BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 570|
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                                UNFINISHED BUSINESS 


          Bill No:  SB 570
          Author:   Jackson (D)
          Amended:  9/1/15  
          Vote:     21  

           SENATE JUDICIARY COMMITTEE:  5-1, 4/28/15
           AYES:  Jackson, Hertzberg, Leno, Monning, Wieckowski
           NOES:  Anderson
           NO VOTE RECORDED:  Moorlach

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 5/11/15
           AYES:  Lara, Beall, Hill, Leyva, Mendoza
           NOES:  Bates, Nielsen

           SENATE FLOOR:  27-11, 5/28/15
           AYES:  Allen, Beall, Block, Cannella, De León, Gaines, Glazer,  
            Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson,  
            Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,  
            Pan, Pavley, Roth, Wieckowski, Wolk
           NOES:  Anderson, Bates, Fuller, Huff, Moorlach, Morrell,  
            Nguyen, Nielsen, Runner, Stone, Vidak
           NO VOTE RECORDED:  Berryhill, Galgiani

           ASSEMBLY FLOOR:  80-0, 9/3/15 - See last page for vote

           SUBJECT:   Personal information: privacy: breach


          SOURCE:    Author


          DIGEST:  This bill modifies the existing data breach  
          notification requirement for agencies and persons or businesses  
          conducting business in California that own or license  
          computerized data that includes personal information.   








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          Specifically, this bill requires these entities, in the event of  
          a data breach, to provide affected individuals with a notice  
          entitled "Notice of Data Breach," in which required content is  
          presented under the following headings: "What Happened," "What  
          Information Was Involved," "What We Are Doing," "What You Can  
          Do," and "For More Information."  This bill states that  
          additional information may be provided to supplement the  
          required notice, and provides a model security breach  
          notification form that entities may use to comply with  
          formatting requirements.  This bill also clarifies the  
          requirements for providing substitute notice of a data breach,  
          and makes other technical and clarifying changes to the Data  
          Breach Notification Law.




          Assembly Amendments remove a requirement that written data  
          breach notices be limited to one page, add triple-jointing  
          language to avoid chaptering out conflicts, and make other  
          technical and clarifying changes.


          ANALYSIS:   


          Existing law:


          1)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.  (Civ. Code Secs. 1798.29(a), (c) and 1798.82(a),  
            (c).)

          2)Requires any agency, person, or business that maintains  
            computerized data that includes personal information that the  








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            agency, person, or business does not own to notify the owner  
            or licensee of the information of any security breach  
            immediately following discovery if the personal information  
            was, or is reasonably believed to have been, acquired by an  
            unauthorized person.  (Civ. Code Secs. 1798.29(b),  
            1798.82(b).)

          3)Requires any agency, person, or business that must issue a  
            security breach notification to meet all of the following  
            requirements when issuing the notification:
                 the notification shall be written in plain language; and
                 the notification shall include, at a minimum, the  
               following information:
               o      the name and contact information of the reporting  
                 entity;
               o      a list of the types of personal information that  
                 were or are reasonably believed to have been the subject  
                 of a breach;
               o      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;
               o      the date of the notice;
               o      whether the 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;
               o      a general description of the breach incident, if  
                 that information is possible to determine at the time the  
                 notice is provided; and
               o      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.  (Civ. Code Secs.  
                 1798.29(d), 1798.82(c).)

          1)Provides that a security breach notification may also include  
            any of the following:
                 information about what the reporting entity has done to  
               protect individuals whose information has been breached;  
               and
                 advice on steps that the person whose information has  








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               been breached may take to protect himself or herself.   
               (Civ. Code Secs. 1798.29(d), 1798.82(c).)

          1)Specifies that a security breach notification may be provided  
            by one of the following methods:
                 written notice;
                 electronic notice; or
                 substitute notice, if the agency, person, or business  
               demonstrates that the cost of providing notice would exceed  
               $250,000, or that the class of persons to be notified  
               exceeds 500,000, or the notifying entity does not have  
               sufficient contact information.  (Civ. Code Secs.  
               1798.29(i), 1798.82(j).)

          1)Specifies that substitute notice shall consist of all of the  
            following:
                 email notice when the reporting entity has an email  
               address for the subject persons;
                 conspicuous posting of the notice on the notifying  
               entity's Internet Web site page, if it maintains one; and
                 notification to major statewide media, as specified.   
               (Civ. Code Secs. 1798.29(i), 1798.82(j).)

          This bill:

          1)Requires a security breach notification to be titled "Notice  
            of Data Breach," in which required content is presented under  
            the following headings: "What Happened," "What Information Was  
            Involved," "What We Are Doing," "What You Can Do," and "For  
            More Information."  This bill specifies that additional  
            information may be provided to supplement the required notice.

          2)Specifies that the format of the notice shall be designed to  
            call attention to the nature and significance of the  
            information it contains, and makes the following additional  
            specifications:
                 the title and headings in the notice shall be clearly  
               and conspicuously displayed; and
                 the text of the required data breach notice and any  
               other notice provided pursuant to the Data Breach  
               Notification Law shall be no smaller than 10-point type.









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          1)Provides a model security breach notification form that may be  
            used to notify affected individuals of a data breach, and  
            states that use of the model form shall constitute compliance  
            with the above formatting requirements.

