What's happening
The SHIELD Act expands New York’s data breach notification law and requires businesses to adopt reasonable data security protections for private information.
Why it matters
Expands the definition of "private information". The bill broadens what counts as sensitive data to include biometric data, account numbers (even without associated codes), and login credentials for online accounts. This means more types of data breaches will trigger notification requirements, providing greater protection for consumers in an increasingly digital world.
Requires "reasonable" data security practices. Businesses (including small businesses, with flexibility based on their size and resources) must implement specific administrative, technical, and physical safeguards to protect private information. This shifts New York law from only requiring breach notification to also mandating proactive prevention, raising the bar for data security standards.
Strengthens and clarifies breach notification rules. The law covers not just the acquisition but also unauthorized access to private information. It specifies how and when affected individuals and state agencies must be notified, and requires businesses to keep written records if they determine notification is unnecessary (e.g., for harmless exposures). This improves transparency and accountability around data breaches.
Increases potential penalties and enforcement. The bill raises the maximum civil penalty for violations and gives the Attorney General more time (three years) to bring actions against violators. However, it does not create a private right of action, meaning individuals cannot directly sue companies under this law—enforcement remains with the state. This aims to deter negligence while centralizing enforcement authority.
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Who cares
Headline styles
Strengthen Data Breach Notices
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 38
1 Co-sponsor
History
- Recommit, enacting clause stricken
- Referred to consumer protection
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Strengthen Data Breach Alerts
Assembly Floor Calendar · Sponsor Michael DenDekker
Full text
9 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
133
2019-2020 Regular Sessions
IN SENATE (Prefiled)
January 9, 2019
Introduced by Sen. CARLUCCI -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection
AN ACT to amend the general business law and the state technology law, in relation to notification of a security breach
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. This act shall be known and may be cited as the "Stop Hacks and Improve Electronic Data Security Act (SHIELD Act)".
§ 2. The article heading of article 39-F of the general business law, as added by chapter 442 of the laws of 2005, is amended to read as follows:
NOTIFICATION OF UNAUTHORIZED ACQUISITION OF PRIVATE
INFORMATION; DATA SECURITY PROTECTIONS
§ 3. Subdivisions 1, 2, 3, 5, 6, 7 and 8 of section 899-aa of the general business law, subdivisions 1, 2, 3, 5, 6 and 7 as added by chapter 442 of the laws of 2005, paragraph (c) of subdivision 1, paragraph (a) of subdivision 6 and subdivision 8 as amended by chapter 491 of the laws of 2005 and paragraph (a) of subdivision 8 as amended by section 6 of part N of chapter 55 of the laws of 2013, are amended to read as follows:
1. As used in this section, the following terms shall have the following meanings:
(a) "Personal information" shall mean any information concerning a natural person which, because of name, number, personal mark, or other identifier, can be used to identify such natural person;
(b) "Private information" shall mean either: (i) personal information consisting of any information in combination with any one or more of the following data elements, when either the data element or the combination of personal information [or] plus the data element is not encrypted, or
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05343-01-9
S. 133 2
is encrypted with an encryption key that has also been accessed or acquired:
(1) social security number;
(2) driver's license number or non-driver identification card number; [or]
(3) account number, credit or debit card number, in combination with any required security code, access code, [or] password or other information that would permit access to an individual's financial account;
(4) account number, credit or debit card number, if circumstances exist wherein such number could be used to access an individual's financial account without additional identifying information, security code, access code, or password; or
(5) biometric information, meaning data generated by electronic measurements of an individual's unique physical characteristics, such as a fingerprint, voice print, retina or iris image, or other unique physical representation or digital representation of biometric data which are used to authenticate or ascertain the individual's identity;
(ii) a user name or e-mail address in combination with a password or security question and answer that would permit access to an online account; or
(iii) any unsecured protected health information held by a "covered entity" as defined in the health insurance portability and accountability act of 1996 (45 C.F.R. pts. 160, 162, 164), as amended from time to time.
"Private information" does not include publicly available information which is lawfully made available to the general public from federal, state, or local government records.
(c) "Breach of the security of the system" shall mean unauthorized access to or acquisition of, or access to or acquisition without valid authorization, of computerized data that compromises the security, confidentiality, or integrity of [personal] private information maintained by a business. Good faith access to, or acquisition of [personal], private information by an employee or agent of the business for the purposes of the business is not a breach of the security of the system, provided that the private information is not used or subject to unauthorized disclosure.
In determining whether information has been accessed, or is reasonably believed to have been accessed, by an unauthorized person or a person without valid authorization, such business may consider, among other factors, indications that the information was viewed, communicated with, used, or altered by a person without valid authorization or by an unauthorized person.
In determining whether information has been acquired, or is reasonably believed to have been acquired, by an unauthorized person or a person without valid authorization, such business may consider the following factors, among others:
(1) indications that the information is in the physical possession and control of an unauthorized person, such as a lost or stolen computer or other device containing information; or
(2) indications that the information has been downloaded or copied; or
(3) indications that the information was used by an unauthorized person, such as fraudulent accounts opened or instances of identity theft reported.
