[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 177 Introduced in Senate (IS)]
114th CONGRESS
1st Session
S. 177
To protect consumers by requiring reasonable security policies and
procedures to protect data containing personal information, and to
provide for nationwide notice in the event of a breach of security.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 13, 2015
Mr. Nelson introduced the following bill; which was read twice and
referred to the Committee on Commerce, Science, and Transportation
_______________________________________________________________________
A BILL
To protect consumers by requiring reasonable security policies and
procedures to protect data containing personal information, and to
provide for nationwide notice in the event of a breach of security.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Data Security and Breach
Notification Act of 2015''.
SEC. 2. REQUIREMENTS FOR INFORMATION SECURITY.
(a) General Security Policies and Procedures.--
(1) Regulations.--Not later than 1 year after the date of
enactment of this Act, the Commission shall promulgate
regulations under section 553 of title 5, United States Code,
to require each covered entity that owns or possesses data
containing personal information, or contracts to have any
third-party entity maintain or process such data for such
covered entity, to establish and implement policies and
procedures regarding information security practices for the
treatment and protection of personal information taking into
consideration--
(A) the size of, and the nature, scope, and
complexity of the activities engaged in by such covered
entity;
(B) the current state of the art in administrative,
technical, and physical safeguards for protecting such
information;
(C) the cost of implementing the safeguards under
subparagraph (B); and
(D) the impact on small businesses and nonprofits.
(2) Requirements.--The regulations shall require the
policies and procedures to include the following:
(A) A security policy with respect to the
collection, use, sale, other dissemination, and
maintenance of personal information.
(B) The identification of an officer or other
individual as the point of contact with responsibility
for the management of information security.
(C) A process for identifying and assessing any
reasonably foreseeable vulnerabilities in each system
maintained by the covered entity that contains such
personal information, including regular monitoring for
a breach of security of each such system.
(D) A process for taking preventive and corrective
action to mitigate any vulnerabilities identified in
the process required by subparagraph (C), that may
include implementing any changes to information
security practices and the architecture, installation,
or implementation of network or operating software.
(E) A process for disposing of data in electronic
form containing personal information by destroying,
permanently erasing, or otherwise modifying the
personal information contained in such data to make
such personal information permanently unreadable or
indecipherable.
(F) A standard method or methods for the
destruction of paper documents and other non-electronic
data containing personal information.
(b) Limitations.--
(1) Covered entities subject to the gramm-leach-bliley
act.--A financial institution that is subject to title V of the
Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq.) and is in
compliance with information security requirements under that
Act shall be deemed in compliance with this section.
(2) Applicability of other information security
requirements.--A person who is subject to, and in compliance
with, the information security requirements of section 13401 of
the Health Information Technology for Economic and Clinical
Health Act (42 U.S.C. 17931) or of section 1173(d) of title XI,
part C of the Social Security Act (42 U.S.C. 1320d-2(d)) shall
be deemed in compliance with this section with respect to any
data governed by section 13401 of the Health Information
Technology for Economic and Clinical Health Act (42 U.S.C.
17931) or by the Health Insurance Portability and
Accountability Act of 1996 Security Rule (45 C.F.R. 160.103 and
part 164).
(3) Certain service providers.--Nothing in this section
shall apply to a service provider for any electronic
communication by a third party to the extent that the service
provider is engaged in the transmission, routing, or temporary,
intermediate, or transient storage of that communication.
SEC. 3. NOTIFICATION OF BREACH OF SECURITY.
(a) Nationwide Notification.--A covered entity that owns or
possesses data in electronic form containing personal information,
following the discovery of a breach of security of the system
maintained by the covered entity that contains such data, shall
notify--
(1) each individual who is a citizen or resident of the
United States and whose personal information was or is
reasonably believed to have been acquired or accessed from the
covered entity as a result of the breach of security; and
(2) the Commission, unless the covered entity has notified
the designated entity under section 4.
