California’s New Privacy & Breach Notification Law: SB 20

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The California Assembly passed a new Breach Notification Law.   This proposed law, called SB 20, will become effective if and when California’s Governor, the Schwartzenator, will sign it into law.   Here is my analysis of the requirements specified in the new law:

 

Analysis of California SB 20 Privacy Law
 Section  Text  Meaning
 Long Title  An act to amend Sections 1798.29 and 1798.82 of the Civil Code, relating to personal information.  Changing the current Security Breach Notification requirements
 Preamble  … This bill would require any agency, person, or business that is required to issue a security breach notification pursuant to existing law to fulfill certain additional requirements pertaining to the security breach notification, as specified… Self explanatory
   …The bill would also require any agency, person, or business that
is required to issue a security breach notification to more than 500
California residents pursuant to existing law to electronically
submit a single sample copy of that security breach notification to
the Attorney General, as specified…

This is the gist of the bill.   Here you see two important items:

  1. First, this bill applies to State agencies, unlike some other bills in other States.
  2. Secondly, if the breach involves data on more than 500 California residents, you must now let the California Attorney General know.
     
 Section 1 Section 1798.29 of the Civil Code is amended to read:
1798.29. (a) Any agency that owns or licenses computerized data that includes personal information shall disclose 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…

It seems to imply that if the data was encrypted at the time of compromise, than this law does not apply.   This is a major issue that may invalidate the bill.   Let me explain:

When data is stored on a hard drive or a tape, it is stored often in a file format specific to the program storing it.   One can argue, I believe, that that is a form of encryption…

 
   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 (c), or any measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system….

Here I see another "gotcha".   The need for expediency here is trumped by  "any measure necessary to determine the scope of the breach" and by "restore the reasonable integrity of the data system….".

Why is that a gotcha?  Because anyone can say: "We are still assessing the scope"  or "we have not restored integrity yet"

 1 (b) (b) Any agency that maintains computerized data that includes personal information that the agency does not own shall notify the owner or licensee of the information of any breach of the security of the data immediately following discovery, if the personal information was, or is reasonably believed to have been, acquired by an unauthorized person. Makes sense to me.
 1 (c) (c) The notification required by this section may be delayed if a law enforcement agency determines that the notification will impede a criminal investigation. The notification required by this section shall be made after the law enforcement agency determines that it will not compromise the investigation.  It makes sense to me, but… delays the expediency clause above.
 1 (d)  (d) Any agency that is required to issue a security breach notification pursuant to this section shall meet all of the following requirements:
(1) The security breach notification shall be written in plain language.
Got to love this!
     
2

The security breach notification shall include, at a minimum, the following information:
(A) The name and contact information of the reporting agency subject to this section.
(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 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 the 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.
(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.

This is a nice description of must be provided.  I am sure businesses appreciate it (this section, however, applies only to State agencies)

 

 

 

 

 

 

It is nice how, here, the requirement is made to supply the numbers of the three "devils".  

     
 3 At the discretion of the agency, the security breach
notification may also include any of the following:
(A) Information about what the agency has done to protect individuals whose information has been breached.
(B) Advice on steps that the person whose information has been breached may take to protect himself or herself.
Optional addition info.
3 (e)  (e) Any agency that is required to issue a security breach notification pursuant to this section to more than 500 California residents as a result of a single breach of the security system shall electronically submit a single sample copy of that security breach notification, excluding any personally identifiable information, to the Attorney General. A single sample copy of a security breach notification shall not be deemed to be within subdivision (f) of Section 6254 of the Government Code.

I am not sure what happened to (C) and (D) and why we went from caps to small case….

This section is a reference to the California Government Discourse laws, making, in my opinion, these notification letters subject to the California Sunshine laws.

 3 (f)  (f) For purposes of this section, "breach of the security of the system" means unauthorized acquisition of computerized data that compromises the security, confidentiality, or integrity of personal information maintained by the agency. Good faith acquisition of personal information by an employee or agent of the agency for the purposes of the agency is not a breach of the security of the system, provided that the personal information is not used or subject to further unauthorized disclosure.

I understand why they say what they said, however, and this is a big HOWEVER, here we see a definition of a security breach becoming something ridiculous.    A breach is only happening after the misuse of the information. 

