United States: New York Updates Privacy Laws

Last Updated: August 28 2019
Article by Data Practice Group

New York has recently enacted two laws expanding its breach notification and security safeguards requirements, and it may be poised to pass a third bill, aimed at increasing the privacy rights of New York residents. On July 25, 2019, New York Governor Andrew M. Cuomo signed into law the Stop Hacks and Improve Electronic Data Security Act ("SHIELD") and Identity Theft Protection and Mitigation Services Act. Together, these bills expand the type of personal information covered by New York's data breach reporting law, require business to implement specific data security safeguards, and demand that any business regulated as a credit reporting agency ("CRA") provide identity theft prevention and mitigation services to affected consumers for five years – a new high water mark for such requirements.

These bills may be only the start of New York's efforts to strengthen the protections over state residents' personal data. New York is also considering a new privacy law that, if enacted, would be more stringent than California's Consumer Protection Act ("CCPA") and introduce the concept of a "data fiduciary" to the U.S. privacy lexicon.

As more states follow California's lead and debate new privacy laws aimed at protecting residents' personal data, companies should consider how these new laws, if enacted, might affect their business practices and the value of the personal data they collect. Below we discuss some of the key features of New York's recently enacted and pending legislation and the potential implications on companies.

Recently Enacted: SHIELD Act

New York's original data breach notification law required any person or business conducting business in New York to notify state residents when their "private information" was acquired without valid authorization. See N.Y. Gen. Bus. L. § 899-aa(2). The SHIELD Act, which takes effect on March 21, 2020, broadens the scope of New York's data breach notification law in several ways. The notification requirements now apply to any person and business that handles New York residents' information regardless of whether that person or business conducts business in New York.

Perhaps most significantly, the SHIELD Act requires any person or business handling New York residents' private information to implement and maintain "reasonable" administrative, technical, and physical safeguards to protect the security, confidentiality, and integrity of private information. Several states have similar laws that require reasonable controls, but the New York SHIELD Act now mandates that a covered company:

  • designate one or more employees to coordinate the security program;
  • identify reasonably foreseeable internal and external risks;
  • assess the sufficiency of safeguards in place to control the identified risks;
  • train and manage employees in the security program practices and procedures;
  • select service providers capable of maintaining appropriate safeguards, and require those safeguards by contract;
  • adjust the security program in light of business changes or new circumstances;
  • assess risks in network and software design;
  • assess risks in information processing, transmission and storage;
  • detect, prevent and respond to attacks or system failures;
  • regularly test and monitor the effectiveness of key controls, systems and procedures;
  • assess risks of information storage and disposal;
  • detect, prevent and respond to intrusions;
  • protect against unauthorized access to or use of private information during or after the collection, transportation and destruction or disposal of the information; and
  • dispose 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.

Failure to establish reasonable safeguards would mean potential action against the company by New York regulators.

In addition, the SHIELD Act broadens the scope of incidents that require notification in the following ways:

  • Expanded definition of "private information"
    The SHIELD Act expands "private information" in line with the laws of several other states to include (i) biometric information, (ii) financial account numbers that can be used alone to access an account, and (iii) usernames or email address in combination with a password or security question and answer.
  • Notification for incidents involving unauthorized access
    Under the original law, notification was required only if there was "unauthorized acquisition" of private information. The SHIELD Act requires notification even where there was "unauthorized access" but no acquisition of private information, such as where there are "indications that the information was viewed, communicated with, used, or altered by a person without valid authorization or by an unauthorized person."

As do the laws of most other states, the SHIELD Act provides for exceptions to its notification and reasonable security requirements, including for those businesses already regulated by and in adherence with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Gramm-Leach-Bliley Act (GLBA). Companies covered by HIPAA or GLBA, however, are still required to provide notice to the New York Attorney General, Department of State, and the Division of State Police in the event of a data breach.