(b) Special Notification Requirements.--
(1) Third-party entities.--In the event of a breach of
security of a system maintained by a third-party entity that
has been contracted to maintain or process data in electronic
form containing personal information on behalf of any other
covered entity who owns or possesses such data, the third-party
entity shall notify the covered entity of the breach of
security. Upon receiving notification from the third party
entity, such covered entity shall provide the notification
required under subsection (a).
(2) Service providers.--If a service provider becomes aware
of a breach of security of data in electronic form containing
personal information that is owned or possessed by another
covered entity that connects to or uses a system or network
provided by the service provider for the purpose of
transmitting, routing, or providing intermediate or transient
storage of such data, the service provider shall notify of the
breach of security only the covered entity who initiated such
connection, transmission, routing, or storage if such covered
entity can be reasonably identified. Upon receiving the
notification from the service provider, the covered entity
shall provide the notification required under subsection (a).
(3) Coordination of notification with credit reporting
agencies.--If a covered entity is required to provide
notification to more than 5,000 individuals under subsection
(a)(1), the covered entity also shall notify each major credit
reporting agency of the timing and distribution of the notices,
except when the only personal information that is the subject
of the breach of security is the individual's first name or
initial and last name, or address, or phone number, in
combination with a credit or debit card number, and any
required security code. Such notice shall be given to each
credit reporting agency without unreasonable delay and, if it
will not delay notice to the affected individuals, prior to the
distribution of notices to the affected individuals.
(c) Timeliness of Notification.--Notification under subsection (a)
shall be made--
(1) not later than 30 days after the date of discovery of a
breach of security; or
(2) as promptly as possible if the covered entity providing
notice can show that providing notice within the timeframe
under paragraph (1) is not feasible due to circumstances
necessary--
(A) to accurately identify affected consumers;
(B) to prevent further breach or unauthorized
disclosures; or
(C) to reasonably restore the integrity of the data
system.
(d) Method and Content of Notification.--
(1) Direct notification.--
(A) Method of direct notification.--A covered
entity shall be in compliance with the notification
requirement under subsection (a)(1) if--
(i) the covered entity provides conspicuous
and clearly identified notification--
(I) in writing; or
(II) by e-mail or other electronic
means if--
(aa) the covered entity's
primary method of communication
with the individual is by e-
mail or such other electronic
means; or
(bb) the individual has
consented to receive
notification by e-mail or such
other electronic means and such
notification is provided in a
manner that is consistent with
the provisions permitting
electronic transmission of
notices under section 101 of
the Electronic Signatures in
Global and National Commerce
Act (15 U.S.C. 7001); and
(ii) the method of notification selected
under clause (i) can reasonably be expected to
reach the intended individual.
(B) Content of direct notification.--Each method of
direct notification under subparagraph (A) shall
include--
(i) the date, estimated date, or estimated
date range of the breach of security;
(ii) a description of each type of personal
information that was or is reasonably believed
to have been acquired or accessed as a result
of the breach of security;
(iii) a telephone number that an individual
can use at no cost to the individual to contact
the covered entity to inquire about the breach
of security or the information the covered
entity maintained or possessed about that
individual;
(iv) notice that the individual may be
entitled to consumer credit reports under
subsection (e)(1);
(v) instructions how an individual can
request consumer credit reports under
subsection (e)(1);
(vi) a telephone number, that an individual
can use at no cost to the individual, and an
address to contact each major credit reporting
agency; and
(vii) a telephone number, that an
individual can use at no cost to the
individual, and an Internet Web site address to
obtain information regarding identity theft
from the Commission.
(2) Substitute notification.--
(A) Circumstances giving rise to substitute
notification.--A covered entity required to provide
notification under subsection (a)(1) may provide
substitute notification instead of direct notification
under paragraph (1)--
(i) if direct notification is not feasible
due to a lack of sufficient contact information
for the individual required to be notified; or
(ii) if the covered entity owns or
possesses data in electronic form containing
personal information of fewer than 10,000
individuals and direct notification is not
feasible due to excessive cost to the covered
entity required to provide such notification
relative to the resources of such covered
entity, as determined in accordance with the
regulations issued by the Commission under
paragraph (3)(A).
