United States: New Proposed Federal And New York State Cybersecurity And Data Privacy Initiatives

Last year proved to be full of unprecedented challenges to the cybersecurity infrastructure of the U.S. economy. Security breaches at Sony Pictures, Target, Apple, JPMorgan, and Home Depot have featured prominently in the news cycle over the past year and highlighted the many risks faced by public companies and their board members. Indeed, the National Association of Corporate Directors has listed cybersecurity as one of the three critical challenges for public company directors in 2015, and not without good reason. Beyond the reputational harm that these breaches may cause, they inflict significant economic costs. The full costs of a breach often extend long beyond the breach itself, as companies like Target and Sony face class action suits in the aftermath of their attacks.

To combat growing cybersecurity threats, the Obama administration and the New York attorney general have recently presented several legislative proposals. Given the bipartisan support for protecting individuals, companies, and government entities against cyber-attacks, new cybersecurity and data privacy legislation in some form appears to have a good chance of passage. We summarize notable recent initiatives here.

The Obama Administration's Proposed Cybersecurity Legislation

On January 12, in a speech at the Federal Trade Commission in Washington, President Obama outlined the new cybersecurity legislation he will propose. The president noted that nearly every state has a unique data breach notification law, making it confusing and costly for companies to notify customers of data breaches. The president plans to introduce a bill, called the Personal Data Notification & Protection Act, that will create a "single, strong national standard" requiring companies to notify consumers within thirty days of a data breach. The president also said that he would introduce legislation to "close loopholes in the law so we can go after more criminals who steal and sell the identities of Americans - even when they do it overseas."

In conjunction with President Obama's January 12 speech and this week's State of the Union address, the White House released three legislative proposals. One proposal would establish a national standard for data breach notification. Business entities that discover security breaches affecting "sensitive personally identifiable information" would have thirty days to notify customers, barring certain exceptions (for instance, notification would be delayed if it would impede a criminal investigation or damage national security). For large-scale data breaches and breaches involving federal government databases or employees, business entities would be required to notify the Department of Homeland Security (DHS). In turn, the DHS would notify appropriate federal agencies. Notably, as proposed, the bill would preempt the incongruent collection of state data breach notification laws.

The administration released a second legislative proposal intended to encourage the private sector to share cyber-threat information with the DHS's National Cybersecurity and Communications Integration Center (NCCIC). The NCCIC could share such information with relevant federal agencies and private-sector organizations (known as Information Sharing and Analysis Organizations). Companies that voluntarily share threat information would receive protection from civil and criminal actions, and the shared information would be shielded from public disclosure or use as evidence in regulatory enforcement actions. This proposed legislation would also preempt state data laws regarding cyber-threat information sharing.

The third legislative proposal would further empower law enforcement to combat cybercrimes. As the White House described in a press release, the legislation

would allow for the prosecution of the sale of botnets, would criminalize the overseas sale of stolen U.S. financial information like credit card and bank account numbers, would expand federal law enforcement authority to deter the sale of spyware used to stalk or commit ID theft, and would give courts the authority to shut down botnets engaged in distributed denial of service attacks and other criminal activity.

Additionally, this legislation would allow prosecutors to use the Racketeering Influenced and Corrupt Organizations Act, or RICO, to prosecute cybercrimes. The legislation would also update and clarify several provisions of the Computer Fraud and Abuse Act to expand the government's capacity to target cybercriminals.

During his State of the Union address, President Obama said that his administration is "making sure our government integrates intelligence to combat cyber threats" and urged Congress "to finally pass the legislation we need to better meet the evolving threat of cyber-attacks, combat identity theft, and protect our children's information." The White House is expected to push forward on the proposed cybersecurity legislation in the coming months.

N.Y. Attorney General's Bill to Strengthen Data Security and Expand Customer Protection

At the same time President Obama is proposing new and uniform federal cybersecurity standards, New York Attorney General Eric T. Schneiderman recently released a proposal that would "overhaul New York State's data security law and require new and unprecedented safeguards for the personal data of consumers."

The attorney general's proposed bill seeks to:

  • Expand the definition of "private information" to include both the combination of an email address and password, and the combination of an email address and a security question and answer, as well as to include in the definition pertinent medical information.
  • Require entities that collect and/or store private information to have reasonable security measures that include:
    • Administrative safeguards to assess risks, train employees, and maintain safeguards.
    • Technical safeguards to (i) identify risks in their respective network, software, and information processing; (ii) detect, prevent, and respond to attacks; and (iii) regularly test and monitor systems controls and procedures.
    • Physical safeguards, including special disposal procedures, intrusion detection and response measures, and protection of physical areas where information is stored.
    • Certification mechanisms, whereby entities that engage in annual independent third-party audits and certifications that confirm their compliance with New York's reasonable data security requirement receive, during litigation, the benefit of a rebuttable presumption that they have reasonable data security measures.
  • Provide a legislative safe harbor - which may include the elimination of liability altogether-as an incentive for a company that implements a heightened level of data security.
  • Improve data sharing between the government and private companies by providing protections, in the event of a data breach, for a company's voluntary disclosure of internal forensic reports to law enforcement.

The Consumer Privacy Bill of Rights

The Obama administration has also been working to develop a Consumer Privacy Bill of Rights built around a set of core principles. According to details released by the White House, some of these principles include:

  • The right for consumers to decide what personal data companies collect from them and how companies use that data.
  • The right for consumers to know that their personal information collected for one purpose cannot then be misused by a company for a different purpose.
  • The right for consumers to have their information stored securely by companies that are accountable for its use.

The Student Digital Privacy Act

The Obama administration also released details on a proposed Student Digital Privacy Act. According to a White House statement, the legislation "would prevent companies from selling student data to third parties for purposes unrelated to the educational mission and from engaging in targeted advertising to students based on data collected in school."

Conclusion

As we begin this new year, companies and their directors should continue to monitor the progress of proposed cybersecurity and data privacy initiatives. The government's focus on cybersecurity risks underscores the importance of businesses establishing clear protocols to give consumers confidence that their data is appropriately protected. It is also critical that companies develop the tools they need to protect against security threats and control reputational and economic damage should a data breach occur.

The Cybersecurity, Privacy and Data Protection Team

Kramer Levin's Cybersecurity, Privacy and Data Protection practice is an interdisciplinary team of attorneys from the United States and Europe with litigation, regulatory, technology and compliance experience. Our team advises on the most cutting-edge technology and data security issues at every stage, representing clients ranging from entrepreneurial start-up entities to multinational Fortune 100 companies in a variety of sectors. We help clients navigate the rapidly evolving and challenging privacy law landscape by providing practical strategies to identify and manage the legal and reputational risks associated with these emerging and dynamic issues. Many of our attorneys have served in senior positions in government, as prosecutors and trial attorneys, counsel for Congressional committees and as advisors in the development of EU law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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
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 you may opt out by clicking here

    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.

    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.

    By clicking Register you state you have read and agree to our Terms and Conditions