California Governor Jerry Brown signed AB-1710 into law yesterday amending its existing data breach notification statute. The most significant change – companies that experience a data breach must provide information in the notification that if identity theft prevention and mitigation services are provided, they must be provided for at least 12 months to affected persons at no cost if the breach exposed or may have exposed specified personal information. The new law also expands the application of safeguard requirements for personal information and further prohibits certain uses and disclosures of Social Security numbers. The new law becomes effective January 1, 2015.
Identity Theft Prevention and Mitigation Services (“Credit Monitoring”) Notification Mandate.
Currently California and 46 other states have laws that, in general, require entities that own or license certain personal information to notify individuals whose personal information has been involved in a data breach. The precise definitions of these or similar terms vary somewhat state-to-state. But none of the states have imposed a broadly applicable requirement by statute or regulation that entities facing a breach notification obligation must also provide credit monitoring services, or “identity theft prevention and mitigation services,” to affected persons. Of course, many companies have provided such services, and State Attorneys General have urged businesses to extend such services. What the law appears to require is that if identity theft prevention and mitigation services are provided, the notification must inform the affected persons that they will be provided for at least 12 months and at no cost, and the notice has to provide information on how to obtain the services.
The language adding the new “identity theft prevention and mitigation services” requirement is set forth at Cal. Civil Code 1798.82(d)(2)(G) and it reads:
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).
The new requirement applies only if the breach involved Social Security numbers, driver’s license numbers or California identification card numbers, but not credit card account numbers or the other elements of personal information in the existing California law.
It is also interesting to note that California’s existing law provides that HIPAA covered entities (there is no mention of business associates here) are deemed to comply with “the notice requirements in subdivision (d)” of the California law, if they comply with the breach notification obligations under HIPAA. Subdivision (d) refers to Cal. Civil Code 1798.82(d), the same section which contains the new identity theft prevention and mitigation services notification requirement. It is unclear, however, whether the reference to subdivision (d) would include the identity theft prevention and mitigation services notification requirement, since that seems to create an obligation beyond the notice requirement where identity theft prevention and mitigation services are offered. Covered entities have to be careful here and also consider the preemption provisions under HIPAA.
Safeguarding Personal Information.
Prior to AB-1710, California required businesses that own or license 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. To own or license meant that the business retained personal information 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. AB-1719 expands this requirement to businesses that “maintain” personal information. That is, personal information that a business maintains but does not own or license. This is a significant expansion of the safeguards requirement and businesses maintaining the personal information of California residents should be taking steps to safeguard that information, whether it applies to customers, employees, students, or other residents. For this purpose, personal information means:
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:
(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 (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).
Note, however, that this obligation does not apply to providers of health care, health care service plans, or contractors regulated by the Confidentiality of Medical Information Act.
Prohibitions on Sale and Marketing of Social Security Numbers.
California also maintained specific protections for Social Security numbers prior to AB-1710, including prohibiting persons or entities from publicly posting or displaying an individual’s Social Security number or doing certain other acts that might compromise the security of an individual’s Social Security number, subject to certain exceptions.
AB-1710 amends those protections to prohibit the sale, advertisement for sale, or offer to sell an individual’s Social Security number. The prohibition does not extend to the release of Social Security numbers when the release is incidental to a larger transaction and is necessary to identify the individual in order to accomplish a legitimate business purpose. This exception might apply, for example, in the course of a sale of a business and records containing Social Security numbers are released to the buyer. However, release of an individual’s Social Security number for marketing purposes is not permitted. Additionally, the release of an individual’s Social Security number for a purpose specifically authorized or specifically allowed by federal or state law is not prohibited by this change.
States have been amending their breach notification and data security laws over the past few years, likely in response to the data breaches constantly in the media and the large number of complaints of identity theft being received by federal and state agencies. See, e.g., recent amendments to Florida’s law. Companies need to be aware of these changes and start reviewing and updating their security incident response plans, as well as their overall risk assessment, particularly in California, where the law now may require a more costly response in certain cases.