I am sure that there is a better way to write this…

 3 (g)  (g) For purposes of this section, "personal information" means 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:

It may seems petty, but I read this requirement 2 different ways.  Bear with me:

  • an individual’s first name or (first initial and last name), or
  • an individual’s (first name or first initial) and last name

See?  Under the first option, a first name is enough to trigger this requirement.

  (1) Social security number.
(2) Driver’s license number or California Identification Card number.
(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.
(4) Medical information.
(5) Health insurance information.

Nice list, but….

(3) so Credit Card number (with name) is not covered here?

 3(h)

(h) (1) For purposes of this section, "personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records.
(2) For purposes of this section, "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.
(3) For purposes of this section, "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.

(i) For purposes of this section, "notice" may be provided by one of the following methods:
(1) Written notice.
(2) 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.

This is good, because without this, even a medical subscription card, with already masked participant code, would be covered.
3(h)(3)

 (3) Substitute notice, if the agency 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 agency does not have sufficient
contact information. Substitute notice shall consist of all of the following:
(A) E-mail notice when the agency has an e-mail address for the subject persons.
(B) Conspicuous posting of the notice on the agency’s Web site page, if the agency maintains one. (C) Notification to major statewide media and the Office of Information Security within the office of the State Chief Information Officer.

This is a VERY good step forward.   
3(j) (j) Notwithstanding subdivision (i), an agency 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 this part shall be deemed to be in compliance with the notification requirements of this
section if it notifies subject persons in accordance with its policies in the event of a breach of security of the system.
Excuse me?  There is no "i" anymore…
     
 2 Section 1798.82 of the Civil Code is amended to read:
1798.82. (a) Any person or business that conducts business in California, and that owns or licenses computerized data that includes personal information, shall disclose 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. 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 (c), or any measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system.

This is a virtual mirror to the Agency-related requirements above, except that it speaks of Persons and Companies.  So the same exaltations and critiques apply.

Notice the specific call out of owns or licenses.   This section does not apply to 3rd party processors or hosting companies.

2 (b) (b) Any person or business that maintains computerized data that includes personal information that the person or business does not own shall notify the owner or licensee of the information of any breach of the security of the data immediately following discovery, if the personal information was, or is reasonably believed to have been, acquired by an unauthorized person. and here…drum roll…  the requirement of the processor and the hosting companies!
2(c) – 2(h)

(c) The notification required by this section may be delayed if a law enforcement agency determines that the notification will impede a criminal investigation. The notification required by this section shall be made after the law enforcement agency determines that it will not compromise the investigation.
(d) Any person or business that is required to issue a security breach notification pursuant to this section shall meet all of the following requirements:
(1) The security breach notification shall be written in plain language.
(2) The security breach notification shall include, at a minimum, the following information:
(A) The name and contact information of the reporting person or business subject to this section.
(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 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.
(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 California identification card number.
(3) 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.
(B) Advice on steps that the person whose information has been breached may take to protect himself or herself.
(e) Any person or business that is required to issue a security breach notification pursuant to this section to more than 500 California residents as a result of a single breach of the security system shall electronically submit a single sample copy of that security breach notification, excluding any personally identifiable information, to the Attorney General. A single sample copy of a security breach notification shall not be deemed to be within subdivision (f) of Section 6254 of the Government Code.
(f) For purposes of this section, "breach of the security of the system" means unauthorized acquisition of computerized data that compromises the security, confidentiality, or integrity of personal information maintained by the person or business. Good faith acquisition of personal information by an employee or agent of the person or business for the purposes of the person or business is not a breach of the security of the system, provided that the personal information is not used or subject to further unauthorized disclosure.

(g) For purposes of this section, "personal information" means 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: (1) Social security number. (2) Driver’s license number or California Identification Card number. (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. (4) Medical information. (5) Health insurance information.

(h) (1) For purposes of this section, "personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records. (2) For purposes of this section, "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. (3) For purposes of this section, "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. (i) For purposes of this section, "notice" may be provided by one of the following methods: (1) Written notice. (2) 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. (3) 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) E-mail notice when the person or business has an e-mail address for the subject persons. (B) Conspicuous posting of the notice on the Web site page of the person or business, if the person or business maintains one.