Recently Enacted: Identity Theft Protection and Mitigation Services Act

The second bill signed by the governor also affects the notice that some businesses must provide to their customers. Under the Identity Theft Protection and Mitigation Services Act, whenever a business that is regulated as a CRA suffers a breach involving Social Security numbers, it must provide five years of identity theft prevention and mitigation services to anyone affected. This is the longest monitoring requirement that any state imposes. States such as Connecticut and Delaware require a business that experiences a breach involving social security numbers to provide one to two years of identity theft prevention or credit monitoring, and Massachusetts requires 18 months of monitoring be provided in similar situations. Massachusetts also has a heightened requirement for CRAs—requiring them to provide 42 months (3.5 years) of monitoring after a breach. New York's bill surpasses even that, and could push the standard amount of monitoring businesses provide. The bill, which also provides consumers with the right to freeze their credit at no cost, goes into effect on September 23, 2019.

On the Horizon: The New York Privacy Act's Data Fiduciary

In addition to heightening data security and breach requirements through the passage of these two laws, New York is also considering a new privacy law, named the New York Privacy Act ("NYPA") (S.5642), which would further expand the privacy rights of state residents. Introduced on May 9, 2019, by Senator Kevin Thomas, the NYPA, if passed, has the potential to impose stricter requirements on companies than the California Consumer Privacy Act ("CCPA") and provide legal innovations that would change the current framework of U.S. privacy law.

The most surprising and novel part of the current draft NYPA is its proposal of "data fiduciary" obligations that "supersede any duty owed to owners or shareholders" of an entity. Any entity that collects, sells, or licenses personal information of consumers would be required to "exercise the duty of care, loyalty and confidentiality expected of a fiduciary with respect to security the personal data of a consumer against a privacy risk." The law defines "privacy risk" to encompass potential financial harm, physical harm, psychological harm and any other consequence that affects an individual's "private life." The NYPA also requires entities to act in the best interests of consumers "in a manner expected by a reasonable consumer under the circumstances." This means, in part, that entities may not use data in any way that causes a consumer financial or physical harm, or would be "unexpected and highly offensive to a reasonable consumer." In addition, entities must "reasonably secure" personal data from unauthorized access and "promptly inform" consumers about any breach of the fiduciary duty.

An equally significant feature of the NYPA is that it provides for a private right of action. The law may be enforced by the attorney general or "any person who has been injured" from a violation of the law. Violators may be subject to injunctions or liable for damages and civil penalties. Damages are to be calculated based on the number of affected individuals, the severity of the violation, and the size and revenues of the covered entity.

The NYPA would affect most companies that do business in New York or with New York residents, regardless of their location, size, or revenue. The law applies broadly to (i) any legal entity that conducts business in New York or (ii) produces products or services that target New York residents. By way of comparison, the CCPA's application is limited to for-profit entities that either have a gross revenue greater than $25 million; annually buy, sell, or share the personal information of more than 50,000 consumers, households or devices; or derive 50 percent or more of their annual revenue from selling consumers' personal information. The NYPA does provide certain exceptions, such as for state and local governments, personal data regulated by HIPAA or the GLBA, and data maintained for employment purposes.

The NYPA would also prohibit covered companies from using, processing or transferring personal data to third parties "unless the consumer provides express and documented consent." Similar to the CCPA, the NYPA broadly defines "personal data" beyond traditional identifiers, e.g., name, address, social security number, to include, among other things, financial information, medical information, biometric data, internet activity information and geolocation data, as well as inferences drawn from information that could be used to create a profile about an individual's preferences.

The NYPA establishes a broad set of rights for consumers similar to the EU's GDPR and California's CCPA, including the right to access personal data and certain information about how that data is being handled; the right to request that personal data be deleted, subject to certain exceptions; the right to have inaccurate personal data corrected and incomplete data completed; and the right to data portability. In addition to these rights, the NYPA also prohibits entities from making important decisions based solely on "profiling," or, rather, using algorithms to evaluate certain personal characteristics such as a person's economic situation, health or personal preferences.

While the ultimate fate of the NYPA is still unknown, if passed, it may surpass the CCPA in terms of privacy rights conferred onto consumers and the obligations imposed on companies that handle New York residents' data. The NY legislative session has ended for this year, but the NYPA is expected to return to the legislative calendar in the next session

Ropes & Gray will continue to monitor developments in New York and other states and will publish additional alerts relating to these privacy laws. For more information on these New York laws or to discuss privacy or data security issues generally, please contact a member of our Data Practice group or visit https://www.ropesgray.com/en/practices/data-practice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions