New York Data Breach Statute

Expanded breach notification requirements for the State of New York

New York, 1785 — Allyn Cox. Oil on Canvas. 1973–1974 — Hall of Capitols — US Capitol

Last revised: January, 2020

The SHIELD Act recently amended New York’s existing security breach notification law (codified under section Section 899-AA of Article 39-F of the New York General Business Law) to broaden notification obligations. It was signed into law on July 25, 2019 by New York Governor Andrew Cuomo.

Effective day: The modifications to New York’s data breach law implemented through the Shield Act became effective 90 days after Governor Cuomo signed the Act.

Relationship with other laws: The statute preempts any provisions of local law, ordinance or code. No locality shall impose requirements that are inconsistent with or more restrictive than those set forth in the Act.

See, Section 899-AA .10

Who is regulated by the New York Data Breach Statute (Territorial Scope)?

Any person or business which owns or licenses computerized data which includes “private information.”

See, Section 899-AA .2.

What is regulated by the New York Data Breach Statute (Material Scope)?

The New York Data Breach Statute requires notification of breaches of security affecting private information.

“Private information” of New York residents defined to mean either:

• Any unencrypted (or encrypted with a key that has been accessed) information concerning a natural person which, because of name, number, personal mark, or other identifier, can be used to identify such natural person (“personal information”) in combination with any one or more of the following data elements: (1) social security number; (2) driver’s license number or non-driver identification card number; (3) account number, credit or debit card number, in combination with any required security code, access code, 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; or
• 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.

“Private information” does not include publicly available information which is lawfully made available to the general public from federal, state, or local government records.

See, Section 899-AA 1.(a) & (b)

“Breach of security” is defined to 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 private information maintained by a business.”

• Good faith access to, or acquisition of, 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.

See, Section 899-AA 1.(c)

Obligations imposed by the New York Data Breach Statute:

Any person or business 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.

See, Section 899-AA .2

• The State attorney general, if the breach affected over five hundred residents, even where the disclosure was inadvertent and unlikely to result in misuse and/or financial/emotional harm.

See, Section 899-AA .2.(a)

• Where the person or business that suffers the breach does not own the private information, such person 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, accessed or acquired by a person without valid authorization.

See, Section 899-AA .3

• 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 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.

See, Section 899-AA .8.(a)

• If more than five thousand New York residents are to be notified at one time, the person or business shall also notify consumer reporting agencies as to the timing, content and distribution of the notices and approximate number of affected persons. Such notice shall be made without delaying notice to affected New York residents.

NOTE: “Consumer reporting agency” is defined to 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 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.” The New Your Attorney General is tasked with compiling a list of consumer reporting agencies and providing it upon request to any person or business required to make notify them.

See, Section 899-AA .8.(b)

Exceptions:

• The notification to affected individuals is not required where 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 harm to the affected persons or emotional harm in the case of unknown disclosure of online credentials. The determination must be documented in writing and maintained for at least five years. If the incident affects over five hundred residents of New York, the person or business shall provide the written determination to the state attorney general within ten days after the determination.

See, Section 899-AA .2.(a)

• Notification is provided to individuals under any of the following laws: GLBA; the Health Insurance Portability and Accountability Act and the Health Information Technology for Economic and Clinical Health Act; New York CRSFC; or or 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. Still, notice shall be provided to the state attorney general, the department of state and the division of state police and to consumer reporting agencies pursuant to paragraph.

See, Section 899-AA .2.(b)

Timing:

• The notification affected residents shall be made in the “most expedient time possible and without unreasonable delay”, consistent with the legitimate needs of law enforcement, or any measures necessary to determine the scope of the breach and restore the integrity of the system.

See, Section 899-AA .2

• The notification to the AG where a determination has been made that the breach is unlikely to result in misuse or cause financial or emotional harm, shall be made within ten days after the determination.

See, Section 899-AA .2.(a)

• The notifications to the state attorney general, the department of state, the division of state police, and the consumer reporting agencies shall be provided without delaying the notification to affected individuals.

See, Section 899-AA .8

• Where the notification is required under HIPAA, the Attorney General shall be notified within five business days of notifying the secretary

Section 899-AA .9

Delay of notification (criminal investigations): The notification may be delayed if a law enforcement agency determines that such notification impedes a criminal investigation.

See, Section 899-AA .4

Notification methods (affected individuals): The notice shall be directly provided to the affected persons by one of the following methods:

• written notice;
• electronic notice, provided that (i) the affected individual has expressly consented to receiving notices in electronic form; (ii) a log of each such notification is kept; AND (iii) it shall not be required to consent to accepting electronic notice as a condition of establishing any business relationship or engaging in any transaction.
• telephone notification, provided that (i) a log of each such notification is kept by the person or business who notifies affected persons; or
• substitute notice, if the cost of providing notice would exceed $250,000, or the affected class of subject persons to be notified exceeds 500,000, or the business does not have sufficient contact information. Substitute notice may consist of all of the following: (1) e-mail notice (except where the breached information includes the e-mail address + password or security question and answer, in which case the person or business shall instead provide “clear and conspicuous notice” delivered online when the consumer is connected to the online account); (2) conspicuous posting of the notice on the business’s web site page, if such business maintains one; and (3) notification to major statewide media.

See, Section 899-AA .5

Notification content: Regardless of the method by which notice is provided, the notice shall include:

• contact information for the person or business making the 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.

See, Section 899-AA .7

Enforcement

The New York Attorney General may bring action to enjoin and restrain the continuation of any violation of the statute.

• Preliminary relief may be granted under article sixty-three of the civil practice law and rules.
• The court may award damages for actual costs or losses incurred by a person entitled to notice, including consequential financial losses.

For knowing or reckless violations, the court may impose a civil penalty of the greater of $5,000 OR up to $20 per instance of failed notification to a maximum of $250,000.

The remedies provided are in addition to any other lawful remedy available.

Action must be brought within 3 years after either the date on which the attorney general became aware of the violation, or the date of notice sent, whichever occurs first. In no event shall an action be brought after six years from the date of discovery of the breach of private information by the company unless the company took steps to hide the breach.

See, Section 899-AA .6