(d) "Consumer reporting agency" shall mean any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer
S. 133 3
credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. A list of consumer reporting agencies shall be compiled by the state attorney general and furnished upon request to any person or business required to make a notification under subdivision two of this section.
2. Any person or business which [conducts business in New York state, and which] owns or licenses computerized data which includes private information shall disclose any breach of the security of the system following discovery or notification of the breach in the security of the system to any resident of New York state whose private information was, or is reasonably believed to have been, accessed or acquired by a person without valid authorization. The disclosure shall be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement, as provided in subdivision four of this section, or any measures necessary to determine the scope of the breach and restore the [reasonable] integrity of the system.
(a) Notice to affected persons under this section is not required if the exposure of private information was an inadvertent disclosure by persons authorized to access private information, and the person or business reasonably determines such exposure will not likely result in misuse of such information, or financial or emotional harm to the affected persons. Such a determination must be documented in writing and maintained for at least five years. The person or business shall provide the written determination to the state attorney general within ten days after the determination.
(b) If notice of the breach of the security of the system is made to affected persons pursuant to the breach notification requirements under any of the following laws, nothing in this section shall require any additional notice to those affected persons, but notice still shall be provided to the state attorney general, the department of state and the office of information technology services pursuant to paragraph (a) of subdivision eight of this section and to consumer reporting agencies pursuant to paragraph (b) of subdivision eight of this section:
(i) regulations promulgated pursuant to Title V of the federal Gramm- Leach-Bliley Act (15 U.S.C. 6801 to 6809), as amended from time to time;
(ii) regulations implementing the Health Insurance Portability and Accountability Act of 1996 (45 C.F.R. parts 160 and 164), as amended from time to time, and the Health Information Technology for Economic and Clinical Health Act, as amended from time to time;
(iii) part five hundred of title twenty-three of the official compilation of codes, rules and regulations of the state of New York, as amended from time to time; or
(iv) any other data security rules and regulations of, and the statutes administered by, any official department, division, commission or agency of the federal or New York state government as such rules, regulations or statutes are interpreted by such department, division, commission or agency or by the federal or New York state courts.
3. Any person or business which maintains computerized data which includes private information which such person or business does not own shall notify the owner or licensee of the information of any breach of the security of the system immediately following discovery, if the private information was, or is reasonably believed to have been, acquired by a person without valid authorization.
S. 133 4
5. The notice required by this section shall be directly provided to the affected persons by one of the following methods:
(a) written notice;
(b) electronic notice, provided that the person to whom notice is required has expressly consented to receiving said notice in electronic form and a log of each such notification is kept by the person or business who notifies affected persons in such form; provided further, however, that in no case shall any person or business require a person to consent to accepting said notice in said form as a condition of establishing any business relationship or engaging in any transaction.
(c) telephone notification provided that a log of each such notification is kept by the person or business who notifies affected persons; or
(d) substitute notice, if a business demonstrates to the state attorney general that the cost of providing notice would exceed two hundred fifty thousand dollars, or that the affected class of subject persons to be notified exceeds five hundred thousand, or such business does not have sufficient contact information. Substitute notice shall consist of all of the following:
(1) e-mail notice when such business has an e-mail address for the subject persons, except if the breached information includes an e-mail address in combination with a password or security question and answer that would permit access to the online account, in which case the person or business shall instead provide clear and conspicuous notice delivered to the consumer online when the consumer is connected to the online account from an internet protocol address or from an online location which the person or business knows the consumer customarily uses to access the online account;
(2) conspicuous posting of the notice on such business's web site page, if such business maintains one; and
(3) notification to major statewide media.
6. (a) whenever the attorney general shall believe from evidence satisfactory to him or her that there is a violation of this article he or she may bring an action in the name and on behalf of the people of the state of New York, in a court of justice having jurisdiction to issue an injunction, to enjoin and restrain the continuation of such violation. In such action, preliminary relief may be granted under article sixty-three of the civil practice law and rules. In such action the court may award damages for actual costs or losses incurred by a person entitled to notice pursuant to this article, if notification was not provided to such person pursuant to this article, including consequential financial losses. Whenever the court shall determine in such action that a person or business violated this article knowingly or recklessly, the court may impose a civil penalty of the greater of five thousand dollars or up to [ten] twenty dollars per instance of failed notification, provided that the latter amount shall not exceed [one] two hundred fifty thousand dollars.
(b) the remedies provided by this section shall be in addition to any other lawful remedy available.
(c) no action may be brought under the provisions of this section unless such action is commenced within [two] three years [immediately] after either the date [of the act complained of or the date of discovery of such act] on which the attorney general became aware of the violation, or the date of notice sent pursuant to paragraph (a) of subdivision eight of this section, whichever occurs first.
