California Legislature—2015–16 Regular Session

Assembly Bill No. 1541

Introduced by Committee on Privacy and Consumer Protection (Assembly Members Gatto (Chair), Baker, Chau, Cooper, Dahle, and Gordon)

March 26, 2015

An act to amend Sections 22580, 22581, and 22584 of the Business and Professions Code and to amend Section 1798.81.5 of the Civil Code, relating to privacy.

LEGISLATIVE COUNSEL’S DIGEST

AB 1541, as introduced, Committee on Privacy and Consumer Protection. Privacy: personal information.

Existing law limits marketing to minors by an operator of an Internet Web site, online service, online application, or mobile application, as specified. Existing law requires the operator of an Internet Web site, online service, online application, or mobile application to permit a minor to remove, or to request and obtain removal of, content or information posted by the minor, as specified. Existing law prohibits an operator of an Internet Web site, online service, online application, or mobile application used primarily for school purposes from using a student’s information, as specified.

This bill would revise these provisions to specify that these laws pertain to an operator of an Internet Web site or online service, such as an online application or a mobile application.

Existing law requires a business that owns, licenses, or maintains 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. Existing law defines terms for purposes of this law, including “personal information.”

This bill would update the definition of personal information to include health insurance information, as defined, and a username or email address combined with a password or security question and answer for access to an online account.

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 22580 of the Business and Professions
Code is amended to read:

22580.  

(a) An operator of an Internet Web begin delete site, online service,
online application, or mobile application end delete begin insert site or online service,
such as an online application or a mobile application, end insert directed to
minors shall not market or advertise a product or service described
in subdivision (i) on its Internet Web begin delete site, online service, online
application, or mobile application end delete begin insert site or online service, such as
an online application or a mobile application, end insert directed to minors.

(b) An operator of an Internet Web begin delete site, online service, online
application, or mobile application end delete begin insert site or online service, such as
an online application or a mobile application end insert :

(1) Shall not market or advertise a product or service described
in subdivision (i) to a minor who the operator has actual knowledge
is using its Internet Web begin delete site, online service, online application,
or mobile application end delete begin insert site or online service, such as an online
application or a mobile application, end insert and is a minor, if the
marketing or advertising is specifically directed to that minor based
upon information specific to that minor, including, but not limited
to, the minor’s profile, activity, address, or location sufficient to
establish contact with a minor, and excluding Internet Protocol
(IP) address and product identification numbers for the operation
of a service.

(2) Shall be deemed to be in compliance with paragraph (1) if
the operator takes reasonable actions in good faith designed to
avoid marketing or advertising under circumstances prohibited
under paragraph (1).

(c) An operator of an Internet Web begin delete site, online service, online
application, or mobile application end delete begin insert site or online service, such as
an online application or a mobile application, end insert directed to minors
or who has actual knowledge that a minor is using its Internet Web
begin delete site, online service, online application, or mobile application, end delete begin insert site
or online service, such as an online application or a mobile
application, end insert shall not knowingly use, disclose, compile, or allow
a third party to use, disclose, or compile, the personal information
of a minor with actual knowledge that the use, disclosure, or
compilation is for the purpose of marketing or advertising products
or services to that minor for a product described in subdivision (i).

(d) “Minor” means a natural person under 18 years of age who
resides in the state.

(e) “Internet Web begin delete site, online service, online application, or
mobile application end delete begin insert site or online service, such as an online
application or a mobile application, end insert directed to minors” mean an
Internet Web begin delete site, online service, online application, or mobile
application, end delete begin insert site or online service, such as an online application
or a mobile application, end insert or a portion thereof, that is created for the
purpose of reaching an audience that is predominately comprised
of minors, and is not intended for a more general audience
comprised of adults. Provided, however, that an Internet Web begin delete site,
online service, online application, or mobile application, end delete begin insert site or
online service, such as an online application or a mobile
application, end insert or a portion thereof, shall not be deemed to be directed
at minors solely because it refers or links to an Internet Web begin delete site,
online service, online application, or mobile application end delete begin insert site or
online service, such as an online application or a mobile
application, end insert directed to minors by using information location tools,
including a directory, index, reference, pointer, or hypertext link.

