BILL ANALYSIS                                                                                                                                                                                                    Ó





                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                             2015-2016  Regular  Session


          AB 1541 (Committee on Privacy and Consumer Protection)
          Version: April 29, 2015
          Hearing Date: June 16, 2015
          Fiscal: No
          Urgency: No
          NR   


                                        SUBJECT
                                           
                           Privacy:  personal information

                                      DESCRIPTION  

          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. 

          This bill would revise 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.

                                      BACKGROUND
                                           
          AB 1541 is the Assembly Privacy and Consumer Protection  
          Committee Privacy omnibus bill.  By tradition, the provisions  
          included in an omnibus are generally technical and  
          non-controversial in nature, so any member of the Committee who  
          objects to a specific provision may request that it be removed  
          from the measure. 

                                CHANGES TO EXISTING LAW
           
           Existing law  requires a business that owns or licenses personal  
          information about a California resident to implement and  
          maintain reasonable security procedures and practices  








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          appropriate to the nature of the information, to protect the  
          personal information from unauthorized access, destruction, use,  
          modification, or disclosure.  (Civ. Code Sec. 1798.81.5(b).)

           Existing law  further provides that a business that discloses  
          personal information about a California resident pursuant to a  
          contract with a nonaffiliated third party 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.  (Civ. Code Sec. 1798.81.5(c).)

           Existing law  defines "personal information" to include: 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: social security number; driver's license  
          number or California identification card number; 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; and medical information.  
          (Civ. Code Sec. 1798.81.5.)

           This bill  would include in the above definition, health  
          insurance information, and a username or email address, in  
          combination with a password or security question and answer that  
          would permit access to an online account.

                                        COMMENT
           
           1.Stated need for the bill
           
          According to the author:

            In recent years, the Legislature has expanded the definition  
            of "personal information" in the Data Breach Notification Law  
            (DBNL) to include health insurance information as well as a  
            user name and password (or related information allowing access  
            to an online account).  The DBNL definition no longer mirrors  
            the information security law definition.

            This bill updates the definition of "personal information" in  
            the information security law (Civ. Code 1798.81.5). The law  
            requires businesses to use reasonable security measures to  







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            protect personal information. Historically, the definition of  
            "personal information" in this law has mirrored the definition  
            found in the DBNL (Civ. Code Secs. 1798.29 and 1798.82). 

           2.Committee on Privacy and Consumer Protection Omnibus bill
           
          This bill would revise the definition of personal information in  
          the information security law to match the definition in the Data  
          Breach Notification Law by including: (1) a username, password,  
          and security question; and (2) health insurance information. 

              a.   Username, password, and security question
             
            This bill would add that an email address, in combination with  
            a password or security question and answer, to the definition  
            of "personal information" in the information security law.   
            This Committee approved this policy in SB 46 (Corbett Ch. 396,  
            Stats. 2013), which added this protection in the Data Breach  
            Notification Law.  The Committee analysis from that bill  
            noted: 

               [R]equiring disclosure of security breaches involving user  
               names, passwords, or security questions and answers would  
               allow those whose information has been disseminated to take  
               actions to minimize the impact of that disclosure.  As  
               Privacy Rights Clearinghouse notes, "[m]any individuals  
               compound their exposure to financial loss and theft of  
               personal data [because] they use the same password or  
               username or answer to a security question for some or all  
               of their online accounts."  Consequently, "a breach of one  
               online account can have a cascading effect upon the user's  
               other accounts."  If existing disclosure requirements were  
               expanded to include disclosures of security breaches  
               involving user names, passwords, and security questions and  
               answers, California residents would be better equipped to  
               proactively change their passwords and other login  
               credentials on other online accounts before those accounts  
               are compromised.

              b.   Health insurance information
              
             This bill would add "health insurance information," defined as  
            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  







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            individual's application and claims history, including any  
            appeals records, to the definition of personal information in  
            the information security law. 

