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States Step Up Cyber Protection for Consumers - IP Blog

Authored by Shane Olafson

As data breaches increase in profile and frequency, lawmakers are struggling to protect their citizens from cybercrime.  Within the past year, at least four states have beefed up their data security statutes to provide greater consumer protection.  

According to a May 2016 summary by the National Conference of State Legislatures, more than 25 states in 2016 have introduced or are currently considering data breach notification bills or resolutions. While many of those proposals remain pending, statutory amendments took effect in at least four states this year.  Here’s a brief summary of changes to data breach regulations in Nebraska, Nevada, Rhode Island and Tennessee.

1. Expanded Definition of Personal Information (A Growing Trend)

  • Nevada expanded its definition of “personal information” to include the following when unencrypted and combined with a person’s first name or first initial and last name: driver authorization card numbers; medical identification or health insurance identification numbers, and user names, unique identifiers or email addresses in combination with a password, access code or security question and answers that permit access to an online account.
  • Similarly, Rhode Island’s “Identity Theft Protection Act of 2015” took full effect on July 2, 2016, expanding “personal information” to include an individual’s first name or initial and last name in combination with any of the following data elements when the name and data elements are not encrypted or are stored in hard-copy format: Social Security number; driver’s license number, Rhode Island identification card number, or tribal identification number; account, credit card, or debit card number in combination with a required security code, access code, password, or personal identification number that would permit access to an individual’s financial accounts; medical or health insurance information; or email address with a required security code, access code, or password that would grant access to an individual’s personal, medical, insurance, or financial accounts.  
  • Nebraska now considers “personal information” to include an individual’s user name or email address in combination with a password or security question and answer that would permit access to an online account.

3. Encryption Safe Harbor

  • On July 1, Tennessee became the first state to remove its encryption safe harbor; meaning that entities potentially must notify those affected by a data breach regardless of whether the personal information involved was encrypted.  
  • Similarly, Nebraska enacted legislation dictating that data should not be considered “encrypted” for purposes of a safe harbor if the decryption key is also acquired in the security breach.  This makes sense—if someone can easily decrypt and access the information, why should it be considered encrypted for purposes of consumer protection?  More states should follow suit.

3. Attorney General Notification

Nebraska and Rhode Island both imposed new obligations around notification to Attorneys General in the event of a security breach:

  • In Rhode Island, an entity notifying more than five hundred (500) residents of a security breach must now also notify the Attorney General.
  • Although many recent state amendments (like Rhode Island) have set a certain threshold number of affected state residents before requiring AG notification, Nebraska’s update requires AG notification whenever any Nebraska resident is notified of a breach.  That notification must be provided not later than the time the notice is provided to the affected resident(s).

4. Notice to Affected Residents

Both Rhode Island and Tennessee put covered entities on the clock:

  • Rhode Island now requires notification to affected residents “in the most expedient time possible” and not more than 45 days after confirmation of a breach.  Rhode Island also imposed new requirements for the specific contents of notice to affected residents.
  • Tennessee’s amendment also requires entities to notify Tennessee residents affected by a data breach within 45 days of discovering the data breach.  

These summaries are not exhaustive so please be sure to consult legal counsel when facing a potential data breach.

Tags: Data Privacy and Cybersecurity

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