Amended in Senate August 19, 2014

Amended in Senate July 1, 2014

Amended in Senate June 5, 2014

Amended in Assembly May 8, 2014

Amended in Assembly April 24, 2014

Amended in Assembly March 28, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1710

Introduced by Assembly Members Dickinson and Wieckowski

February 13, 2014

An act to amend Sections 1798.81.5, 1798.82, and 1798.85 of the Civil Code, relating to personal information privacy.

LEGISLATIVE COUNSEL’S DIGEST

AB 1710, as amended, Dickinson. Personal information: privacy.

Existing law requires a person or business conducting business in California that owns or licenses computerized data that includes personal information, as defined, to disclose, as specified, a breach of the security of the system or data following discovery or notification of the security breach to any California resident whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person. Existing law also requires a person or business that maintains computerized data that includes personal information that the 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 begin delete discovery end delete begin insert discovery, end insert as specified. Existing law requires a person or business required to issue a security breach notification pursuant to these provisions to meet various requirements, including that the security breach notification provide specified information.

This bill would require, begin delete if 500 or more persons are affected by the breach, that a person or business that maintains computerized data that includes personal information notify those persons of the breach of the security when a credit or debit card number was, or is reasonably believed to have been, acquired by an unauthorized person at the same time that the notice is given to the owner or licensee, as specified. The bill would authorize the owner or licensee of computerized data that includes personal information and a person or business that maintains computerized data that includes personal information to agree, pursuant to a written contractual agreement, to make the owner or licensee responsible for carrying out the notice requirement described above. With end delete begin insert with end insert respect to the information required to be included in the notification, begin delete the bill would require, end delete if the person or business providing the notification was the source of the breach, that begin insert the end insert person or business begin delete to end delete offer to provide appropriate identity theft prevention and mitigation services, if any, to the affected person at no cost for not less than 12 months if the breach exposed or may have exposed specified personal information.

Existing law requires a business that owns or licenses personal information about a California resident to implement and maintain reasonable security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification, or disclosure.

This bill would expand these provisions to businesses that own, license, or maintain personal information about a California resident, as specified.

Existing law prohibits a person or entity, with specified exceptions, from publicly posting or displaying an individual’s social security number or doing certain other acts that might compromise the security of an individual’s social security number, unless otherwise required by federal or state law.

This bill would also, except as specified, prohibit the sale, advertisement for sale, or offer to sell of an individual’s social security number.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1798.81.5 of the Civil Code is amended
to read:

1798.81.5.  

(a) (1) It is the intent of the Legislature to ensure
that personal information about California residents is protected.
To that end, the purpose of this section is to encourage businesses
that own, license, or maintain personal information about
Californians to provide reasonable security for that information.

(2) For the purpose of this section, the terms “own” and
“license” include personal information that a business retains as
part of the business’ internal customer account or for the purpose
of using that information in transactions with the person to whom
the information relates. The term “maintain” includes personal
information that a business maintains but does not own or license.

(b) A business that owns, licenses, or maintains personal
information about a California resident shall implement and
maintain reasonable security procedures and practices appropriate
to the nature of the information, to protect the personal information
from unauthorized access, destruction, use, modification, or
disclosure.

(c) A business that discloses personal information about a
California resident pursuant to a contract with a nonaffiliated third
party that is not subject to subdivision (b) shall require by contract
that the third party implement and maintain reasonable security
procedures and practices appropriate to the nature of the
information, to protect the personal information from unauthorized
access, destruction, use, modification, or disclosure.

(d) For purposes of this section, the following terms have the
following meanings:

(1) “Personal information” means an individual’s first name or
first initial and his or her 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 or redacted:

(A) Social security number.

(B) Driver’s license number or California identification card
number.

(C) 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.

(D) Medical information.

(2) “Medical information” means any individually identifiable
information, in electronic or physical form, regarding the
individual’s medical history or medical treatment or diagnosis by
a health care professional.

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

(e) The provisions of this section do not apply to any of the
following:

(1) A provider of health care, health care service plan, or
contractor regulated by the Confidentiality of Medical Information
Act (Part 2.6 (commencing with Section 56) of Division 1).

(2) A financial institution as defined in Section 4052 of the
Financial Code and subject to the California Financial Information
Privacy Act (Division 1.2 (commencing with Section 4050) of the
Financial Code).

(3) A covered entity governed by the medical privacy and
security rules issued by the federal Department of Health and
Human Services, Parts 160 and 164 of Title 45 of the Code of
Federal Regulations, established pursuant to the Health Insurance
Portability and Availability Act of 1996 (HIPAA).

(4) An entity that obtains information under an agreement
pursuant to Article 3 (commencing with Section 1800) of Chapter
1 of Division 2 of the Vehicle Code and is subject to the
confidentiality requirements of the Vehicle Code.

