California Legislation Would Require Companies To Specify The Data Exposed In Breaches

A privacy breach notification bill recently passed by the California legislature would expand the state's existing law for how organizations notify consumers of a data breach.

California's existing data breach law does not specify what the breach notification should include information-wise. "This bill is intended to fill that gap by establishing standard, core content for breach notification letters," reads the California Senate Bill 1166, which was first introduced to the legislature in March.

Whether the new bill becomes law is up to Governor Arnold Schwarzenegger, who had previously vetoed a similar data breach bill because it put too much "unnecessary mandates on businesses without a corresponding consumer benefit," he said at the time.

The new bill, among other things, requires that the company include the type of personal information exposed in the breach; the date or estimated date of the breach; a general description of the incident itself; and toll-free numbers and addresses for credit reporting agencies if the breach included social security numbers, driver's licenses, or California ID cards. The breached organization would also have to explain how it's now protecting the affected victims and provide recommendations for how they can protect themselves. And if a single breach affects more than 500 California residents, the organization must send the Attorney General an electronic copy of the notification, according to the bill.

This new bill -- if signed into law -- basically puts California in sync with the HITECH (Health Information Technology for Economic and Clinical Health) Act, says Luis Salazar, partner and head of the data privacy and security law group at Infante, Zumpano, Hudson & Miloch LLC.

The HITECH Act requires healthcare providers to disclose to victims of a breach the date of the event if possible, as well as the "type of unsecured protected health information breached," according to that law.

"In this case, California is not leading the charge as much as hopping on the wave that's already coming," Salazar says. "A lot of breach notices [today] are not very informative."

Rob Enderle, principal with Enderle Consulting, says the problem with California and some other states' existing data breach laws is that the victims don't get enough information to protect themselves. "At least in California, [if this law is signed] they will get more easily understood information on the theft and what they can and should do about it," Enderle says. "The problem under the current program is that folks impacted by a theft aren't made adequately aware of their danger and they don't know what to do to mitigate the potential damage. This seeks to correct that in California and the states that will emulate this law."

But some organizations justifiably worry that it could tip off the wrong people on the type of attack that's underway, according to Salazar. Even so, providing victims with more information such as who to contact in the wake of the breach basically "compensates for the potential risk" in divulging more information, he says.

"One of the reasons we see vague notification letters is a combination of misguided belief that less information will create less of a stir, less follow-up, and less media coverage," Salazar says.

Overall, the new law, if passed, could result in better data breach reports, according to Enderle. "We are still well behind the curve in dealing with these problems and there should likely be stronger incentives to secure information and stronger penalties for not securing adequately. But this is progress in the right direction," Enderle notes.

Enderle says a federal breach law would simplify things for organizations that suffer breaches. "This really should be coming from a federal level, as the differences between the states' rules are going to be painful for most large firms, adding cost to what is already a painful experience caused by a thief," he says.

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