BILL NUMBER: AB 1656	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 27, 2008
	PASSED THE ASSEMBLY  AUGUST 31, 2008
	AMENDED IN SENATE  AUGUST 6, 2008
	AMENDED IN SENATE  SEPTEMBER 7, 2007
	AMENDED IN SENATE  AUGUST 20, 2007
	AMENDED IN SENATE  JULY 3, 2007
	AMENDED IN ASSEMBLY  JUNE 1, 2007
	AMENDED IN ASSEMBLY  MAY 1, 2007
	AMENDED IN ASSEMBLY  APRIL 12, 2007

INTRODUCED BY   Assembly Member Jones
   (Principal coauthor: Senator Torlakson)
   (Coauthors: Assembly Members Adams, Aghazarian, DeSaulnier,
Fuentes, Garrick, Huffman, Krekorian, and Plescia)
   (Coauthors: Senators Denham, Scott, and Wyland)

                        FEBRUARY 23, 2007

   An act to amend Sections 1798.29 and 1798.82 of, and to add
Sections 1724.4, 1724.5, 1724.6, 1798.295, and 1798.825 to, the Civil
Code, relating to personal information.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1656, Jones. Personal information: security breaches.
   (1) Existing law imposes specified duties upon certain persons or
businesses that conduct business in California to, among other
things, take reasonable steps to destroy customer records, implement
and maintain reasonable security measures, disclose a breach of
computerized data, and, upon request, provide specified information
to a customer in relation to the disclosure of personal information
to 3rd parties. For a violation of any of the above-described
provisions, existing law allows an injured customer to institute a
civil action to recover damages or for injunctive relief.
   This bill would prohibit a person, business, or agency, as
defined, that sells goods or services to any resident of California
and accepts as payment a credit card, debit card, or other payment
device, from storing, retaining, sending, or failing to limit access
to payment-related data, as defined, retaining a primary account
number, or storing sensitive authentication data subsequent to an
authorization, as specified, unless a specified exception applies.
   (2) Existing law requires any agency, person, or business that
maintains computerized data that includes personal information that
the agency, person, or business does not own, to 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.
   This bill would require that notification to the owner or licensee
of the information to include, among other things, a description of
the categories of personal information that were, or may have been,
acquired, a toll-free or local telephone number or e-mail address
that individuals may use to contact the agency, person, or business,
and the telephone numbers and addresses of the major credit reporting
agencies. If the owner or licensee of the information is the issuer
of the credit or debit card or the payment device, or maintains the
account from which the payment device orders payment or is an agency
required to give notice of a security breach, as specified, the bill
would require the owner or licensee to disclose the same information
to the California resident in plain language, as specified.
   (3) Existing law requires any state agency, or a person or
business that conducts business in California, that owns or licenses
computerized data that includes personal information, as defined, to
disclose any breach of the security of that data to any resident of
California whose unencrypted personal information was, or is
reasonably believed to have been, acquired by an unauthorized person.
Existing law allows for that disclosure by written notice,
electronic notice, or, upon a specified condition, by substitute
notice, which, if utilized, also requires notification to major
statewide media.
   This bill, if substitute notice is utilized, would require that
notice to also be provided to the Office of Information Security and
Privacy Protection.
   The bill would specify that it would only become operative if SB
364 is enacted and takes effect on or before January 1, 2009.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1724.4 is added to the Civil Code, to read:
   1724.4.  (a) In addition to being subject to the provisions of
Title 1.81 (commencing with Section 1798.80) of Part 4, a person,
business, or agency, as defined in subdivision (b) of Section 1798.3,
that sells goods or services to any resident of California and
accepts as payment a credit card, debit card, or other payment device
shall not do any of the following:
   (1) Store payment-related data, except when the person, business,
or agency complies with both of the following:
   (A) The person, business, or agency shall have a payment data
retention and disposal policy that limits the amount of
payment-related data and the time that data is retained to only the
amount and time required for business, legal, or regulatory purposes
as explicitly documented in the policy.
   (B) The person, business, or agency shall retain payment-related
data only for a time period and in a manner explicitly permitted by
the policy.
   (2) Store sensitive authentication data subsequent to
authorization, even if that data is encrypted. Sensitive
authentication data includes all of the following:
   (A) The full contents of any data track from a payment card or
other payment device.
   (B) The card verification code or any value used to verify
transactions when the payment device is not present.
   (C) The personal identification number (PIN) or the encrypted PIN
block.
   (3) Store any payment-related data that is not needed for
business, legal, or regulatory purposes.
   (4) Store any of the following data elements:
   (A) Payment verification code.
   (B) Payment verification value.
   (C) PIN verification value.
   (5) Retain the primary account number unless retained in a manner
consistent with the other requirements of this subdivision and in a
form that is unreadable and unusable by unauthorized persons anywhere
it is stored.
   (6) Send payment-related data over open, public networks unless
the data is encrypted using strong cryptography and security
protocols or otherwise rendered indecipherable.
   (7) Fail to limit access to payment-related data to only those
individuals whose job requires that access.
   (b) (1) This section shall not apply to any person or business
subject to Sections 6801 to 6809, inclusive, of Title 15 of the
United States Code and state or federal statutes or regulations