(5) A business that is regulated by state or federal law providing
greater protection to personal information than that provided by
this section in regard to the subjects addressed by this section.
Compliance with that state or federal law shall be deemed
compliance with this section with regard to those subjects. This
paragraph does not relieve a business from a duty to comply with
any other requirements of other state and federal law regarding
the protection and privacy of personal information.

SEC. 2.  

Section 1798.82 of the Civil Code is amended to read:

1798.82.  

(a) A person or business that conducts business in
California, and that owns or licenses computerized data that
includes personal information, shall disclose a breach of the
security of the system following discovery or notification of the
breach in the security of the data to a 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)  begin delete (1) end delete begin delete   end delete A 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
the 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.

begin delete

(2)  Except as provided in paragraph (3), if 500 or more subject
persons are affected, a person or business that maintains
computerized data that includes personal information shall notify
those subject persons of the breach of the security when a credit
or debit card number was, or is reasonably believed to have been,
acquired by an unauthorized person at the same time that the notice
is given to the owner or licensee by United States mail if the person
or business has a mailing address for the subject persons or email
notice if the person or business has an email address for the subject
persons. If the subject persons cannot be notified by mail or email,
the person or business shall provide notice by the following
methods:

(A) Conspicuous posting of the notice on the Internet Web site
page of the person or business, if the person or business maintains
an Internet Web site page, for at least 30 days.

(B) Notification to major statewide media.

(3) Notwithstanding paragraph (2), the owner or licensee of
computerized data that includes personal information and a person
or business that maintains computerized data that includes personal
information may agree, based on a written contractual agreement,
to make the owner or licensee responsible for the requirement in
paragraph (2).

end delete

(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 promptly after the law enforcement agency
determines that it will not compromise the investigation.

(d) A 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 or California identification card
number.

(G) If the person or business providing the notification was the
source of the breach, an offer to provide appropriate identity theft
prevention and mitigation services, if any, shall be provided at no
cost to the affected person for not less than 12 months, along with
all information necessary to take advantage of the offer to any
person whose information was or may have been breached if the
breach exposed or may have exposed personal information defined
in subparagraphs (A) and (B) of paragraph (1) of subdivision (h).

(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.

(4) In the case of a breach of the security of the system involving
personal information defined in paragraph (2) of subdivision (h)
for an online account, and no other personal information defined
in paragraph (1) of subdivision (h), the person or business may
comply with this section by providing 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.

(5) In the case of a breach of the security of the system involving
personal information defined in paragraph (2) of subdivision (h)
for login credentials of 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, comply with this section by providing
notice by another method described in subdivision (j) 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.

(e) A covered entity under the federal Health Insurance
Portability and Accountability Act of 1996 (42 U.S.C. Sec. 1320d
et seq.) will be deemed to have complied with the notice
requirements in subdivision (d) if it has complied completely with
Section 13402(f) of the federal Health Information Technology
for Economic and Clinical Health Act (Public Law 111-5).
However, nothing in this subdivision shall be construed to exempt
a covered entity from any other provision of this section.

(f) A 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.

(g) 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.

(h) For purposes of this section, “personal information” means
either of the following:

(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:

(A) Social security number.

(B) Driver’s license number or California identification card
number.

(C) 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.

(D) Medical information.

(E) Health insurance information.

(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.

(i) (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.

(j) 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) 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.

(C) Notification to major statewide media.

(k) Notwithstanding subdivision (j), 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. 3.  

Section 1798.85 of the Civil Code is amended to read:

1798.85.  

(a) Except as provided in this section, a person or
entity may not do any of the following:

(1) Publicly post or publicly display in any manner an
individual’s social security number. “Publicly post” or “publicly
display” means to intentionally communicate or otherwise make
available to the general public.

(2) Print an individual’s social security number on any card
required for the individual to access products or services provided
by the person or entity.

(3) Require an individual to transmit his or her social security
number over the Internet, unless the connection is secure or the
social security number is encrypted.

(4) Require an individual to use his or her social security number
to access an Internet Web site, unless a password or unique
personal identification number or other authentication device is
also required to access the Internet Web site.

(5) Print an individual’s social security number on any materials
that are mailed to the individual, unless state or federal law requires
the social security number to be on the document to be mailed.
Notwithstanding this paragraph, social security numbers may be
included in applications and forms sent by mail, including
documents sent as part of an application or enrollment process, or
to establish, amend or terminate an account, contract or policy, or
to confirm the accuracy of the social security number. A social
security number that is permitted to be mailed under this section
may not be printed, in whole or in part, on a postcard or other
mailer not requiring an envelope, or visible on the envelope or
without the envelope having been opened.

(6) Sell, advertise for sale, or offer to sell an individual’s social
security number. For purposes of this paragraph, the following
apply:

(A) “Sell” shall not include the release of an individual’s social
security number if the release of the social security number is
incidental to a larger transaction and is necessary to identify the
individual in order to accomplish a legitimate business purpose.
begin insert Release of an individual’s social security number for marketing
purposes is not permitted. end insert

begin delete

(B) The release of a social security number for the purpose of
marketing is not a legitimate business purpose.

end delete begin delete

(C)

end delete

begin insert (B) end insert  “Sell” shall not include the release of an individual’s social
security number for a purpose specifically authorized or specifically
allowed by federal or state law.