            By mirroring the language from DBNL, this bill would clarify  
            that businesses are required to protect consumers' health  
            insurance information from being compromised.  Staff notes  
            that because existing law allows the sharing of a consumer's  
            information by health care providers, service plans, and  
            contractors who are regulated by the Confidentiality of  
            Medical Information Act (CMIA), this bill would not limit the  
            ability of health care providers to exchange information as  
            necessary to provide services to patients. 


           Support  :  None Known 

           Opposition  :  None Known

                                           
                                       HISTORY
           
           Source  :  Author

           Related Pending Legislation  : None Known

           Prior Legislation  :

          AB 1710 (Dickinson, Ch. 855, Stats. 2014) among other  
          provisions, required, with respect to the information required  
          to be included in the notification of a data security breach, if  
          the person or business providing the notification was the source  
          of the breach, that the person or business offer to provide  
          appropriate identity theft prevention and mitigation services,  
          as specified.

          SB 46 (Corbett, Ch. 396, Stats. 2013) revised certain data  
          elements included within the definition of personal information  
          under California's Data Breach Notification Law, by adding  
          certain information that would permit access to an online  
          account and imposed additional requirements on the disclosure of  
          a breach of the security of the system or data in situations  
          where the breach involves personal information that would permit  
          access to an online or email account.








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          AB 555 (Salas, Ch. 103, Stats. 2013) provided an exemption from  
          the prohibition on posting or publicly releasing a person's  
          social security number (SSN) for an adult state correctional  
          facility, an adult city jail, or an adult county jail, that  
          releases an inmate's SSN, 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.

          SB 24 (Simitian, Ch. 197, Stats. 2011) required any agency,  
          person, or business that is required to issue a security breach  
          notification pursuant to existing law to fulfill certain  
          additional requirements pertaining to the security breach  
          notification, and required any agency, person, or business that  
          is required to issue a security breach notification to more than  
          500 California residents to electronically submit a single  
          sample copy of that security breach notification to the Attorney  
          General.

          AB 1298 (Jones, Ch. 699, Stats. 2007), among other things, added  
          medical information and health insurance information to the data  
          elements that, when combined with the individual's name, would  
          constitute personal information requiring disclosure when  
          acquired, or believed to be acquired, by an unauthorized person  
          due to a security breach.

          AB 1950 (Wiggins, Ch. 877, Stats. 2004) required a business that  
          owns or licenses personal information about a California  
          resident to implement and maintain reasonable security  
          procedures and practices to protect personal information from  
          unauthorized access, destruction, use, modification, or  
          disclosure.  AB 1950 also required a business that discloses  
          personal information to a nonaffiliated third party, to require  
          by contract that those entities maintain reasonable security  
          procedures.

          AB 763 (Liu, Ch. 532, Stats. 2003) prohibited a SSN that is  
          otherwise permitted to be mailed from being printed, in whole or  
          in part, on a postcard or other mailer or visible on the  
          envelope or without the envelope having been opened.

          SB 1936 (Peace, Ch. 915, Stats. 2002) enacted California's Data  
          Breach Notification Law and required a state agency, or a person  







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          or business that conducts business in California, that owns or  
          licenses computerized data that includes personal information to  
          disclose any breach of the security of the data to California's  
          residents whose unencrypted personal information was, or is  
          reasonably believed to have been, acquired by an unauthorized  
          person. SB 1936 permitted notifications to be delayed if a law  
          enforcement agency determines that it would impede a criminal  
          investigation, and required an agency, person, or business that  
          maintains computerized data that includes personal information  
          owned by another to notify the owner or licensee of the  
          information of any breach of security of the data.

          SB 168 (Bowen, Ch. 720, Stats. 2001) prohibited any person or  
          entity, not including a state or local agency, from using an  
          individual's SSN in certain ways, including posting it publicly  
          or requiring it for access to products or services.

           Prior Vote  :

          Assembly Floor (Ayes 78, Noes 0)
          Assembly Privacy and Consumer Protection Committee (Ayes 11,  
          Noes 0)

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