(f) “Operator” means any person or entity that owns an Internet
Web begin delete site, online service, online application, or mobile application end delete
begin insert site or online service, such as an online application or a mobile
application end insert . It does not include any third party that operates, hosts,
or manages, but does not own, an Internet Web begin delete site, online service,
online application, or mobile application end delete begin insert site or online service,
such as an online application or a mobile application, end insert on the
owner’s behalf or processes information on the owner’s behalf.

(g) This section shall not be construed to require an operator of
an Internet Web begin delete site, online service, online application, or mobile
application end delete begin insert site or online service, such as an online application
or a mobile application, end insert to collect or retain age information about
users.

(h) (1) With respect to marketing or advertising provided by
an advertising service, the operator of an Internet Web begin delete site, online
service, online application, or mobile application end delete begin insert site or online
service, such as an online application or a mobile application, end insert
directed to minors shall be deemed to be in compliance with
subdivision (a) if the operator notifies the advertising service, in
the manner required by the advertising service, that the site, service,
or application is directed to minors.

(2) If an advertising service is notified, in the manner required
by the advertising service, that an Internet Web begin delete site, online service,
online application, or mobile application end delete begin insert site or online service,
such as an online application or a mobile application, end insert is directed
to minors pursuant to paragraph (1), the advertising service shall
not market or advertise a product or service on the operator’s
Internet Web begin delete site, online service, online application, or mobile
application end delete begin insert site or online service, such as an online application
or a mobile application, end insert that is described in subdivision (i).

(i) The marketing and advertising restrictions described in
subdivisions (a) and (b) shall apply to the following products and
services as they are defined under state law:

(1) Alcoholic beverages, as referenced in Sections 23003 to
23009, inclusive, and Section 25658.

(2) Firearms or handguns, as referenced in Sections 16520,
16640, and 27505 of the Penal Code.

(3) Ammunition or reloaded ammunition, as referenced in
Sections 16150 and 30300 of the Penal Code.

(4) Handgun safety certificates, as referenced in Sections 31625
and 31655 of the Penal Code.

(5) Aerosol container of paint that is capable of defacing
property, as referenced in Section 594.1 of the Penal Code.

(6) Etching cream that is capable of defacing property, as
referenced in Section 594.1 of the Penal Code.

(7) Any tobacco, cigarette, or cigarette papers, or blunt wraps,
or any other preparation of tobacco, or any other instrument or
paraphernalia that is designed for the smoking or ingestion of
tobacco, products prepared from tobacco, or any controlled
substance, as referenced in Division 8.5 (commencing with Section
22950) and Sections 308, 308.1, 308.2, and 308.3 of the Penal
Code.

(8) BB device, as referenced in Sections 16250 and 19910 of
the Penal Code.

(9) Dangerous fireworks, as referenced in Sections 12505 and
12689 of the Health and Safety Code.

(10) Tanning in an ultraviolet tanning device, as referenced in
Sections 22702 and 22706.

(11) Dietary supplement products containing ephedrine group
alkaloids, as referenced in Section 110423.2 of the Health and
Safety Code.

(12) Tickets or shares in a lottery game, as referenced in Sections
8880.12 and 8880.52 of the Government Code.

(13) Salvia divinorum or Salvinorin A, or any substance or
material containing Salvia divinorum or Salvinorin A, as referenced
in Section 379 of the Penal Code.

(14) Body branding, as referenced in Sections 119301 and
119302 of the Health and Safety Code.

(15) Permanent tattoo, as referenced in Sections 119301 and
119302 of the Health and Safety Code and Section 653 of the Penal
Code.

(16) Drug paraphernalia, as referenced in Section 11364.5 of
the Health and Safety Code.

(17) Electronic cigarette, as referenced in Section 119405 of
the Health and Safety Code.

(18) Obscene matter, as referenced in Section 311 of the Penal
Code.

(19) A less lethal weapon, as referenced in Sections 16780 and
19405 of the Penal Code.

(j) The marketing and advertising restrictions described in
subdivisions (a), (b), and (c) shall not apply to the incidental
placement of products or services embedded in content if the
content is not distributed by or at the direction of the operator
primarily for the purposes of marketing and advertising of the
products or services described in subdivision (i).

(k) “Marketing or advertising” means, in exchange for monetary
compensation, to make a communication to one or more
individuals, or to arrange for the dissemination to the public of a
communication, about a product or service the primary purpose
of which is to encourage recipients of the communication to
purchase or use the product or service.

SEC. 2.  

Section 22581 of the Business and Professions Code
is amended to read:

22581.  

