Wednesday, April 24, 2019

Washington's privacy bill seems dead, but a data security bill passes

Privacy and data security law are essentially moving targets.  Take for example recent events in the state of Washington.

Last month, I wrote about a bill introduced in the state legislature of Washington that would mimic the California Consumer Privacy Act, but would be even more strict in some cases. 

It has been a rollercoaster ride for the bill's sponsor and supporters.  The bill originally enjoyed overwhelming support in the Senate, but later, after stalling in a House committee, the bill seemed dead; the state's Chief Privacy Officer thought the bill was doomed. 

Just days later, a data security bill was approved by the legislature and presented to the Governor for signature.  (It seems likely that the data security bill is being adopted instead of the privacy bill.)

As amended, the data security bill will:

  • expand the definition of "consumer information" for purposes of triggering the breach notification requirements;
  • address breaches that specifically involve usernames and passwords;
  • provide a 30-day notification timeframe; and
  • add information to be included in breach notifications.

You can read the data security bill here.

Tuesday, March 26, 2019

Utah Expands Privacy Protections For Data Held By Third Parties

Utah state flag

Utah's Governor Gary Herbert is expected to sign a privacy bill in the next few days following unanimous approval in the state's legislature. This bill is particularly interesting (at least to privacy law geeks like you and me) for two reasons:
First, this bill diverges from the general trend. The bill's primary effect is to limit law enforcement's access to electronic data. (The general trend in the United States over the past two decades has been to grant law enforcement greater access to electronic data while gradually restricting data access and sharing in the private sector.) In the United States, law enforcement agencies are generally permitted to access data that is shared with a third party without a warrant, if the third party (not the individual data subject) consents. Many of the large custodians of consumer data routinely grant access to government agencies without demanding a warrant. The U.S. Constitution's 4th Amendment, which prohibits unreasonable searches and seizures, generally has not been applied to information in the custody of a third party.

Second, bills like this could eventually make trans-Atlantic data transfers easier.  One of the primary sources of tension in the context of cross-border personal data transfers is the difference between the U.S. government's relatively easy access to these data repositories without strict procedural protections versus the European Union's General Data Protection Legislation, which calls for strong protections around consumer data. If other states, or the federal government, follow Utah's lead, the U.S. could move closer to becoming a jurisdiction with "adequate" privacy protections, for purposes of the GDPR.
The bill, titled simply "The Electronic Information or Data Privacy Act,"
  • makes clear that the "owner" of data is the individual who transmits electronic information or data;
  • requires, with some exceptions, a search warrant to obtain certain electronic information or data in the custody of a third-party (other than the owner);
  • requires, with some exceptions, notification that electronic information or data was obtained;
  • provides for transmission of electronic information or data to a remote computing service, including restrictions on government entities;
  • excludes from evidence certain electronic information or data obtained without a warrant; 
  • defines and re-defines certain terms; and
  • makes some technical and conforming changes.

You can read the bill's full text for yourself here.

Monday, March 11, 2019

Will the "Washington Privacy Act" be the aftershock to the CCPA's seismic shift?

Washington State Outline

California has been getting most of the attention lately for the California Consumer Privacy Act, but Washington may be following closely behind with its own bold new privacy statute.  Senate Bill 5376 has been approved by the state's Senate and is currently before the House (in the Environment, Energy & Technology Committee as of the date of this post).  The current version can be viewed here

"Washingtonians cherish privacy as an element of their individual freedom..." the bill begins (somewhat awkwardly), and takes off from there.  Briefly, here are some highlights:
  • Jurisdiction resembles the CCPA. It applies to entities that conduct business in Washington or intentionally target residents if they (a) processes personal data of 100,000 consumers; or(b) derives over fifty percent of gross revenue from the sale of personal data and process personal data of 25,000 consumers.
  • The controller/processor paradigm is clearly set out, reflecting the influence of HIPAA and international laws.  Controllers and processors share liability under a "comparative fault" framework.
  • Access, correction, and deletion rights are all specifically conferred (not unlike CCPA and GDPR).  These are each subject to "verification" of the request.  
  • Consumers have a right to information regarding a controller's sharing of their data (by category) with processors, and processors must cooperate with controllers to fulfill opt-out, correction, and deletion requests from consumers. 
  • Consumers are given the specific right to opt out of "targeted advertising" by controllers, and third-party processors must honor the request.
  • Consumer requests should be fulfilled within 30 days, but the timeline can be extended by 60 days if necessary. 
  • Risk assessments (similar to privacy impact assessments) are mandated for all new processing of personal information or material changes.  This is not limited to processing of sensitive data.  If the risks are substantial, consumer consent is required.  The AG may inspect risk assessments, but otherwise they are confidential.
  • There are healthcare carve-outs; it doesn't appear to be intended to overlap with HIPAA.
  • The use of facial recognition (a) for decision-making with "significant effects" or (b) by the government is specifically restricted.
  • There is no private right of action created by the statute.
  • The AG will enforce the statute, but there is a 30 day cure period. 
  • An "office of privacy and data protection" is created, and (all of) the civil penalties extracted from violators by the AG will be used to fund it.
The statute would become effective July 1, 2021.  Stay tuned!