(B) Method of substitute notification.--Substitute
notification under this paragraph shall include--
(i) conspicuous and clearly identified
notification by e-mail to the extent the
covered entity has an e-mail address for an
individual who is entitled to notification
under subsection (a)(1);
(ii) conspicuous and clearly identified
notification on the Internet Web site of the
covered entity if the covered entity maintains
an Internet Web site; and
(iii) notification to print and to
broadcast media, including major media in
metropolitan and rural areas where the
individuals whose personal information was
acquired reside.
(C) Content of substitute notification.--Each
method of substitute notification under this paragraph
shall include--
(i) the date, estimated date, or estimated
date range of the breach of security;
(ii) a description of each type of personal
information that was or is reasonably believed
to have been acquired or accessed as a result
of the breach of security;
(iii) notice that an individual may be
entitled to consumer credit reports under
subsection (e)(1);
(iv) instructions how an individual can
request consumer credit reports under
subsection (e)(1);
(v) a telephone number that an individual
can use at no cost to the individual to contact
the covered entity to inquire about the breach
of security or the information the covered
entity maintained or possessed about that
individual;
(vi) a telephone number, that an individual
can use at no cost to the individual, and an
address to contact each major credit reporting
agency; and
(vii) a telephone number, that an
individual can use at no cost to the
individual, and an Internet Web site address to
obtain information regarding identity theft
from the Commission.
(3) Regulations and guidance.--
(A) Regulations.--Not later than 1 year after the
date of enactment of this Act, the Commission, by
regulation under section 553 of title 5, United States
Code, shall establish criteria for determining
circumstances under which substitute notification may
be provided under paragraph (2), including criteria for
determining if direct notification under paragraph (1)
is not feasible due to excessive costs to the covered
entity required to provide such notification relative
to the resources of such covered entity. The
regulations may also identify other circumstances where
substitute notification would be appropriate, including
circumstances under which the cost of providing direct
notification exceeds the benefits to consumers.
(B) Guidance.--In addition, the Commission, in
consultation with the Small Business Administration,
shall provide and publish general guidance with respect
to compliance with this subsection. The guidance shall
include--
(i) a description of written or e-mail
notification that complies with paragraph (1);
and
(ii) guidance on the content of substitute
notification under paragraph (2), including the
extent of notification to print and broadcast
media that complies with paragraph (2)(B)(iii).
(e) Other Obligations Following Breach.--
(1) In general.--Not later than 60 days after the date of
request by an individual who received notification under
subsection (a)(1) and quarterly thereafter for 2 years, a
covered entity required to provide notification under
subsection (a)(1) shall provide, or arrange for the provision
of, to the individual at no cost, consumer credit reports from
at least 1 major credit reporting agency.
(2) Limitation.--This subsection shall not apply if the
only personal information that is the subject of the breach of
security is the individual's first name or initial and last
name, or address, or phone number, in combination with a credit
or debit card number, and any required security code.
(3) Rulemaking.--The Commission's rulemaking under
subsection (d)(3) shall include--
(A) determination of the circumstances under which
a covered entity required to provide notification under
subsection (a)(1) must provide or arrange for the
provision of free consumer credit reports; and
(B) establishment of a simple process under which a
covered entity that is a small business or small
nonprofit organization may request a full or a partial
waiver or a modified or an alternative means of
complying with this subsection if providing free
consumer credit reports is not feasible due to
excessive costs relative to the resources of such
covered entity and relative to the level of harm, to
affected individuals, caused by the breach of security.
(f) Delay of Notification Authorized for National Security and Law
Enforcement Purposes.--
(1) In general.--If the United States Secret Service or the
Federal Bureau of Investigation determines that notification
under this section would impede a criminal investigation or a
national security activity, notification shall be delayed upon
written notice from the United States Secret Service or the
Federal Bureau of Investigation to the covered entity that
experienced the breach of security. Written notice from the
United States Secret Service or the Federal Bureau of
Investigation shall specify the period of delay requested for
national security or law enforcement purposes.
