NY. S5575B Stop Hacks and Improve Electronic Data Security Act (SHIELD Act)

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NY. S5575B Stop Hacks and Improve Electronic Data Security Act (SHIELD Act)
Short Title New York SHIELD Act
Official Text NY. S5575B Stop Hacks and Improve Electronic Data Security Act (SHIELD Act)
Country/Jurisdiction United States
State or Province New York
Regulatory Bodies
Date Enacted 2020
Scope of the Law
Information
Taxonomy Breach of Confidentiality, Exclusion, Insecurity
Strategies
Template:New YorkAd
Template:United StatesAd

New York Senate Bill 5575 enacted the SHIELD Act, which imposes reasonable data security for private information, and biometric data and email addresses and passwords to the definition of private information. Entities compliant with DFS’s Cybersecurity Requirements for Financial Services Companies (23 NY ADC 500) are exempt from the SHIELD Act’s data security requirements.

Text of the law

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, subdivision 9
is renumbered subdivision 10 and a new subdivision 9 is added 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
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; or
(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.
"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.
A. 5635--B 3
(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 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 harm to the affected persons or
emotional harm in the case of unknown disclosure of online credentials
as found in subparagraph (ii) of paragraph (b) of subdivision one of
this section. Such a 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.
(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
division of state police 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.
A. 5635--B 4
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,
accessed or acquired by a person without valid authorization.
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]
A. 5635--B 5
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. 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.
7. Regardless of the method by which notice is provided, such 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.
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 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.
(b) In the event that 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.
9. Any covered entity required to provide notification of a breach,
including breach of information that is not "private information" as
defined in paragraph (b) of subdivision one of this section, to the
secretary of health and human services pursuant to the Health Insurance
Portability and Accountability Act of 1996 or the Health Information
Technology for Economic and Clinical Health Act, as amended from time to
time, shall provide such notification to the state attorney general
within five business days of notifying the secretary.
§ 4. The general business law is amended by adding a new section 899-bb to read as follows:
§ 899-bb. Data security protections. 1. Definitions. (a) "Compliant
regulated entity" shall mean any person or business that is subject to,
and in compliance with, any of the following data security requirements:
(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.
A. 5635--B 6
(b) "Private information" shall have the same meaning as defined in section eight hundred ninety-nine-aa of this article.
(c) "Small business" shall mean any person or business with (i) fewer
than fifty employees; (ii) less than three million dollars in gross
annual revenue in each of the last three fiscal years; or (iii) less
than five million dollars in year-end total assets, calculated in
accordance with generally accepted accounting principles.
2. Reasonable security requirement. (a) Any person or business that
owns or licenses computerized data which includes private information of
a resident of New York shall develop, implement and maintain reasonable
safeguards to protect the security, confidentiality and integrity of the
private information including, but not limited to, disposal of data.
(b) A person or business shall be deemed to be in compliance with
paragraph (a) of this subdivision if it either:
(i) is a compliant regulated entity as defined in subdivision one of
this section; or
(ii) implements a data security program that includes the following:
(A) reasonable administrative safeguards such as the following, in
which the person or business:
(1) designates one or more employees to coordinate the security
program;
(2) identifies reasonably foreseeable internal and external risks;
(3) assesses the sufficiency of safeguards in place to control the
identified risks;
(4) trains and manages employees in the security program practices and
procedures;
(5) selects service providers capable of maintaining appropriate safe-
guards, and requires those safeguards by contract; and
(6) adjusts the security program in light of business changes or new
circumstances; and
(B) reasonable technical safeguards such as the following, in which
the person or business:
(1) assesses risks in network and software design;
(2) assesses risks in information processing, transmission and stor-
age;
(3) detects, prevents and responds to attacks or system failures; and
(4) regularly tests and monitors the effectiveness of key controls,
systems and procedures; and
(C) reasonable physical safeguards such as the following, in which the
person or business:
(1) assesses risks of information storage and disposal;
(2) detects, prevents and responds to intrusions;
(3) protects against unauthorized access to or use of private information during or after the collection, transportation and destruction or