7. Regardless of the method by which notice is provided, such notice shall include contact information for the person or business making the
S. 133 5
notification, the telephone numbers and websites of the relevant state and federal agencies that provide information regarding security breach response and identity theft prevention and protection information, and a description of the categories of information that were, or are reasonably believed to have been, accessed or acquired by a person without valid authorization, including specification of which of the elements of personal information and private information were, or are reasonably believed to have been, so accessed or acquired.
8. (a) In the event that any New York residents are to be notified, the person or business shall notify the state attorney general, the department of state and the [division of state police] office of information technology services as to the timing, content and distribution of the notices and approximate number of affected persons and shall provide a copy of the template of the notice sent to affected persons. Such notice shall be made without delaying notice to affected New York residents.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law and the state technology law, in relation to notification of a security breach
Purpose
New York's data breach notification law needs to be updated keep pace with current technology. This bill broadens the scope of information covered under the notification law and updates the notification require- ments when there has been a breach of data. It also broadens the defi- nition of a data breach to include an unauthorized person gaining access to information. It also requires reasonable data security, provides standards tailored to the size of a business, and provides protections from liability for certain entities.
Summary of specific provisions
Section 1 of the bill names the act.
Read the full memo (1,018 words)
Section 2 of the bill amends the title of article 39-F of the General Business Law.
Section 3 of the bill amends section 899-aa of the General Business Law. The amendments would:
*update the notifications section of the General Business Law by adding biometric data, email addresses or user names in combination with a password or security question answer, and protected health information held by a "covered entity" to the private information definition;
*update the notifications section of the General Business Law by adding unauthorized access to the private information to the definitions of "private information" and "breach of the security of the system";
*update the notification requirement by applying it to any person or entity with private information of a New York resident, not just to those that "conduct business" in New York State;
*add definitions for the terms credit card and debit card;
*correct typos and inconsistencies in language to clarify that breaches of private information only (and not personal information) trigger notice obligations and to make consistent all references to compromise by an unauthorized person or a person without valid authorization;
*authorize businesses in certain circumstances to notify the consumer via email of the breach and if the consumer's email is believed to have been compromised authorize the business to use other electronic methods to notify the consumer;
*require that, if a business is sending out a new credit or debit card to a consumer, the consumer be notified that the card is on its way;
*outline penalties for businesses that fail to provide notice to consum- ers of a breach and the limitations period for the attorney general to act on any failure;
*require certain information to be included in the notice that would direct consumers to federal and state data security prevention entities and require businesses to send a template of their notice to consumers to the attorney general and the Office of Information Technology Services; and,
*task the Department of State with receiving and responding to data breach complaints and with informing the public of data security and breach prevention techniques.
Section 4 of the bill creates a new section 899-bb of the General Busi- ness Law that would:
*require reasonable data security for private information, with a more flexible standard for small businesses, without creating new require- ments for entities subject to existing or future regulations by any federal or other New York State government entity, and while providing safe harbor from enforcement for entities that take steps to verify their compliance with other existing data security regulations or stand- ards; and
*deem failure to provide required reasonable data security to be a violation of section 349 of the General Business Law, permitting the attorney general to bring suit but not any private plaintiff.
Section 5 of the bill amends the State Technology Law. The amendments would:
*include the same terms as above in the definition of private informa- tion;
*state that should a data breach occur in a State entity the Office of Information Technology Services shall deliver a report on the scope of the breach to the entity affected;
*require that an entity shall notify individuals affected by the data breach as quickly as possible; and,
*task the office of information technology services to develop and provide regular trainings to all entities on preventing data breaches.
Section 6 of the bill sets forth the effective date.
Justification
New York's current data breach notification law needs to be updated to keep pace with individuals' use and dissemination of private informa- tion. New York also needs to join the increasing number of states that require reasonable data security protections, without imposing duplicate obligations on those already subject to other federal or New York State data security regulations and without imposing excessive costs on small business, while providing safe harbor from enforcement for entities that take steps to verify their compliance with other existing data security regulations or standards. This bill expands the scope of information subject to the current data breach notification law to include biometric information, email addresses and their corresponding passwords or secu- rity questions and answers, and protected health information as defined under HIPAA. It broadens the definition of a data breach to include unauthorized access to private information. It applies the notification requirement to any person or entity with private information of a New York resident, not just to those that conduct business in New York State. It also updates the notification procedures companies and state entities must follow when there has been a breach of private informa- tion. It also creates reasonable data security requirements tailored to the size of a business and provides protections from liability for certain entities that take steps to verify their safeguarding of private information.
Prior legislative history
2017-18: S6933b/A8884b - FINANCE/passed assembly
Fiscal impact on the state
None.
Fiscal impact on localities
None.
Impact on the regulation of businesses and individuals
The bill would impose stronger obligations on businesses handling private data of customers, regarding security and proper notification of breaches.
Impact on fines, imprisonment, forfeiture of rights, or other penal sanctions
None.
Effective date
This act shall take effect on the ninetieth day after it shall have become a law; provided, however, that section four of this act shall take effect on the two hundred fortieth day after it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.