Recent amendments to Vermont's Security Breach Notice Act (Act) will further complicate compliance for entities and practitioners handling data breaches, particularly those breaches affecting individuals residing in multiple states, where one of the states is Vermont. The amendments became effective May 8.
After reviewing these changes, businesses should reassess and modify, as necessary, their data incident response procedures. (Or, they should consider creating procedures to address these situations. Data security regulations in Massachusetts and HIPAA require such procedures be in place.)
For example, businesses should consider procedures and materials that facilitate quick action to comply, including draft notification letters, template scripts to respond to inquiries following a breach, and establishing relationships with computer forensic, crisis management and other firms. Businesses that provide personally identifiable information to third party service providers (such as payroll companies, benefits brokers, accountants, and others) also should review their service contracts with those providers to ensure the businesses will be able to meet the time frames and other breach notification requirements.
What are the key changes? (Click below for more analysis on each of these changes)
- 45-Day Notice to Affected Individuals.
- 14-Day Attorney General Notice.
- WISP Exception to 14-Day Attorney General Notice.
- Revised Definition of "Security Breach".
- Assistance in determining whether a security breach has occurred.
What are the key changes?
- 45-Day Notice to Affected Individuals. Vermont becomes the fourth state (after Florida, Ohio and Wisconsin) to require notification to consumers (individuals residing in the Green Mountain State) within 45 days after discovering or being notified of a security breach. Of course, like all other breach notification requirements, the Act continues to provide that notice must be provided in the most expedient time possible and without unreasonable delay.
So, even complying with the 45-day rule may create exposure if 45 days was not the most expedient time possible. Additionally, the new timeframe continues to be qualified by the legitimate needs of the law enforcement agency, and with measures necessary to determine the scope of the security breach and restore the reasonable integrity, security, and confidentiality of the data system.
- 14-Day Attorney General Notice. In the case of a reportable breach, a data collector must notify the Vermont Attorney General within 14 business days following the earlier of notifying consumers or discovering the security breach.
- The notice must include the date of the security breach, the date of discovery of the breach and a preliminary description of the breach.
- After notifying consumers, the data collector has to inform the Attorney General of the number of consumers affected , if known, and provide a copy of the notice.
- To avoid public disclosure by the Attorney General of the personally identifiable information acquired in the breach, the Act allows data collectors to send a second copy of the notice to consumers which redacts that information. Note, however, that other federal and state agencies make required notices public, without this option. See, e.g., New Hampshire, and the Department of Health and Human Services in the case of HIPAA breaches.
- Remember, a "data collector" under the Vermont law includes state agencies, political subdivisions of the state, public and private universities, privately and publicly held corporations, limited liability companies, financial institutions, retail operators, and any other entity that, for any purpose, whether by automated collection or otherwise, handles, collects, disseminates, or otherwise deals with nonpublic personal information.
- Note that under the amendment, the Act now uses the term “personally identifiable information,” instead of “personal information.” However, the reference to "personal information" in the definition of "data collector" was left unchanged. We expect this technical issue will be corrected and will not affect the application of the statute.
- WISP Exception to 14-Day Attorney General Notice. Data collectors that have sworn in writing to the Attorney General, on a form provided by the Attorney General and prior to the data of a security breach, that they (i) have written policies and procedures to maintain the security of personally identifiable information (a written information security program, WISP) and (ii) would respond to a breach in a manner consistent with Vermont law, need only notify the Attorney General, prior to notifying consumers, of the date of the security breach, the date of discovery of the breach and a description of the breach.
- The 14-day AG notice requirement coupled with the change in the definition of security breach (see below) could put data collectors in a difficult position of having to notify the AG of an incident that turns out not being a security breach, potentially creating unnecessary media attention, business partner inquiries and employee concerns. The WISP exception may help to provide data collectors more time before deciding to pull the trigger on notification.
- Revised Definition of "Security Breach". Under the Act, as amended, a security breach means "the unauthorized acquisition of electronic data or a reasonable belief of an unauthorized acquisition of electronic data that compromises the security, confidentiality, or
integrity of a consumer’s personally identifiable information maintained by the data collector." The change removes unauthorized "access" from what constitutes a security breach, but expands the definition to include situations where the data collector has a reasonable belief of an unauthorized acquisition.
- Assistance in determining whether a security breach has occurred. The amendment added factors that data collectors may consider, along with others, to determine is a security breach has occurred. The factors are indications that:
- the information is in the physical possession and control of a person without valid authorization, such as a lost or stolen electronic device containing information;
- the information has been downloaded or copied;
- the information was used by an unauthorized person, such as fraudulent accounts opened or instances of identity theft reported;
- that the information has been made public.