disposal of the information; and
(4) disposes of private information within a reasonable amount of time
after it is no longer needed for business purposes by erasing electronic
media so that the information cannot be read or reconstructed.
(c) A small business as defined in paragraph (c) of subdivision one of
this section complies with subparagraph (ii) of paragraph (b) of subdi-
vision two of this section if the small business's security program
contains reasonable administrative, technical and physical safeguards
that are appropriate for the size and complexity of the small business,
the nature and scope of the small business's activities, and the sensitivity of the personal information the small business collects from or
about consumers.
A. 5635--B 7
(d) Any person or business that fails to comply with this subdivision
shall be deemed to have violated section three hundred forty-nine of
this chapter, and the attorney general may bring an action in the name
and on behalf of the people of the state of New York to enjoin such
violations and to obtain civil penalties under section three hundred
fifty-d of this chapter.
(e) Nothing in this section shall create a private right of action.
§ 5. Paragraph (a) of subdivision 1 and subdivisions 2, 3, 6, 7 and 8
of section 208 of the state technology law, paragraph (a) of subdivision
1 and subdivisions 3 and 8 as added by chapter 442 of the laws of 2005,
subdivision 2 and paragraph (a) of subdivision 7 as amended by section 5
of part N of chapter 55 of the laws of 2013 and subdivisions 6 and 7 as
amended by chapter 491 of the laws of 2005, are amended and a new subdi-
vision 9 is added to read as follows:
(a) "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
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 which would permit access to an individual's financial account;
(4) account number, or credit or debit card number, if circumstances
exist wherein such number could be used to access to 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
fingerprint, voice print, or retina or iris image, or other unique physical representation or digital representation which are used to authenticate or ascertain the individual's identity; or
(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.
"Private information" does not include publicly available information
that is lawfully made available to the general public from federal,
state, or local government records.
2. Any state entity that owns or licenses computerized data that
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 data system. The state entity shall consult with the state
office of information technology services to determine the scope of the
breach and restoration measures. Within ninety days of the notice of the
breach, the office of information technology services shall deliver a
A. 5635--B 8
report on the scope of the breach and recommendations to restore and
improve the security of the system to the state entity.
(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 state entity
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. If the incident affected over five hundred residents of New York, the state entity 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 seven of this section and to consumer reporting agencies
pursuant to paragraph (b) of subdivision seven 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 state entity that maintains computerized data that includes
private information which such agency 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, accessed or acquired by a
person without valid authorization.
6. Regardless of the method by which notice is provided, such notice
shall include contact information for the state entity 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.
7. (a) In the event that any New York residents are to be notified,
the state entity shall notify the state attorney general, the department
of state and the state office of information technology services as to
the timing, content and distribution of the notices and approximate
number of affected persons and provide a copy of the template of the
A. 5635--B 9
notice sent to affected persons. Such notice shall be made without
delaying notice to affected New York residents.
(b) In the event that more than five thousand New York residents are
to be notified at one time, the state entity 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.
8. The state office of information technology services shall develop,
update and provide regular training to all state entities relating to
best practices for the prevention of a breach of the security of the
system.
9. Any covered entity required to provide notification of a breach,
including breach of information that is not "private information" as
defined in paragraph (a) of subdivision one of this section, to the
secretary of health and human services pursuant to the Health Insurance
Portability and Accountability Act of 1996 or the Health Information
Technology for Economic and Clinical Health Act, as amended from time to
time, shall provide such notification to the state attorney general
within five business days of notifying the secretary.
10. Any entity listed in subparagraph two of paragraph (c) of subdi-
vision one of this section shall adopt a notification policy no more
than one hundred twenty days after the effective date of this section.
Such entity may develop a notification policy which is consistent with
this section or alternatively shall adopt a local law which is consistent with this section.
§ 6. 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.



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