Tuesday, January 22, 2019

The (Revised) Proposal to "Strengthen North Carolina Identity Theft Protection Act"

North Carolina's Attorney General, Josh Stein, and Representative Jason Saine have unveiled a revised proposal for amending the state's existing Identity Theft Protection Act.  Recall that one year ago, Stein and Saine introduced a summary of proposed legislation (sometimes erroneously called a "fact sheet") outlining their plans for bipartisan legislation to tighten privacy and data security protections for North Carolinian.  In this post, I will attempt to describe the 2019 proposal and highlight differences from the 2018 proposal.
Concerns with the 2018 proposal
In many of my privacy and data security law presentations during 2018, I expressed my view that some elements of the proposal were reasonable and advisable improvements to the statute, and I also described a couple of my concerns with the proposal:

1.  First, the 2018 version of the Act to Strengthen Identity Theft Protections would have created the shortest breach reporting timeframe in the entire United States--only 15 days--giving organizations only half the time to respond to a breach as the next shortest timeframe.  Having assisted some of North Carolina's largest and smallest organizations in post-incident response, I thought that was unrealistically aggressive (although I'm sure well-intentioned).  Several states did, in fact, adopt or revise reporting deadlines in 2018, but none were close to the 15 days in the Stein-Saine proposal, for example:
  • 30 days: Colorado; 
  • 45 days: Alabama, Arizona, Maryland, Oregon; and
  • 60 days: Delaware, Louisiana, South Dakota.

2.  Second, the 2018 proposal would have included ransomware in the definition of "breach" even if no personal information was divulged (i.e., "exfiltrated").  Notifying individuals of an incident in which their data has not been exposed, and for which they probably cannot really take any pro-active or remedial actions, seems pointless, would likely generate fear disproportionate to the risk of harm, and creates a significant and unnecessary expense for the entity that has been attacked. In other words, I think there are good reasons why other states do not include ransomware attacks within the scope of a reportable breach.

What's new in the 2019 proposal
In the 2019 version of the proposal, one of these concerns has been addressed.  Let's take a look at how the 2019 proposal differs from the 2018 proposal:
  • In the 2018 proposal, the Attorney General's office would "determine the risk of harm" to consumers. In the 2019 proposal, the organization makes the initial determination, and "if the breached entity determines that no one was harmed, it must document that determination for the Attorney General’s office to review."
  • There were no changes to the security obligation. Both proposals impose a duty on a "business that owns or licenses personal information to implement and maintain reasonable security procedures and practices – appropriate to the nature of personal information – to protect the personal information from a security breach. "
  • There were no changes to the proposed expansion of "personal information." In both proposals, the scope would be expanded to include medical information and insurance account numbers. (The interaction with HIPAA was not addressed specifically.)
  • The 15 day reporting timeframe in the 2018 proposal has been changed to a 30 day timeframe in the 2019 proposal, which is much more consistent with the approach of other states.
  • Under both proposals, consumers will be able to place and lift a credit freeze on their credit report at any time, for free, and credit reporting agencies will also be required to cooperate to establish a simple method so that consumers need not repeat the process with each CRA. (If this sounds familiar, it is because this is how credit fraud alerts already work. Credit fraud alerts are creatures of federal law, and credit freezes arise from state law, and therefore vary from state to state.)
  • Under the 2018 proposal, consumers affected by a breach would have access to three free credit reports from each national consumer reporting agency, but that provision was dropped from the 2019 version of the proposal.
  • Under the 2018 proposal, if a consumer reporting agency is breached, it will be obligated to provide five years of free credit monitoring; under the 2019 version, the CRA would provide monitoring for four years.
  • Under the 2019 version, if any organization is breached, it must provide two years of free credit monitoring to each affected consumer. There was no similar provision in the 2018 proposal (except for CRAs).
  • Under the 2019 version, a failure to report a breach will be a violation of the NC Unfair and Deceptive Trade Practices Act. (The 2018 version specified that each affected consumer would support a separate violation; the 2019 version omits that statement.) Frankly, I am not sure that this would actually be a change from the current law; it may be a mere attempt to codify the status quo.
  • Both proposals say that a company will need a person's permission before obtaining or using a person’s credit report or credit score, and must disclose the reason for the request. (This is already a requirement under federal law, so I do not foresee much impact from this provision.)
  • Finally, both proposals would give NC residents the right to obtain from any CRA "the information maintained on him or herself (both credit related and non-credit related information), its source, and a list of any person or entity to which it was disclosed."


 The 2018 proposal never made it to a vote in the North Carolina General Assembly, and I cannot predict whether the new proposal will be adopted in the 2019-2020 session, but it is clear that the Attorney General intends to focus on privacy and data security, through legislation and enforcement actions, during the coming year.


Wednesday, January 2, 2019

Business North Carolina has released the 2019 "Legal Elite"

The start of a new year brings many opportunities to improve ourselves, but it is also a time to reflect on the accomplishments of the prior year. Each January, Business North Carolina releases the results of its annual survey of lawyers. The survey asks one simple question: "Of the Tar Heel lawyers whose work you have observed firsthand, whom would you rate among the current best in these categories?"

(Lawyers are never allowed to vote for themselves.) This year, I was included among the 22 honorees in the "Corporate" law category, along with some incredibly talented and accomplished lawyers.  I want to thank all of the lawyers across the state who took the time to vote.  Your confidence is humbling (and inspires me to be a better lawyer to meet your estimation!).

[I was also included in the "Young Guns" category again this year, and I'm delighted that some people still consider me young!] 

I hope each of you find meaning and purpose in your work in 2019 and that your efforts are rewarded with great success!