(2) Subsequent delay of notification.--
(A) In general.--A covered entity shall provide
notification under this section not later than 30 days
after the day that the delay was invoked unless a
Federal law enforcement or intelligence agency provides
subsequent written notice to the covered entity that
further delay is necessary.
(B) Written justification requirements.--
(i) United states secret service.--If the
United States Secret Service instructs a
covered entity to delay notification under this
section beyond the 30-day period under
subparagraph (A) (referred to in this clause as
``subsequent delay''), the United States Secret
Service shall submit written justification for
the subsequent delay to the Secretary of
Homeland Security before the subsequent delay
begins.
(ii) Federal bureau of investigation.--If
the Federal Bureau of Investigation instructs a
covered entity to delay notification under this
section beyond the 30-day period under
subparagraph (A) (referred to in this clause as
``subsequent delay''), the Federal Bureau of
Investigation shall submit written
justification for the subsequent delay to the
Attorney General before the subsequent delay
begins.
(3) Law enforcement immunity.--No cause of action shall lie
in any court against any Federal agency for acts relating to
the delay of notification for national security or law
enforcement purposes under this Act.
(g) General Exemption.--
(1) In general.--A covered entity shall be exempt from the
requirements under this section if, following a breach of
security, the covered entity reasonably concludes that there is
no reasonable risk of identity theft, fraud, or other unlawful
conduct.
(2) Presumption.--
(A) In general.--There shall be a presumption that
no reasonable risk of identity theft, fraud, or other
unlawful conduct exists following a breach of security
if--
(i) the data is rendered unusable,
unreadable, or indecipherable through a
security technology or methodology; and
(ii) the security technology or methodology
under clause (i) is generally accepted by
experts in the information security field.
(B) Rebuttal.--The presumption under subparagraph
(A) may be rebutted by facts demonstrating that the
security technology or methodology in a specific case
has been or is reasonably likely to be compromised.
(3) Technologies or methodologies.--Not later than 1 year
after the date of enactment of this Act, and biennially
thereafter, the Commission, after consultation with the
National Institute of Standards and Technology, shall issue
rules (pursuant to section 553 of title 5, United States Code)
or guidance to identify each security technology and
methodology under paragraph (2). In identifying each such
security technology and methodology, the Commission and the
National Institute of Standards and Technology shall--
(A) consult with relevant industries, consumer
organizations, data security and identity theft
prevention experts, and established standards setting
bodies; and
(B) consider whether and in what circumstances a
security technology or methodology currently in use,
such as encryption, complies with the standards under
paragraph (2).
(4) Commission guidance.--Not later than 1 year after the
date of enactment of this Act, the Commission, after
consultation with the National Institute of Standards and
Technology, shall issue guidance regarding the application of
the exemption under paragraph (1).
(h) Exemptions for National Security and Law Enforcement
Purposes.--
(1) In general.--A covered entity shall be exempt from the
requirements under this section if--
(A) a determination is made--
(i) by the United States Secret Service or
the Federal Bureau of Investigation that
notification of the breach of security could be
reasonably expected to reveal sensitive sources
and methods or similarly impede the ability of
the Government to conduct law enforcement or
intelligence investigations; or
(ii) by the Federal Bureau of Investigation
that notification of the breach of security
could be reasonably expected to cause damage to
the national security; and
(B) the United States Secret Service or the Federal
Bureau of Investigation, as the case may be, provides
written notice of its determination under subparagraph
(A) to the covered entity.
(2) United states secret service.--If the United States
Secret Service invokes an exemption under paragraph (1), the
United States Secret Service shall submit written justification
for invoking the exemption to the Secretary of Homeland
Security before the exemption is invoked.
(3) Federal bureau of investigation.--If the Federal Bureau
of Investigation invokes an exemption under paragraph (1), the
Federal Bureau of Investigation shall submit written
justification for invoking the exemption to the Attorney
General before the exemption is invoked.
(4) Immunity.--No cause of action shall lie in any court
against any Federal agency for acts relating to the exemption
from notification for national security or law enforcement
purposes under this Act.
