BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 20| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 20 Author: Simitian (D) Amended: 3/4/09 Vote: 21 SENATE JUDICIARY COMMITTEE : 3-2, 2/24/09 AYES: Corbett, Florez, Leno NOES: Harman, Walters SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 SUBJECT : Personal information: privacy SOURCE : Author DIGEST : This bill amends Californias security breach notification law to provide that any agency, person, or business required to issue a notification under existing law must meet additional requirements regarding that notification. This bill requires that security breach notifications be written in plain language and contain certain specified information, including contact information regarding the breach, the types of information breached, and the date, estimated date, or date range of the breach. This bill provides that a security breach notification may also include other specified information, at the discretion of the entity issuing the notification. This bill provides that any agency, person, or business that must provide a security breach notification under existing law to more than 500 California residents as a CONTINUED SB 20 Page 2 result of a single breach would be required to submit the notification electronically to the Attorney General. This bill amends the substitute notice provisions of California's security breach notification law to require that an entity providing substitute notice also provide notice to the Office of Information Security and Privacy Protection. ANALYSIS : Existing law requires any agency, person, or business that owns or licenses computerized data that includes personal information to disclose a breach of the security of the system to any California resident whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person. The disclosure must be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement, as specified. [Sections 1798.29(a) and (c) and 1798.82(a) and (c) of the Civil Code] 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. [Sections 1798.29(b) and 1798.82(b) of the Civil Code] Existing law defines "personal information," for purposes of the breach notification statute, to include the 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, or 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, or health insurance information. "Personal information" does not include publicly available information that is lawfully made available to the general public from federal, state, or local government records. SB 20 Page 3 [Sections 1798.29(e) and (f) and 1798.82(e) and (f) of the Civil Code] This bill provides that any agency, person, or business required to issue a security breach notification under existing law must also meet certain requirements regarding the notification including that it be written in plain language. This bill also requires that the notification include, at a minimum, the following information: 1. The name and contact information of the reporting agency. 2. A list of the types of personal information that were or are reasonably believed to have been the subject 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. The date of the notice. 5. Whether the notification was delayed because of an investigation by law enforcement. 6. A general description of the breach incident. 7. The estimated number of persons affected by the breach. 8. The toll-free telephone numbers and addresses of the major credit reporting agencies if the breach exposed a bank account or credit card number, a social security number, or a driver's license or California identification card number. This bill provides that an agency, person, or business may also include the following information in a security breach notification, at its discretion: 1. Information regarding what the entity has done to protect individuals whose information has been breached. 2. Advice on steps that the individual may take to protect SB 20 Page 4 himself/herself. This bill requires any agency, person, or business that must provide a security breach notification pursuant to existing law to more than 500 California residents as a result of a single breach of the security system to submit the notification electronically to the Attorney General. Existing law requires an agency, person, or business to provide breach notification using either written notice, electronic notice, or substitute notice. An entity may use substitute notice when it demonstrates that the cost of providing notice would exceed $250,000, or that the affected class of persons to be notified exceeds 500,000, or if the entity does not have sufficient contact information. Substitute notice must consist of (1) electronic mail notice when the entity has an email address for the affected individuals, (2) conspicuous posting of the notice on the entity's Web site, and (3) notification to major statewide media. [Sections 1798.29(g) and 1798.82(g) of the Civil Code] This bill additionally requires notification to the Office of Information Security and Privacy Protection when an agency, person, or business uses substitute notice. Prior Legislation SB 364 (Simitian, 2008) would have required that breach notifications be written in plain language and contain specified information, such as the name of the entity that maintained the computerized data at the time of the breach and a description of the categories of personal information that was breached. The bill passed the Senate by a vote of 38-2 on August 30, 2008, and was vetoed by the Governor. In his veto message, the Governor stated: "California's landmark law on data breach notification has had many beneficial results. Informing individuals whose personal information was compromised in a breach of what their risks are and what they can do to protect themselves is an important consumer SB 20 Page 5 protection benefit. The law has also provided a window on information privacy and security practices that has led organizations to make many improvements. "Unfortunately, this bill could lead consumers to believe that all data breaches result in identity theft. Further, this would place an additional unnecessary cost on businesses without a corresponding consumer benefit." AB 1656 (Jones, 2008) would have, among other things, required a person, business, or agency who maintains personal information to include specified items in a breach notification to the owner or licensee of the information. The bill would also have required that the specified items be disclosed to affected California residents if the owner or licensee of the information is also the issuer of the credit or debit card. The bill passed the Senate by a vote of 34-3 on August 27, 2008, and was vetoed by the Governor. AB 779 (Jones, 2007) would have, among other things, provided that the Office of Privacy Protection be notified if substitute notice was used. The bill would also have required any agency, person, or business that owns, licenses, or maintains personal information related to various payment devices to notify the owner, licensee, or California resident of a security data breach. The notification would have been required to contain certain specified standard information, including, among other things, when the breach occurred and the categories of personal information breached. The bill passed the Senate by a vote of 30-6 on September 6, 2007, and was vetoed by the Governor. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 5/20/09) SB 20 Page 6 California Public Interest Research Group California School Employees Association Consumer Federation of California Privacy Rights Clearinghouse OPPOSITION : (Verified 5/20/09) Association of California Insurance Companies California Bankers Association California Business Properties Association California Chamber of Commerce California Financial Services Association California Mortgage Bankers Association Experian Personal Insurance Federation of California State Privacy and Security Coalition State Farm Insurance Tech America ARGUMENTS IN SUPPORT : The author writes: "Although California has a security breach notification law (A.B. 700, Simitian/S.B. 1386, Peace - 2002), we do not require public agencies, businesses, or persons subject to that law to provide any standard set of information about the breach to consumers. As a result, security breach notification letters often lack important information - such as the time of the breach or type of information that was breached - or are confusing to consumers. This leaves consumers uncertain about how to respond to the breach or protect themselves from identity theft, and leaves businesses and government entities that have experienced a breach unsure about what to put in the notices they send consumers. "This bill would make relatively modest but helpful changes to the current security breach notification statutes to enhance consumer knowledge about, and understanding of, security breaches by requiring that the customer notification required by current law contain specified information." ARGUMENTS IN OPPOSITION : The California Business SB 20 Page 7 Properties Association, California Chamber of Commerce, California Financial Services Association, California Mortgage Bankers Association, Experian, Personal Insurance Federation of California, and State Privacy and Security Coalition oppose this bill, raising concerns about the specified items of information. They assert that the requirement that the breach notification contain the toll-free telephone numbers of major credit reporting agencies leads consumers to believe that a breach will result in identity theft, which is not necessarily the case according to the groups. The organizations also question whether it is necessary that a consumer receive notification about the estimated number of people affected by a breach. Finally, they argue that this bill's requirement that the Office of Information Security and Privacy Protection be notified when substitute notice is used is unnecessary and, if notice to a government agency is necessary, then it should go to the Attorney General. State Farm argues that disclosing the date, estimated date, or date range of the breach will provide a hacker with important information about the security of a computer system and will confirm to the hacker that his/her approach used at that time was successful. State Farm also asserts that reporting the number of persons affected by a breach provides a hacker with information about the size of the breached database which, it argues, allows a hacker to focus his/her efforts on larger databases. RJG:mw 5/20/09 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****