By David Fagan & Libbie Canter

Last week, Congressman Bobby Rush (D-Ill.) reintroduced the Data Accountability and Trust Act (H.R. 1707).  During the 111th Congress, the House of Representatives approved the same measure by voice vote, but the legislation, introduced in the Senate by Senators Jay Rockefeller (D-WV) and Mark Pryor (D-Ark.), did not make it out of the Senate Commerce Committee before the end of the session.  The legislation would create a federal breach notification standard and authorize the FTC to promulgate information security and data disposal regulations.

• Scope.  The legislation covers persons engaged in interstate commerce, with certain additional requirements applicable to information brokers.  The provisions generally apply to the ownership or possession of personal information, which is defined as a person’s “first name or initial and last name, or address, or phone number, in combination with any 1 or more of [certain] data elements.”  Those data elements include social security number, driver’s license number, other government-issued identification numbers, and financial account numbers. 
• Breach Notification.  Following discovery of any unauthorized acquisition or access to electronic data containing personal information, businesses typically would be required to notify the FTC and any resident of the United States whose personal information was acquired or accessed.  Where notice is required to 5,000 or more individuals, the major credit reporting agencies would also need to be notified.
  • Timing.  Under the bill, notification would be required not later than 60 days following discovery of the breach, with a limited number of exceptions available.
  • Content Requirement.  Consumer notifications would be required to include the date of the breach; a description of the personal information accessed; a telephone number for further inquiries; notice that the individual is entitled to receive certain credit protection products at no charge (which the Act would require businesses to furnish); and contact information for the major credit reporting agencies and the FTC.
  • Obligation to Furnish Credit Products.  The bill indicates businesses will be required to provide or arrange for the provision of free consumer credit reports on a quarterly basis and credit monitoring to affected individuals for a period of two years following a breach.  The bill directs the FTC to promulgate rules with respect to the circumstances in which such credit products will be required to be offered.
  • Risk of Harm.  There is no notification requirement or other obligations on a business if it determines there is no reasonable risk of identity theft, fraud, or other unlawful conduct.  This is presumed to be the case if the data is encrypted or otherwise unreadable, although the bill directs the FTC to promulgate regulations on the technologies that adequately render data unreadable.
  • Service Providers.  Third parties contracted to maintain or process data and service providers would be required to notify the owner of the information, which would then have the obligation to notify the FTC and consumers.

Continue Reading Rep. Rush Reintroduces Data Breach Legislation