by representing to consumers in the companies’ privacy policies that they employed appropriate technologies to protect consumer information when they did not; and
  • Engaging in unjust and unreasonable practices by not notifying consumers that their information had been compromised by a breach.

Whether the FCC’s announcement signals its intention to become yet another regulator of data security remains to be seen.  But companies that collect and store customer personal information must take the initiative to ensure information is stored properly with appropriate data security safeguards in place.  And safeguards are not enough.  If, after investigation, a company uncovers a breach, it must timely notify customers in accordance with state law and federal regulations.

For more information about the FCC’s announcement, click here.

 

California Governor Jerry Brown signed Senate Bill 46 (S.B. 46) (PDF) into law on Friday, September 27, 2013.  The new law expands the current breach notification requirement to include a known breach of a security system, not just a confirmed loss of Social Security, driver’s license numbers, credit card numbers, or medical and health insurance information.

Starting on January 1, 2014, governmental agencies and any person or business that conducts business in California and that owns or licenses computerized data that includes personal information will be required to notify consumers of any breach of the security of the system following discovery or notification of the breach in the security of the data to any resident of California whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person. Much of the text of the new law has been reformatted and provided below to give the reader an easily digestible version of the most relevant portions of the new law.

“Personal Information” means either (1) an individual’s first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted:

  • Social security number.
  • Driver’s license number or California identification card number.
  • 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.
  • Medical information. “Medical Information” means any information regarding an individual’s medical history, mental or physical condition, or medical treatment or diagnosis by a health care professional
  • Health insurance information.  “Health Insurance Information” means an individual’s health insurance policy number or subscriber identification number, any unique identifier used by a health insurer to identify the
    individual, or any information in an individual’s application and claims history, including any appeals records.; or

(2) a user name or email address, in combination with a password or security question and answer that would permit access to an online account.

“Personal Information” does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records.

The highlights of the law include:

  • The disclosure shall be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement or as necessary to determine the scope of the breach and restore the reasonable integrity of the data system.
  • The notification may be delayed if a law enforcement agency determines that the notification will impede a criminal investigation.  The notification shall be made after the law enforcement agency determines that it will not compromise the investigation.
  • The security breach notification shall be written in plain language.
  • The security breach notification shall include, at a minimum, the following information: (a) the name and contact information of the reporting person or business; (b) a list of the types of personal information that were or are reasonably believed to have been the subject of a breach; (c) if the foregoing information is possible to determine at the time the notice is provided, then any of the following: (i) the date of the breach, (ii) the estimated date of the breach, or (iii) the date range within which the breach occurred (the notification shall also include the date of the notice); (d) whether notification was delayed as a result of a law enforcement investigation, if that information is possible to determine at the time the notice is provided; (e) a general description of the breach incident, if that information is possible to determine at the time the notice is provided; and (f) the toll-free telephone numbers and addresses of the major credit reporting agencies if the breach exposed a social security number or a driver’s license or California identification card number.
  • At the discretion of the person or business, the security breach notification may also include any of the following: (a) information about what the person or business has done to protect individuals whose information has been breached, and (b) advice on steps that the person whose information has been breached may take to protect himself or herself.

With respect to the manner of notification, “notice” may be provided by one of the following methods:

  • Written notice.
  • Electronic notice, if the notice provided is consistent with the provisions regarding electronic records and signatures set forth in Section 7001 of Title 15 of the United States Code.
  • Substitute notice, if the person or business demonstrates that the cost of providing notice would exceed two hundred fifty thousand dollars ($250,000), or that the affected class of subject persons to be notified exceeds 500,000, or the person or business does not have sufficient contact information. Substitute notice shall consist of all of the following: (a) email notice when the person or business has an email address for
    the subject persons; (b) conspicuous posting of the notice on the Internet Web site page of the person or business, if the person or business maintains one; and (c) notification to major statewide media.

Additionally, if the breach includes a user name or email address, in combination with a password or security question and answer that would permit access to an online account, but not including any of the other information in the above definition of Personal Information, the person or business may provide the security breach notification in electronic or other form that directs the person whose personal information has been breached promptly to change his or her password and security question or answer, as applicable, or to take other steps appropriate to protect the online account with the person or business and all other online accounts for which the person whose personal information has been breached uses the same user name or email address and password or security question or answer.

If the breach includes a user name or email address, in combination with a password or security question and answer that would permit access to an email account furnished by the person or business, the person or
business shall not comply with this section by providing the security breach notification to that email address, but may, instead provide notice by another method described above or by clear and conspicuous notice delivered to the resident online when the resident is connected to the online account from an Internet Protocol address or online location from which the person or business knows the resident customarily accesses the account.

Notwithstanding the above, a person or business that maintains its own notification procedures as part of an information security policy for the treatment of personal information and is otherwise consistent with the
timing requirements of the law, shall be deemed to be in compliance with the notification requirements if the person or business notifies subject persons in accordance with its policies in the event of a breach of security of the system.