This is a virtual mirror to the Agency-related requirements above, except that it speaks of Persons and Companies.  So the same exaltations and critiques apply.
 2(h)(C)   (C) Notification to major statewide media and the Office of Privacy Protection within the State and Consumer Services Agency.  As far as I can tell, this is the only difference between the Agency section (above) and the Business section  The Consumer Services Agency is specified here as a must-be-notified.
2(h)(j)  (j) Notwithstanding subdivision (i), 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 this part, shall be deemed to be in compliance with the notification requirements of this section if the person or business notifies subject persons in accordance with its policies in the event of a breach of security of the system. This is a virtual mirror to the Agency-related requirements above, except that it speaks of Persons and Companies.  So the same exaltations and critiques apply.

 

 

Thank you for coming here to see my analysis of the new almost-law: California’s new Privacy and Breach Notification Law – SB 20

The usual disclaimer:  I am not a lawyer.  I don’t even play one on TV.  This is not legal advice.

 

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10 thoughts on “California’s New Privacy & Breach Notification Law: SB 20

  1. Pingback: Tweets that mention California New Privacy & Breach Notification Law: SB 20 : Intelligent Business Security | The Security Blog -- Topsy.com

  2. Excellent analysis! I agree with the devil in details arguments.. Always seems the case that clarifications are never enough! One point I would argue is whether app specific data is a form of encryption – I would say it is not. Easy to get an app to open a file. I also like the phrase in the law that mentions “unencrypted” – which can imply that if the data was encrypted and you left the keys lying around, it does not count!

  3. Pingback: California New Privacy & Breach Notification Law: SB 20 … | Daily News Headlines

      • Good questions, Joseph!

        So… here is the answers, and they are not (yet) straight answers: SB 20 is not yet law. It would replace sections and 1798.82 of the California Civil Code. I read and re-read and…. well, you get the point, but 1798.82 does not seem to have any penalties associated with it. It somewhat continues in 1798.83, and then 1798.84 does specify penalties, but calls them out only for violations of 1798.83! So, I placed a call to the California Attorney General’s office and am awaiting an official reply. I will post it here. But please remember: I am not a lawyer. For legal advice I suggest you contact an attorney.

        Ariel

  4. Hi Ariel,

    I’m currently looking for penalties and fines related to many of these types of regulations. However, beyond the costs associated with notification, I don’t see anything that constitutes a fine or right to private action. Do you know of any examples where a company or executive was fined for non-compliance with SB 1386 or anything newer in CA?

  5. @Ariel
    OK, here goes. The official reply by the California State Attorney General’s office:

    The penalty for 1798.82 lies with 1798.84 … 1798.84 provides that “any customer injured by a violation of this title may institute a civil action to recover damages.” “Any business that violates, proposes to violate, or has violated this title may be enjoined.” (1798.84(e).) 1798.82 is part of the Title 1.81, so it is included.

    By contrast, 1798.84 provides that civil penalties are only available to consumers for violations of for 1798.83, w/o referencing 1798.82. (See 1798.84(c).) So, the blogger is correct regarding the unavailability of penalties under 1798.84 for violation of 1798.82. However, if he meets the standing requirements, he could bring an action for violation of Bus. & Prof. Code section 17200 for violation of 1798.82, but only for injunctive relief, not penalties. We, as law enforcement, can bring a section 17200 action seeking injunctive relief and penalties for violation of 1798.82.

  6. Ariel,

    It looks like the new SB 20 would require the notification to the Attorney General, which would then put the notifying company in to the pentalty part of section 4057 of the California Financial Information Privacy Act, right? So, it’s more of a round about penalty.


  7. Ariel :Good questions, Joseph!
    So… here is the answers, and they are not (yet) straight answers: SB 20 is not yet law. It would replace sections and 1798.82 of the California Civil Code. I read and re-read and…. well, you get the point, but 1798.82 does not seem to have any penalties associated with it. It somewhat continues in 1798.83, and then 1798.84 does specify penalties, but calls them out only for violations of 1798.83! So, I placed a call to the California Attorney General’s office and am awaiting an official reply. I will post it here. But please remember: I am not a lawyer. For legal advice I suggest you contact an attorney.
    Ariel

    Have the Attorney General Office gotten back in touch with you on the quoted question?

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