On July 25, the New York governor signed two bills designed to strengthen protections for consumers in the event their private information is compromised in a data breach.

A 5635B/S.5575B, the Stop Hacks and Improve Electronic Data Security Act (SHIELD Act) updates the state’s privacy law by expanding the definition of personal information and broadening the definition of a data breach. Notably, the SHIELD Act applies to any person or entity with access to a New York resident’s private information, regardless of whether or not the company conducts business in the state. Among other provisions, the SHIELD Act:

  • Requires all covered entities to adopt and implement “reasonable” administrative, technical, and physical safeguards to protect and dispose of sensitive data, as well as implement “reasonable” administrative safeguards, such as employee training;
  • Stipulates that a covered entity that is already regulated by, and in compliance with, certain existing applicable state or federal data security requirements (e.g., Gramm-Leach-Bliley Act, HIPAA, and 23 NYCRR Part 500—NYDFS’ Cybersecurity Regulation) is considered a “compliant regulated entity”;
  • Requires entities to promptly notify impacted individuals under new, broadened data breach notification requirements, which now include (i) “access to” private information as a trigger for notification, in addition to the existing “acquired” trigger; and (ii) expanded data types, including biometric data, email addresses, and corresponding passwords or security questions and answers;
  • Applies a more flexible standard for small businesses to ease regulatory burdens (qualifying small businesses must have fewer than 50 employees, under $3 million in gross annual revenue, or less than $5 million in assets) and will consider a small business compliant if its “security program contains reasonable administrative, technical and physical safeguards that are appropriate for the size and complexity of the small business” to protect the security, confidentiality, and integrity of private information; and
  • Broadens the New York attorney general’s oversight regarding data breaches impacting state residents. The SHIELD Act further stipulates that actions may not be brought under the law’s provisions unless the action is commenced within three years following either the date on which the attorney general received notice of the violation, or the date the notice was sent to affected individuals, whichever occurs first. However, “[i]n 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.”

The SHIELD Act takes effect March 21, 2020.

A.2374/S.3582, which was signed into the law the same day, prohibits consumer credit reporting agencies from charging fees to consumers if the agency’s system was involved in a data breach including social security numbers. Credit reporting agencies are required to provide “reasonable identity theft prevention services and, if applicable, identity theft mitigation services for a period not to exceed five years at no cost to such consumers.” The law applies to any breach of security of a consumer credit reporting agency that occurred in the last three years. This measure takes effect September 23.