(b) This section does not prevent the collection, use, or release
of a social security number as required by state or federal law or
the use of a social security number for internal verification or
administrative purposes.

(c) This section does not prevent an adult state correctional
facility, an adult city jail, or an adult county jail from releasing an
inmate’s social security number, with the inmate’s consent and
upon request by the county veterans service officer or the United
States Department of Veterans Affairs, for the purposes of
determining the inmate’s status as a military veteran and his or her
eligibility for federal, state, or local veterans’ benefits or services.

(d) This section does not apply to documents that are recorded
or required to be open to the public pursuant to Chapter 3.5
(commencing with Section 6250), Chapter 14 (commencing with
Section 7150) or Chapter 14.5 (commencing with Section 7220)
of Division 7 of Title 1 of, Article 9 (commencing with Section
11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of, or Chapter
9 (commencing with Section 54950) of Part 1 of Division 2 of
Title 5 of, the Government Code. This section does not apply to
records that are required by statute, case law, or California Rule
of Court, to be made available to the public by entities provided
for in Article VI of the California Constitution.

(e) (1) In the case of a health care service plan, a provider of
health care, an insurer or a pharmacy benefits manager, a contractor
as defined in Section 56.05, or the provision by any person or
entity of administrative or other services relative to health care or
insurance products or services, including third-party administration
or administrative services only, this section shall become operative
in the following manner:

(A) On or before January 1, 2003, the entities listed in paragraph
(1) shall comply with paragraphs (1), (3), (4), and (5) of subdivision
(a) as these requirements pertain to individual policyholders or
individual contractholders.

(B) On or before January 1, 2004, the entities listed in paragraph
(1) shall comply with paragraphs (1) to (5), inclusive, of
subdivision (a) as these requirements pertain to new individual
policyholders or new individual contractholders and new groups,
including new groups administered or issued on or after January
1, 2004.

(C) On or before July 1, 2004, the entities listed in paragraph
(1) shall comply with paragraphs (1) to (5), inclusive, of
subdivision (a) for all individual policyholders and individual
contractholders, for all groups, and for all enrollees of the Healthy
Families and Medi-Cal programs, except that for individual
policyholders, individual contractholders and groups in existence
prior to January 1, 2004, the entities listed in paragraph (1) shall
comply upon the renewal date of the policy, contract, or group on
or after July 1, 2004, but no later than July 1, 2005.

(2) A health care service plan, a provider of health care, an
insurer or a pharmacy benefits manager, a contractor, or another
person or entity as described in paragraph (1) shall make reasonable
efforts to cooperate, through systems testing and other means, to
ensure that the requirements of this article are implemented on or
before the dates specified in this section.

(3) Notwithstanding paragraph (2), the Director of the
Department of Managed Health Care, pursuant to the authority
granted under Section 1346 of the Health and Safety Code, or the
Insurance Commissioner, pursuant to the authority granted under
Section 12921 of the Insurance Code, and upon a determination
of good cause, may grant extensions not to exceed six months for
compliance by health care service plans and insurers with the
requirements of this section when requested by the health care
service plan or insurer. Any extension granted shall apply to the
health care service plan or insurer’s affected providers, pharmacy
benefits manager, and contractors.

(f) If a federal law takes effect requiring the United States
Department of Health and Human Services to establish a national
unique patient health identifier program, a provider of health care,
a health care service plan, a licensed health care professional, or
a contractor, as those terms are defined in Section 56.05, that
complies with the federal law shall be deemed in compliance with
this section.

(g) A person or entity may not encode or embed a social security
number in or on a card or document, including, but not limited to,
using a barcode, chip, magnetic strip, or other technology, in place
of removing the social security number, as required by this section.

(h) This section shall become operative, with respect to the
University of California, in the following manner:

(1) On or before January 1, 2004, the University of California
shall comply with paragraphs (1), (2), and (3) of subdivision (a).

(2) On or before January 1, 2005, the University of California
shall comply with paragraphs (4) and (5) of subdivision (a).

(i) This section shall become operative with respect to the
Franchise Tax Board on January 1, 2007.

(j) This section shall become operative with respect to the
California community college districts on January 1, 2007.

(k) This section shall become operative with respect to the
California State University system on July 1, 2005.

(l) This section shall become operative, with respect to the
California Student Aid Commission and its auxiliary organization,
in the following manner:

(1) On or before January 1, 2004, the commission and its
auxiliary organization shall comply with paragraphs (1), (2), and
(3) of subdivision (a).

(2) On or before January 1, 2005, the commission and its
auxiliary organization shall comply with paragraphs (4) and (5)
of subdivision (a).