Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 964

Introduced by Assembly Member Chau

February 26, 2015

An act begin insert to amend Section 1798.82 of the Civil Code, end insert relating to civil law.

LEGISLATIVE COUNSEL’S DIGEST

AB 964, as amended, Chau. Civil law: 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 in specified ways, a breach of the security of the system or data, as defined, 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. begin insert Existing law requires the disclosure to be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement, or any measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system. end insert

This bill would begin delete state the intent of the Legislature to enact legislation to protect the public from data breaches. end delete begin insert instead require the disclosure to be made within 30 days, consistent with the legitimate needs of law enforcement. end insert

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The bill would authorize the Attorney General to grant a person or business an additional period of time, not exceeding 30 days, in which to make the disclosure if the Attorney General determines that the person or business needs additional time in order to determine the scope of the security breach, prevent further disclosures, conduct a risk assessment, restore the integrity of the data system, or provide notice to an entity designated to receive reports and information about information security incidents.

end insert begin insert

The bill would also provide that if the data containing personal information was encrypted, as defined, there would be a presumption that a breach of the security of the data does not compromise the security, confidentiality, or integrity of the personal information, and no disclosure would be required. That presumption would be rebuttable in a civil action against a person or business for failure to comply with these provisions by facts demonstrating that in the present instance, the security technologies or methodologies used to encrypt the data have been, or are reasonably likely to have been, compromised.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

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

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begin insert SECTION 1. end insert   

end insert

begin insert Section 1798.82 of the end insert begin insert Civil Code end insert begin insert is amended to
read: end insert

1798.82.  

(a)  begin insert (1) end insert begin insert   end insert 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 begin delete notification end delete
begin insert notification, pursuant to subdivision (b), end insert 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 begin delete without unreasonable
delay, end delete begin insert within 30 days, end insert consistent with the legitimate needs of law
enforcement, as provided in subdivision begin delete (c), or any measures
necessary to determine the scope of the breach and restore the
reasonable integrity of the data system. end delete begin insert (c). end insert

begin insert

(2) If the data containing personal information was encrypted,
there shall be a presumption that a breach of the data does not
comprise the security, confidentiality, or integrity of the personal
information contained therein, and no disclosure is required. That
presumption shall be rebuttable in a civil action pursuant to
subdivision (b) of Section 1798.84 against a person or business
for failure to make the required disclosure by facts demonstrating
that in the present instance the security technologies or
methodologies used to encrypt the data have been, or are
reasonably likely to have been, compromised and disclosure is
required in accordance with paragraph (1).

end insert begin insert

(3) If a person or business requires additional time to disclose
a breach, it shall provide the Attorney General records or other
evidence demonstrating the need to delay disclosure. If the Attorney
General determines that the person or business needs additional
time in order to determine the scope of a security breach, prevent
further disclosures, conduct a risk assessment, restore the integrity
of the data system, or provide notice to an entity designated to
receive reports and information about information security
incidents, threats, and vulnerabilities, it may grant the person or
business an additional period of time, not exceeding 30 days, in
which to make the disclosure. The Attorney General shall grant
additional time to make the disclosure in writing specifying the
amount of additional time granted.

end insert

(b) 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.

(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 begin insert pursuant to paragraph
(3) of subdivision (a) or end insert 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.

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(4) For purposes of this section, “encrypted” means rendered
unusable, unreadable, or indecipherable through a security
technology or methodology generally accepted in the field of
information security.

end insert

(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.

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SECTION 1.  

It is the intent of the Legislature to enact
legislation to protect the public from data breaches.

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