(a) An operator of an Internet Web begin delete site, online service,
online application, or mobile application end delete begin insert site or online service,
such as an online application or a mobile application, end insert directed to
minors or an operator of an Internet Web begin delete site, online service, online
application, or mobile application end delete begin insert site or online service, such as
an online application or a mobile application, end insert that has actual
knowledge that a minor is using its Internet Web begin delete site, online
service, online application, or mobile application end delete begin insert site or online
service, such as an online application or a mobile application, end insert
shall do all of the following:

(1) Permit a minor who is a registered user of the operator’s
Internet Web begin delete site, online service, online application, or mobile
application end delete begin insert site or online service, such as an online application
or a mobile application, end insert to remove or, if the operator prefers, to
request and obtain removal of, content or information posted on
the operator’s Internet Web begin delete site, online service, online application,
or mobile application end delete begin insert site or online service, such as an online
application or a mobile application, end insert by the user.

(2) Provide notice to a minor who is a registered user of the
operator’s Internet Web begin delete site, online service, online application, or
mobile application end delete begin insert site or online service, such as an online
application or a mobile application, end insert that the minor may remove
or, if the operator prefers, request and obtain removal of, content
or information posted on the operator’s Internet Web begin delete site, online
service, online application, or mobile application end delete begin insert site or online
service, such as an online application or a mobile application, end insert by
the registered user.

(3) Provide clear instructions to a minor who is a registered user
of the operator’s Internet Web begin delete site, online service, online
application, or mobile application end delete begin insert site or online service, such as
an online application or a mobile application, end insert on how the user
may remove or, if the operator prefers, request and obtain the
removal of content or information posted on the operator’s Internet
Web begin delete site, online service, online application, or mobile application end delete
begin insert site or online service, such as an online application or a mobile
application end insert .

(4) Provide notice to a minor who is a registered user of the
operator’s Internet Web begin delete site, online service, online application, or
mobile application end delete begin insert site or online service, such as an online
application or a mobile application, end insert that the removal described
under paragraph (1) does not ensure complete or comprehensive
removal of the content or information posted on the operator’s
Internet Web begin delete site, online service, online application, or mobile
application end delete begin insert site or online service, such as an online application
or a mobile application, end insert by the registered user.

(b) An operator or a third party is not required to erase or
otherwise eliminate, or to enable erasure or elimination of, content
or information in any of the following circumstances:

(1) Any other provision of federal or state law requires the
operator or third party to maintain the content or information.

(2) The content or information was stored on or posted to the
operator’s Internet Web begin delete site, online service, online application, or
mobile application end delete begin insert site or online service, such as an online
application or a mobile application, end insert by a third party other than the
minor, who is a registered user, including any content or
information posted by the registered user that was stored,
republished, or reposted by the third party.

(3) The operator anonymizes the content or information posted
by the minor who is a registered user, so that the minor who is a
registered user cannot be individually identified.

(4) The minor does not follow the instructions provided to the
minor pursuant to paragraph (3) of subdivision (a) on how the
registered user may request and obtain the removal of content or
information posted on the operator’s Internet Web begin delete site, online
service, online application, or mobile application end delete begin insert site or online
service, such as an online application or a mobile application, end insert by
the registered user.

(5) The minor has received compensation or other consideration
for providing the content.

(c) This section shall not be construed to limit the authority of
a law enforcement agency to obtain any content or information
from an operator as authorized by law or pursuant to an order of
a court of competent jurisdiction.

(d) An operator shall be deemed compliant with this section if:

(1) It renders the content or information posted by the minor
user no longer visible to other users of the service and the public
even if the content or information remains on the operator’s servers
in some form.

(2) Despite making the original posting by the minor user
invisible, it remains visible because a third party has copied the
posting or reposted the content or information posted by the minor.

(e) This section shall not be construed to require an operator of
an Internet Web begin delete site, online service, online application, or mobile
application end delete begin insert site or online service, such as an online application
or a mobile application, end insert to collect age information about users.

(f) “Posted” means content or information that can be accessed
by a user in addition to the minor who posted the content or
information, whether the user is a registered user or not, of the
Internet Web begin delete site, online service, online application, or mobile
application end delete begin insert site or online service, such as an online application
or a mobile application, end insert where the content or information is posted.

SEC. 3.  

Section 22584 of the Business and Professions Code
is amended to read:

22584.  