implementing those sections, if the person or business is subject to
compliance oversight by a state or federal regulatory agency with
respect to those sections.
   (2) Nothing in this section shall prohibit a person, business, or
agency, as defined in subdivision (b) of Section 1798.3, that sells
goods or services to any California resident and accepts as payment a
credit card, debit card, or other payment device from storing
payment-related data for the sole purpose of processing ongoing or
recurring payments, provided that the payment-related data is
maintained in accordance with this section.
   (c) For purposes of this section, "payment-related data" means any
computerized information described in paragraph (3) of subdivision
(e) of Section 1798.82, whether individually or in combination with
any other information described in that paragraph.
  SEC. 2.  Section 1724.5 is added to the Civil Code, to read:
   1724.5.  (a) Any person, business, or agency subject to Section
1724.4 that is required to give notice of a breach of the security of
the system pursuant to subdivision (b) of Section 1798.29 or
subdivision (b) of Section 1798.82 shall include in that notification
to the owner or licensee of the information, in plain language, all
of the following information if available at the time the notice is
provided:
   (1) The date of the notice.
   (2) The name of the agency, person, or business that maintained
the computerized data at the time of the breach.
   (3) The date, estimated date, or date range within which the
breach occurred, if that information is possible to determine at the
time the notice is provided.
   (4) A description of the categories of personal information that
was, or is reasonably believed to have been, acquired by an
unauthorized person.
   (5) A toll-free telephone number for the agency, person, or
business subject to the breach of the security of the system of that
agency, person, or business or, if the primary method used by that
agency, person, or business to communicate with the individuals whose
information is the subject of the breach is by electronic means, an
e-mail address that the individuals may use to contact the agency,
person, or business so that the individuals may learn what types of
personal information that agency, person, or business maintained
about the individuals were subject to the security breach. If the
agency, person, or business that experienced the breach does not have
a toll-free telephone number, a local telephone number may be
provided to the owner or licensee of the information to contact the
agency, person, or business.
   (6) The toll-free telephone numbers and addresses for the major
credit reporting agencies.
   (b) The notification required by subdivisions (a) and (c) may be
delayed if a law enforcement agency determines that the notification
will impede a criminal investigation. The notification required by
subdivisions (a) and (c) shall be made after the law enforcement
agency determines that it will not compromise the investigation.
   (c) If the owner or licensee of the information is the issuer of
the credit or debit card or the payment device, or maintains the
account from which the payment device orders payment, or is an agency
required to give notice of a breach of the security of the system
pursuant to subdivision (a) of Section 1798.29, the owner or licensee
shall disclose to the California resident in any notification
provided pursuant to subdivision (a) of Section 1798.29 or
subdivision (a) of Section 1798.82, in plain language, all
information described in paragraphs (1) to (6), inclusive, of
subdivision (a) of this section that is available at the time that
notification is made, except however, with respect to paragraph (5),
an e-mail address may be provided in lieu of a toll-free or local
telephone number to those individuals with whom the primary method
used by that agency, person, or business to communicate is by
electronic means.
  SEC. 3.  Section 1724.6 is added to the Civil Code, to read:
   1724.6.  Any person, business, or agency subject to Section 1724.4
required to give the notice described in subdivision (a) of Section
1724.5 shall be liable to the owner or licensee of the information
for the actual costs of any consumer notification provided by the
owner or licensee pursuant to Section 1798.29 or 1798.82.
  SEC. 3.  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. 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.
   (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.
   (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) 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.
   (e) 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.
   (f) (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.
   (g) 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 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 Internet Web
site, if the agency maintains one.
   (C) Notification to major statewide media and the Office of
Information Security and Privacy Protection.
   (h) Notwithstanding subdivision (g), 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.
  SEC. 4.  Section 1798.295 is added to the Civil Code, to read:
   1798.295.  The notification required pursuant to Section 1798.29
shall be in accordance with Section 1724.5, if applicable.
  SEC. 5.  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.
   (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.
   (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) 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.
   (e) 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.
   (f) (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.
   (g) 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 Internet Web site of
the person or business, if the person or business maintains one.
   (C) Notification to major statewide media and the Office of
Information Security and Privacy Protection.
   (h) Notwithstanding subdivision (g), 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.
  SEC. 6.  Section 1798.825 is added to the Civil Code, to read:
   1798.825.  The notification required pursuant to Section 1798.82
shall be in accordance with Section 1724.5, if applicable.
  SEC. 7.  This act shall become operative only if Senate Bill 364 of
the 2007-08 Regular Session is enacted and takes effect on or before
January 1, 2009.