(5) Reports.--Not later than 18 months after the date of
enactment of this Act, and upon request by Congress thereafter,
the United States Secret Service and Federal Bureau of
Investigation shall submit to Congress a report on the number
and nature of breaches of security subject to the exemptions
for national security and law enforcement purposes under this
subsection.
(i) Financial Fraud Prevention Exemption.--
(1) In general.--A covered entity shall be exempt from the
requirements under this section if the covered entity utilizes
or participates in a security program that--
(A) effectively blocks the use of the personal
information to initiate an unauthorized financial
transaction before it is charged to the account of the
individual; and
(B) provides notice to each affected individual
after a breach of security that resulted in attempted
fraud or an attempted unauthorized transaction.
(2) Limitations.--An exemption under paragraph (1) shall
not apply if--
(A) the breach of security includes personal
information, other than a credit card number or credit
card security code, of any type; or
(B) the breach of security includes both the
individual's credit card number and the individual's
first and last name.
(j) Financial Institutions Regulated by Federal Functional
Regulators.--
(1) In general.--A covered financial institution shall be
deemed in compliance with this section if--
(A) the Federal functional regulator with
jurisdiction over the covered financial institution has
issued a standard by regulation or guideline under
title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801
et seq.) that--
(i) requires financial institutions within
its jurisdiction to provide notification to
individuals following a breach of security; and
(ii) provides protections substantially
similar to, or greater than, those required
under this Act; and
(B) the covered financial institution is in
compliance with the standard under subparagraph (A).
(2) Definitions.--In this subsection--
(A) the term ``covered financial institution''
means a financial institution that is subject to--
(i) the data security requirements of the
Gramm-Leach-Bliley Act (15 U.S.C. 6801 et
seq.);
(ii) any implementing standard issued by
regulation or guideline issued under that Act;
and
(iii) the jurisdiction of a Federal
functional regulator under that Act;
(B) the term ``Federal functional regulator'' has
the meaning given the term in section 509 of the Gramm-
Leach-Bliley Act (15 U.S.C. 6809); and
(C) the term ``financial institution'' has the
meaning given the term in section 509 of the Gramm-
Leach-Bliley Act (15 U.S.C. 6809).
(k) Exemption; Health Privacy.--
(1) Covered entity or business associate under hitech
act.--To the extent that a covered entity under this Act acts
as a covered entity or a business associate under section 13402
of the Health Information Technology for Economic and Clinical
Health Act (42 U.S.C. 17932), has the obligation to provide
notification to individuals following a breach of security
under that Act or its implementing regulations, and is in
compliance with that obligation, the covered entity shall be
deemed in compliance with this section.
(2) Entity subject to hitech act.--To the extent that a
covered entity under this Act acts as a vendor of personal
health records, a third party service provider, or other entity
subject to section 13407 of the Health Information Technology
for Economical and Clinical Health Act (42 U.S.C. 17937), has
the obligation to provide notification to individuals following
a breach of security under that Act or its implementing
regulations, and is in compliance with that obligation, the
covered entity shall be deemed in compliance with this section.
(3) Limitation of statutory construction.--Nothing in this
Act may be construed in any way to give effect to the sunset
provision under section 13407(g)(2) of the Health Information
Technology for Economic and Clinical Health Act (42 U.S.C.
17937(g)(2)) or to otherwise limit or affect the applicability,
under section 13407 of that Act, of the requirement to provide
notification to individuals following a breach of security for
vendors of personal health records and each entity described in
clause (ii), (iii), or (iv) of section 13424(b)(1)(A) of that
Act (42 U.S.C. 17953(b)(1)(A)).
(l) Web Site Notice of Federal Trade Commission.--If the
Commission, upon receiving notification of any breach of security that
is reported to the Commission, finds that notification of the breach of
security via the Commission's Internet Web site would be in the public
interest or for the protection of consumers, the Commission shall place
such a notice in a clear and conspicuous location on its Internet Web
site.