          2)Provides that conspicuous posting of the notice on the  
            notifying entity's Internet Web site, if it maintains one,  
            must occur for a minimum of 30 days.  This bill also provides  
            that conspicuous posting on a notifying entity's Internet Web  
            site means providing a link to the notice on the home page or  
            first significant page after entering the Internet Web site  
            that is in larger type than the surrounding text, or in  
            contrasting type, font, or color to the surrounding text of  
            the same size, or set off from the surrounding text of the  
            same size by symbols or other marks that call attention to the  
            link.

          3)Makes other technical and clarifying changes to the Data  
            Breach Notification Law.
          
          Background

          In 2003, California's first-in-the-nation security breach  
          notification law went into effect.  (See Civ. Code Secs.  
          1798.29(a), 1798.82(a).)   Since that time, all but three states  
          have enacted similar security breach notification laws, and  
          governments around the world have or are considering enacting  
          such laws.  California's breach notification statute requires  
          state agencies, local agencies, and businesses to notify  
          residents when the security of their personal information is  
          breached.  This notification requirement ensures that residents  
          are made aware of a breach, thus allowing them to take  
          appropriate action to mitigate or prevent potential financial  
          losses due to fraudulent activity.

          Existing law requires breach notifications to be made in the  
          most expedient time possible without unreasonable delay, and  
          specifies certain information that must be included in these  
          notices.  The law provides that breach notifications must be  
          written in "plain language," but is otherwise silent about how  
          the information should be presented.  In a 2014 report on data  
          breaches in California, the Attorney General stated:








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            Breach notices continue to be written at the college level,  
            well above the average reading level for adults.  The intent  
            of the breach notice law is to alert individuals that their  
            information is at risk, so they can take steps to protect  
            themselves.  Notices that can be easily understood are  
            obviously essential to accomplishing this purpose.

            While concerns about litigation risks may cause companies to  
            draft notices in legalistic language that is less than  
            accessible, we encourage companies to work with communications  
            professionals to improve the clarity of their notices.  Good  
            writing can make the notices more readable, using techniques  
            such as shorter sentences, familiar words and phrases, the  
            active voice and a layout that supports clarity.  (California  
            Department of Justice, California Data Breach Report (Oct.  
            2014)  
                                                                    Page  7



            communicate relevant information to affected California  
            residents.  It directs these entities to convey the  
            information currently required under existing law in a notice  
            with the information grouped under the following five  
            headings:
                What Happened
                What Information Was Involved
                What We Are Doing
                What You Can Do
                For More Information

            Breached entities remain free to provide additional  
            information to supplement the required notice as they see fit.  
             Additionally, this bill specifies notices conspicuously  
            posted on a Web site under the substitute notice provision  
            must remain posted for a minimum of 30 days, and clarifies the  
            meaning of "conspicuous posting."

            These changes to California's breach notification law will  
            help ensure that critical information pertaining to a breach  
            is communicated effectively to California residents,  
            empowering them to take appropriate steps to protect  
            themselves from the consequences of a data breach.

          Related/Prior Legislation
          
          AB 259 (Dababneh, 2015) requires an agency, if the agency was  
          the source of a breach and the breach compromised a person's  
          social security number, driver's license number, or California  
          identification card number, to offer the person identity theft  
          prevention and mitigation services at no cost for not less than  
          12 months.  AB 259 was held on suspense in the Assembly  
          Appropriations Committee.

          AB 964 (Chau, 2015) amends California's Data Breach Notification  
          Law by defining "encrypted" to mean rendered unusable,  
          unreadable, or indecipherable through a security technology or  
          methodology generally accepted in the field of information  
          technology.  AB 964 is pending a concurrence vote on the  
          Assembly Floor.










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          AB 1710 (Dickinson, Chapter 855, Statutes of 2014) amended  
          California's Data Breach Notification Law to require a person or  
          business to offer appropriate identity theft prevention and  
          mitigation services to an affected person at no cost for not  
          less than 12 months if the person or business was the source of  
          a data breach.  AB 1710 also prohibited the sale, advertisement  
          for sale, or offer to sell an individual's social security  
          number.


          SB 46 (Corbett, Chapter 396, Statutes of 2013) revised the 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.


          AB 1149 (Campos, Chapter 395, Statutes of 2013) expanded  
          existing disclosure requirements concerning breaches of  
          computerized data owned or licensed by state agencies to "local  
          agencies" as defined by Government Code Section 6252(a).  AB  
          1149 also made certain technical corrections to the security  
          breach notification law.


          SB 24 (Simitian, Chapter 197, Statutes of 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, Chapter 699, Statutes of 2007), among other  
          things, added medical information and health insurance  
          information to the data elements that, when combined with the  








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          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, Chapter 877, Statutes of 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.


          SB 1386 (Peace, Chapter 915, Statutes of 2002) enacted  
          California's Data Breach Notification Law and required a state  
          agency, or a person 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 1386 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.


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee, this bill will  
          result in minor costs to revise the form (General/Specials).


          SUPPORT:   (Verified9/3/15)










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          California Attorney General's Office
          Privacy Rights Clearinghouse 


          OPPOSITION:   (Verified9/3/15)


          None received

          ASSEMBLY FLOOR:  80-0, 9/3/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,  
            Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,  
            Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,  
            Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,  
            Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,  
            Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,  
            Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,  
            Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins


           Prepared by:Tobias Halvarson / JUD. / (916) 651-4113
          9/3/15 17:07:15


                                   ****  END  ****