(a) For the purposes of this section, “operator” means
the operator of an Internet Web begin delete site, online service, online
application, or mobile application end delete begin insert site or online service, such as
an online application or a mobile application, end insert with actual
knowledge that the begin delete site, service, or application end delete begin insert Internet Web site
or online service, such as an online application or a mobile
application, end insert is used primarily for K-12 school purposes and was
designed and marketed for K-12 school purposes.

(b) An operator shall not knowingly engage in any of the
following activities with respect to their begin delete site, service, or application end delete
begin insert Internet Web site or online service, such as an online application
or a mobile application end insert :

(1) (A) Engage in targeted advertising on the operator’s begin delete site,
service, or application, end delete begin insert Internet Web site or online service, such
as an online application or a mobile application, end insert or (B) target
advertising on any other begin delete site, service, or application end delete begin insert Internet Web
site or online service, such as an online application or a mobile
application, end insert when the targeting of the advertising is based upon
any information, including covered information and persistent
unique identifiers, that the operator has acquired because of the
use of that operator’s begin delete site, service, or application end delete begin insert Internet Web site
or online service, such as an online application or a mobile
application, end insert described in subdivision (a).

(2) Use information, including persistent unique identifiers,
created or gathered by the operator’s begin delete site, service, or application, end delete
begin insert Internet Web site or online service, such as an online application
or a mobile application, end insert to amass a profile about a K-12 student
except in furtherance of K-12 school purposes.

(3) Sell a student’s information, including covered information.
This prohibition does not apply to the purchase, merger, or other
type of acquisition of an operator by another entity, provided that
the operator or successor entity continues to be subject to the
provisions of this section with respect to previously acquired
student information.

(4) Disclose covered information unless the disclosure is made:

(A) In furtherance of the K-12 purpose of the begin delete site, service, or
application, end delete begin insert Internet Web site or online service, such as an online
application or a mobile application, end insert provided the recipient of the
covered information disclosed pursuant to this subparagraph:

(i) Shall not further disclose the information unless done to
allow or improve operability and functionality within that student’s
classroom or school; and

(ii) Is legally required to comply with subdivision (d);

(B) To ensure legal and regulatory compliance;

(C) To respond to or participate in judicial process;

(D) To protect the safety of users or others or security of the
site; or

(E) To a service provider, provided the operator contractually
(i) prohibits the service provider from using any covered
information for any purpose other than providing the contracted
service to, or on behalf of, the operator, (ii) prohibits the service
provider from disclosing any covered information provided by the
operator with subsequent third parties, and (iii) requires the service
provider to implement and maintain reasonable security procedures
and practices as provided in subdivision (d).

(c) Nothing in subdivision (b) shall be construed to prohibit the
operator’s use of information for maintaining, developing,
supporting, improving, or diagnosing the operator’s begin delete site, service,
or application end delete begin insert Internet Web site or online service, such as an online
application or a mobile application end insert .

(d) An operator shall:

(1) Implement and maintain reasonable security procedures and
practices appropriate to the nature of the covered information, and
protect that information from unauthorized access, destruction,
use, modification, or disclosure.

(2) Delete a student’s covered information if the school or
district requests deletion of data under the control of the school or
district.

(e) Notwithstanding paragraph (4) of subdivision (b), an operator
may disclose covered information of a student, as long as
paragraphs (1) to (3), inclusive, of subdivision (b) are not violated,
under the following circumstances:

(1) If other provisions of federal or state law require the operator
to disclose the information, and the operator complies with the
requirements of federal and state law in protecting and disclosing
that information.

(2) For legitimate research purposes: (A) as required by state
or federal law and subject to the restrictions under applicable state
and federal law or (B) as allowed by state or federal law and under
the direction of a school, school district, or state department of
education, if no covered information is used for any purpose in
furtherance of advertising or to amass a profile on the student for
purposes other than K-12 school purposes.

(3) To a state or local educational agency, including schools
and school districts, for K-12 school purposes, as permitted by
state or federal law.

(f) Nothing in this section prohibits an operator from using
deidentified student covered information as follows:

(1) Within the operator’s begin delete site, service, or application end delete begin insert Internet
Web site or online service, such as an online application or a
mobile application, end insert or other begin delete sites, services, or applications end delete begin insert Internet
Web sites or online services, such as online applications or mobile
applications, end insert owned by the operator to improve educational
products.

(2) To demonstrate the effectiveness of the operator’s products
or services, including in their marketing.