(m) FTC Study on Notification in Languages in Addition to
English.--Not later than 1 year after the date of enactment of this
Act, the Commission shall conduct a study on the practicality and cost
effectiveness of requiring the direct notification required by
subsection (d)(1) to be provided in a language in addition to English
to individuals known to speak only such other language.
(n) General Rulemaking Authority.--The Commission may promulgate
regulations necessary under section 553 of title 5, United States Code,
to effectively enforce the requirements of this section.
SEC. 4. NOTICE TO LAW ENFORCEMENT.
(a) Designation of Government Entity To Receive Notice.--Not later
than 60 days after the date of enactment of this Act, the Secretary of
the Department of Homeland Security shall designate a Federal
Government entity to receive notice under this section.
(b) Notice.--A covered entity shall notify the designated entity of
a breach of security if--
(1) the number of individuals whose personal information
was, or is reasonably believed to have been, acquired or
assessed as a result of the breach of security exceeds 10,000;
(2) the breach of security involves a database, networked
or integrated databases, or other data system containing the
personal information of more than 1,000,000 individuals;
(3) the breach of security involves databases owned by the
Federal Government; or
(4) the breach of security involves primarily personal
information of individuals known to the covered entity to be
employees or contractors of the Federal Government involved in
national security or law enforcement.
(c) Content of Notices.--
(1) In general.--Each notice under subsection (b) shall
contain--
(A) the date, estimated date, or estimated date
range of the breach of security;
(B) a description of the nature of the breach of
security;
(C) a description of each type of personal
information that was or is reasonably believed to have
been acquired or accessed as a result of the breach of
security; and
(D) a statement of each paragraph under subsection
(b) that applies to the breach of security.
(2) Construction.--Nothing in this section shall be
construed to require a covered entity to reveal specific or
identifying information about an individual as part of the
notice under paragraph (1).
(d) Responsibilities of the Designated Entity.--The designated
entity shall promptly provide each notice it receives under subsection
(b) to--
(1) the United States Secret Service;
(2) the Federal Bureau of Investigation;
(3) the Federal Trade Commission;
(4) the United States Postal Inspection Service, if the
breach of security involves mail fraud;
(5) the attorney general of each State affected by the
breach of security; and
(6) as appropriate, other Federal agencies for law
enforcement, national security, or data security purposes.
(e) Timing of Notices.--Notice under this section shall be
delivered as follows:
(1) Notice under subsection (b) shall be delivered as
promptly as possible, but--
(A) not less than 3 business days before
notification to an individual under section 3; and
(B) not later than 10 days after the date of
discovery of the events requiring notice.
(2) Notice under subsection (d) shall be delivered as
promptly as possible, but not later than 1 business day after
the date that the designated entity receives notice of a breach
of security from a covered entity.
SEC. 5. APPLICATION AND ENFORCEMENT.
(a) General Application.--The requirements of sections 2 and 3
shall apply to--
(1) those persons, partnerships, or corporations over which
the Commission has authority under section 5(a)(2) of the
Federal Trade Commission Act (15 U.S.C. 45(a)(2)); and
(2) notwithstanding sections 4 and 5(a)(2) of the Federal
Trade Commission Act (15 U.S.C. 44 and 45(a)(2)), any nonprofit
organization, including any organization described in section
501(c) of the Internal Revenue Code of 1986 that is exempt from
taxation under section 501(a) of the Internal Revenue Code of
1986.
(b) Opt-In for Certain Other Entities.--
(1) In general.--Notwithstanding sections 4 and 5(a)(2) of
the Federal Trade Commission Act (15 U.S.C. 44 and 45(a)(2)),
the requirements of section 3 shall apply to any other covered
entity not included under subsection (a) that enters into an
agreement with the Commission under which that covered entity
would be subject to section 3 with respect to any acts or
omissions that occur while the agreement is in effect and that
may constitute a violation of section 3, if--
(A) not less than 30 days prior to entering into
the agreement with the person or entity, the Commission
publishes notice in the Federal Register of the
Commission's intent to enter into the agreement; and
(B) not later than 14 business days after entering
into the agreement with the person or entity, the
Commission publishes in the Federal Register--
(i) notice of the agreement;
(ii) the identity of each person covered by
the agreement; and
(iii) the effective date of the agreement.
