In the wake of increasing pressure due to data breaches, Florida is introducing a stringent new data breach law to protect its residents from identity theft and financial harm. The new Florida Information Protection Act of 2014 ("FIPA") takes effect on July 1, 2014, replacing Florida's existing data breach law. FIPA, like its predecessor, applies to any entity that has personal information about Florida residents.
Generally, state data breach laws require an entity to provide notice of a data breach that results in the unauthorized disclosure of personal information held by the entity. The notice must be delivered to each affected individual (and other parties, in certain instances) and the governing law depends on the state in which the impacted individual resides. As a result, an entity responding to a data breach must comply with the applicable law for each state in which affected individuals reside, regardless of where the breach took place. Every U.S. state – with the exceptions of Alabama, New Mexico and South Dakota – has implemented its own law.
The previous Florida data breach legislation followed a similar format to other state data breach laws. Although FIPA includes many similar provisions, it expanded the obligations in significant ways. The following summarizes FIPA, highlights key differences from the previous law and suggests practical compliance tips.
To Whom Does FIPA Apply?
FIPA applies to any "covered entity," which is generally defined as a commercial entity that acquires, maintains, stores or uses personal information. FIPA also applies to "third-party agents," which are those entities that have been engaged to maintain, store or process personal information on behalf of a covered entity or governmental entity. Governmental entities also have notification obligations under FIPA.
What Does FIPA Require?
FIPA requires covered entities that have personal information to notify affected Florida residents in the event of unauthorized access to electronic data containing their personal information. Notice must be made without unreasonable delay, taking into account the need to determine the scope of the breach, identify the affected individuals and restore system integrity. Notification must be made within 30 days of determining that a breach occurred unless the Florida Department of Legal Affairs in the Office of the Attorney General (the "AG's Office") or a law enforcement agency authorizes a delay, or the covered entity determines that the breach will not result in identity theft or financial harm (after consulting with law enforcement). Third-party agents are required to notify the applicable covered entity within 10 days of determining that a breach occurred.
In the event that a covered entity notifies 500 or more Florida residents, written notice must also be sent to the AG's Office within 30 days of discovery of the breach. A covered entity must notify the consumer reporting agencies of the breach if it notifies more than 1,000 Florida residents at one time. Moreover, the AG's Office must be notified if the entity (i) notifies Florida residents pursuant to an obligation established by the covered entity's primary or functional federal regulator and (ii) concludes that the breach will not likely result in identity theft or financial harm.
Failure to comply with FIPA can result in fines of up to $500,000 per breach as well as an action brought by the AG's Office for unfair or deceptive trade practices.
What Are the Key Changes in FIPA?
The key differences between FIPA and its predecessor include the following:
- Expanded definition of "personal information." The original Florida data breach law defined personal information as an individual's name in combination with the individual's Social Security number, driver's license number or Florida ID card number, or financial account number (with the required security access code or password). FIPA expanded this definition to include: an individual's medical history, condition, treatment or diagnosis; health insurance policy number or unique identifier used by an insurer; and user name or email address (with the required access password or security answer). The new categories of information expand the covered entity's obligations and create new areas of potential exposure.
- Greater investigative authority. FIPA not only dictates the content of the initial notice to the AG's Office, but it enables the AG's Office to require the provision of additional information, including the covered entity's data breach policy and a police report, incident report or computer forensics report. A reasonable reading of FIPA is that it empowers the AG's Office to require a covered entity to obtain a computer forensics report even if one was not completed during the initial investigation – a potentially expensive undertaking.
- Mandated data security measures. FIPA requires the implementation of reasonable measures to protect and secure electronic data containing personal information. Although FIPA does not expressly require a written policy, the fact that the AG's Office can order a covered entity to produce its data breach policy indicates an expectation that the policy is written.
- Expressed allocation of liability. FIPA expressly assigns liability between covered entities and related third-party agents. FIPA states that although either party may provide the required notices, a third-party agent's failure to properly comply will be deemed the covered entity's violation.
Practical Tips for Complying with FIPA.
The obligations outlined in FIPA are more stringent than the previous Florida data breach law in many respects. The broader definition of personal information, additional notification obligations, greater regulatory oversight, tighter timing requirements and mandated security measures all create greater exposure for covered entities. At a minimum, covered entities should ensure that they have written information security programs and incident response plans in place, and that their employees understand the associated obligations so that they can quickly respond to a data breach. To the extent that covered entities have existing programs and plans, they should be reviewed to ensure that they are consistent with the new FIPA obligations. Finally, covered entities should consider reviewing their agreements with third-party agents to ensure the proper allocation of responsibility and costs associated with a data breach, especially in light of the fact that the AG could hold the covered entity responsible for non-compliance by the third-party agent.