(g) Nothing in this section prohibits an operator from sharing
aggregated deidentified student covered information for the
development and improvement of educational begin delete sites, services, or
applications end delete begin insert Internet Web Sites or online services, such as end insert begin insert online
applications or mobile applications end insert .

(h) “Online service” begin delete includes end delete begin insert includes, but is not limited to, end insert
cloud computing services, which must comply with this section if
they otherwise meet the definition of an operator.

(i) “Covered information” means personally identifiable
information or materials, in any media or format that meets any
of the following:

(1) Is created or provided by a student, or the student’s parent
or legal guardian, to an operator in the course of the student’s,
parent’s, or legal guardian’s use of the operator’s begin delete site, service, or
application end delete begin insert Internet Web site or online service, such as an online
application or a mobile application, end insert for K-12 school purposes.

(2) Is created or provided by an employee or agent of the K-12
school, school district, local education agency, or county office of
education, to an operator.

(3) Is gathered by an operator through the operation of begin delete a site,
service, or application end delete begin insert an Internet Web site or online service, such
as an online application or a mobile application, end insert described in
subdivision (a) and is descriptive of a student or otherwise
identifies a student, including, but not limited to, information in
the student’s educational record or email, first and last name, home
address, telephone number, email address, or other information
that allows physical or online contact, discipline records, test
results, special education data, juvenile dependency records, grades,
evaluations, criminal records, medical records, health records,
social security number, biometric information, disabilities,
socioeconomic information, food purchases, political affiliations,
religious information, text messages, documents, student identifiers,
search activity, photos, voice recordings, or geolocation
information.

(j) “K-12 school purposes” means purposes that customarily
take place at the direction of the K-12 school, teacher, or school
district or aid in the administration of school activities, including,
but not limited to, instruction in the classroom or at home,
administrative activities, and collaboration between students, school
personnel, or parents, or are for the use and benefit of the school.

(k) This section shall not be construed to limit the authority of
a law enforcement agency to obtain any content or information
from an operator as authorized by law or pursuant to an order of
a court of competent jurisdiction.

(l) This section does not limit the ability of an operator to use
student data, including covered information, for adaptive learning
or customized student learning purposes.

(m) This section does not apply to general audience Internet
Web begin delete sites, end delete begin insert sites or end insert general audience online services, begin insert such as end insert general
audience online begin delete applications, end delete begin insert applications end insert or general audience
mobile applications, even if login credentials created for an
operator’s begin delete site, service, or application end delete begin insert Internet Web Sites or online
service, such as end insert begin insert online application or a mobile application, end insert may
be used to access those general audience begin delete sites, services, or
applications. end delete begin insert Internet Web site or online services, such as an online
applications or mobile applications. end insert

(n) This section does not limit Internet service providers from
providing Internet connectivity to schools or students and their
families.

(o) This section shall not be construed to prohibit an operator
of an Internet Web begin delete site, online service, online application, or
mobile application end delete begin insert site or online service, such as an online
application or a mobile application, end insert from marketing educational
products directly to parents so long as the marketing did not result
from the use of covered information obtained by the operator
through the provision of services covered under this section.

(p) This section does not impose a duty upon a provider of an
electronic store, gateway, marketplace, or other means of
purchasing or downloading software or applications to review or
enforce compliance of this section on those applications or
software.

(q) This section does not impose a duty upon a provider of an
interactive computer service, as defined in Section 230 of Title 47
of the United States Code, to review or enforce compliance with
this section by third-party content providers.

(r) This section does not impede the ability of students to
download, export, or otherwise save or maintain their own student
created data or documents.

SEC. 4.  

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 begin insert either of the following: end insert begin delete an end delete

begin insert (A) end insert begin insert   end insert begin insert A end insert begin insert n end insert 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:

begin delete

(A)

end delete

begin insert (i) end insert  Social security number.

begin delete

(B)

end delete

begin insert (ii) end insert  Driver’s license number or California identification card
number.

begin delete

(C)

end delete

begin insert (iii) end insert  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.

begin delete

(D)

end delete

begin insert (iv) end insert  Medical information.

begin insert

(v) Health insurance information.

end insert begin insert

(B) A username or email address, in combination with a
password or security question and answer that would permit access
to an online account.

end insert

(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.

begin insert

(3) “Health insurance information” means an individual’s
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.

end insert begin delete

(3)

end delete

begin insert (4) end insert  “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.