The University of Wisconsin-Milwaukee (“UWM”) announced on Wednesday that a malware-infected, university server was discovered on May 25th that allowed hackers, apparently seeking research data, to access several types of scanned documents. Included in the potentially accessed documents were student applications from past and present students, which applications contained Social Security numbers.

At this time, UWM has not been able to confirm that any of the documents were actually taken by the hackers. UWM reports that “[t]he university learned of the installation of malware on May 25, and immediately shut down the system and began to investigate. During the course of the investigation, on June 30, 2011, we discovered that the database containing social security numbers was included in the compromised system.”

UWM wants to assure students that although names and Social Security numbers were possibly taken, the potentially accessed documents did not contain any financial data or academic information such as student grades. At least students don’t have to worry about having embarrassing grades posted.

The announcement asks “[s]houldn’t the university be offering free credit monitoring?” After all, free credit monitoring is expected these days, although certainly no required. The response? “We have no evidence that anyone’s personal information was retrieved or that any information was misused. However, it is recommended that everyone should monitor their financial information by:

  • Reviewing bank and credit card statements regularly, and looking for unusual or suspicious activities.
  • Contacting appropriate financial institutions immediately upon noticing any irregularity in a credit report or account.
  • Request a free credit report and carefully inspect your own credit scores.

That is one approach, I suppose.  It is certainly different.

While the details of the investigation by this public institution remains under wraps, it does raise interesting questions. To be clear, there may be excellent bases for not making the disclosure earlier. However, we have seen more and more experts commenting on how huge delays in public announcements are justified. Sure, delays in notification can sometimes be justified where only an intrusion is known and it is unclear whether personal information is accessible through that intrusion.

We have come to the point where using the “ongoing internal investigation” excuse is habitually abused. In this case, based on facts known, it took 35 days for a “national computer security consultant” to determine the source and extent of the breach. In other words, it took experts 35 day to conclude that if a certain port on a server was exposed, then access to a certain, non-encrypted database was possible. I asked our network guys about this, and they said it should take about 30 minutes to determine what was exposed if a port was left open.

After confirmation of the possibility that the sensitive documents could have been accessed, it too another 41 days to make a public announcement.

Okay, so maybe law enforcement delayed the notification. Certainly possible. These comments are not meant to be an indictment of UWM specifically, but of the new approach to data breach notification that is occurring more often than not.

In the cases where delay notification is grossly delayed, it is more often that company executives and their counsel decide that if the breach was announced, and it was later determined that access to the potentially accessed documents did not occur, then the “bad press” would be worse than delaying notification for 77 days.  Stated another way, they don’t want to unnecessarily worry potentially affected persons.

Again, we do not know all the facts. In all likelihood the sensitive documents were not accessed.  However, more and more we all are seeing HUGE delays in notifying those affected. If I received a breach notification 77 days after discovery I would be mad as hell. That is 77 days when identity theft could have occurred and I was not being vigilant because I was unaware of a breach. This is the exploding Pinto approach to data breaches.

You may recall that Governor Schwarzenegger "terminated" the proposed update to California´s landmark privacy protection law (AB 700), known as SB 20, which California’s State Legislature previously approved and we reported about here. SB 20 was proposed by State Senator Joe Simitian (D-Palo Alto), the original author of California’s breach notification law after which many states model their breach notification laws.

Well, the Governator’s office encouraged Rep. Simitian to reintroduce the amendment, which is now Senate Bill 1166.  This Bill was approved by the California Senate last Thursday and now moves to the California State Assembly for approval and, if approved, signature by the Governor.

The existing legislation requires that any company or business that loses unencrypted personal information send a security breach notification letter to those affected. States adopting breach notification laws similar to California’s now number 46, plus the District of Columbia, Puerto Rico and the US Virgin Islands. 

At its heart, SB 1166 accomplishes two major goals. First, SB 1166 would require that the notification letters sent to victims “contain specific information designed to help victims safeguard their privacy. This includes the type of personal information exposed, a description of the incident, and when it took place.”  At least 13 states already have laws indicating the contents of breach notification letters to affected individuals.  These provisions are often encouraged because consumers receiving notices are often confused about what data is affected, and because as the number generic notices received by consumers increased there is fear that apathy will set in and a consumer will miss notice of a particularly troubling breach.

Second, SB 1166 would also require that parties that have a (single event) data breach that affects more than 500 California residents provide a copy of the notification letter to the state Attorney General’s office. This second provision is where the there is now a potential for a clearinghouse. In most conceivable cases of a data breach of any significant size, it is likely that 500 California residents will be affected. Under applicable sunshine laws, this information would be more widely available to watchdog groups, not to mention concerned citizens. It is also conceivable that the Attorney General’s office would post information regarding these reported data breaches on its web site in an easily accessible manner.

We will have to wait and see if Skynet orders the Governor signs this law when and if it reaches his desk.