United States: New California Law Protects Online Account Information

As of January 1, security breach notifications must be provided to consumers when certain account information is compromised.

On September 27, California Governor Jerry Brown signed into law Senate Bill No. 46 (S.B. 46), a new data breach notification law that expands consumer protections by requiring that security breach notifications be provided when passwords, usernames, or security questions or answers that would permit access to an online account are breached. California's existing data breach notification law requires that consumers be alerted only when a security breach has exposed Social Security numbers, driver's license numbers, credit card numbers, or medical or health insurance information. No notification is currently required when other online account information is breached. S.B. 46 will take effect on January 1, 2014.

Overview of S.B. 46

Both the existing law and the newly enacted S.B. 46 apply to any agency or any person or business that conducts business in California and owns or licenses computerized data that includes personal information. These persons or businesses are required to notify any resident of California whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person. Specifically, S.B. 46 expands the definition of "personal information" to now include either of the following pieces of unencrypted information:

  • An individual's first name or first initial and 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:
    • Social Security number
    • Driver's license number of California identification card number
    • Account number or 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
    • Medical information
    • Health insurance information
  • A username or email address, in combination with a password or security question and answer that would permit access to an online account

S.B. 46 also imposes additional requirements on the disclosure of a security breach in situations where the breach involves personal information that would permit access to an online or email account. Specifically, if the breach includes a username or email address, in combination with a password or security question and answer that would permit access to an online account, and does not include any of the other information in the above definition of "personal information," the person or business may notify the consumer in an electronic form that directs the consumer to promptly change his or her password and security question or answer, as applicable, or to take other steps appropriate to protect the online account with the business and all other online accounts for which the person uses the same username or email address and password or security question or answer.

However, if the breach includes a username or email address, in combination with a password or security question and answer that would permit access to an email account furnished by a business, the person or business must not provide the security breach notification to that email address. Instead, the person or business must comply by providing notice in one of the following methods:

  • Written notice
  • Electronic notice, if the notice provided is consistent with the provisions regarding electronic records and signatures set forth in section 7001 of title 15 of the U.S. Code
  • Substitute notice, if the person or business demonstrates that the cost of providing notice would exceed $250,000, that the affected class of subject persons to be notified exceeds 500,000, or that the person or business does not have sufficient contact information

Substitute notice shall consist of all of the following: (a) email notice when the person or business has an email address for the subject persons; (b) conspicuous posting of the notice on the Internet website of the person or business, if the person or business maintains one; and (c) notification to major statewide media. Alternatively, clear and conspicuous notice may be delivered to the resident online when the resident is connected to the online account from an Internet Protocol address or online location from which the person or business knows the resident customarily accesses the account.

The law also expressly allows people and businesses to provide notice pursuant to their own notification procedures that are part of an information security policy for the treatment of personal information as long as those procedures are otherwise consistent with the timing requirements of the statute.

Notification Requirements

The requirements for what the notification must contain remain the same as under the existing law. Specifically, the notification must be written in plain language and include, at a minimum, the following information:

  • The name and contact information of the reporting person or business
  • A list of the types of personal information that were or are reasonably believed to have been the subject of a breach
  • The following, if it is possible to determine this information at the time the notice is provided:
    • The date of the breach
    • The estimated date of the breach
    • The date range within which the breach occurred
  • Whether 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
  • A general description of the breach incident, if that information is possible to determine at the time the notice is provided
  • 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

The security breach notification may also include information about what the person or business has done to protect consumers whose information has been breached or advice on steps that the consumers whose information has been breached may take to protect themselves. If a notification must be given to more than 500 California residents as a result of a single breach, the reporting person or business must submit a sample copy of the notification to the state Attorney General.

Implications

The expanded law applies to all agencies, people, and businesses that conduct business in California and that own or license computerized data that includes personal information, as defined in the statute, and requires that security breach notifications must be made to residents of California. California is one of 49 states that have enacted a variety of laws addressing security breach notifications when personally identifiable information is potentially compromised. Individuals and companies should be thoughtful about their collection of personally identifiable information, maintain such information in a secure and encrypted manner to the extent possible, and implement policies to address security breaches in a timely and lawful manner in the event that they occur.

Copyright 2013. Morgan, Lewis & Bockius LLP. All Rights Reserved.

This article is provided as a general informational service and it should not be construed as imparting legal advice on any specific matter.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.