(2) Construction.--
(A) Other federal law.--An agreement under
paragraph (1) shall not effect a covered entity's
obligation to provide notice of a breach of security or
similar event under any other Federal law.
(B) No preemption prior to valid agreement.--
Subsections (a)(2) and (b) of section 7 shall not apply
to a breach of security that occurs before a valid
agreement under paragraph (1) is in effect.
(c) Enforcement by the Federal Trade Commission.--
(1) Unfair or deceptive acts or practices.--A violation of
section 2 or 3 of this Act shall be treated as an unfair and
deceptive act or practice in violation of a regulation under
section 18(a)(1)(B) of the Federal Trade Commission Act (15
U.S.C. 57a(a)(1)(B)) regarding unfair or deceptive acts or
practices.
(2) Powers of commission.--The Commission shall enforce
this Act in the same manner, by the same means, with the same
jurisdiction, except as provided in subsections (a)(2) and (b)
of this section, and with the same powers and duties as though
all applicable terms and provisions of the Federal Trade
Commission Act (15 U.S.C. 41 et seq.) were incorporated into
and made a part of this Act. Any covered entity who violates
such regulations shall be subject to the penalties and entitled
to the privileges and immunities provided in that Act.
(3) Limitation.--In promulgating rules under this Act, the
Commission shall not require the deployment or use of any
specific products or technologies, including any specific
computer software or hardware.
(d) Enforcement by State Attorneys General.--
(1) Civil action.--In any case in which the attorney
general of a State, or an official or agency of a State, has
reason to believe that an interest of the residents of that
State has been or is threatened or adversely affected by any
covered entity who violates section 2 or section 3 of this Act,
the attorney general, official, or agency of the State, as
parens patriae, may bring a civil action on behalf of the
residents of the State in a district court of the United States
of appropriate jurisdiction--
(A) to enjoin further violation of such section by
the defendant;
(B) to compel compliance with such section; or
(C) to obtain civil penalties in the amount
determined under paragraph (2).
(2) Civil penalties.--
(A) Calculation.--
(i) Treatment of violations of section 2.--
For purposes of paragraph (1)(C) with regard to
a violation of section 2, the amount determined
under this paragraph is the amount calculated
by multiplying the number of days that a
covered entity is not in compliance with such
section by an amount not greater than $11,000.
(ii) Treatment of violations of section
3.--For purposes of paragraph (1)(C) with
regard to a violation of section 3, the amount
determined under this paragraph is the amount
calculated by multiplying the number of
violations of such section by an amount not
greater than $11,000. Each failure to send
notification as required under section 3 to a
resident of the State shall be treated as a
separate violation.
(B) Adjustment for inflation.--Beginning on the
date that the Consumer Price Index is first published
by the Bureau of Labor Statistics that is after 1 year
after the date of enactment of this Act, and each year
thereafter, the amounts specified in clauses (i) and
(ii) of subparagraph (A) and in clauses (i) and (ii) of
subparagraph (C) shall be increased by the percentage
increase in the Consumer Price Index published on that
date from the Consumer Price Index published the
previous year.
(C) Maximum total liability.--Notwithstanding the
number of actions which may be brought against a
covered entity under this subsection, the maximum civil
penalty for which any covered entity may be liable
under this subsection shall not exceed--
(i) $5,000,000 for each violation of
section 2; and
(ii) $5,000,000 for all violations of
section 3 resulting from a single breach of
security.
(3) Intervention by the ftc.--
(A) Notice and intervention.--The State shall
provide prior written notice of any action under
paragraph (1) to the Commission and provide the
Commission with a copy of its complaint, except in any
case in which such prior notice is not feasible, in
which case the State shall serve such notice
immediately upon commencing such action. The Commission
shall have the right--
(i) to intervene in the action;
(ii) upon so intervening, to be heard on
all matters arising therein; and
(iii) to file petitions for appeal.
(B) Limitation on state action while federal action
is pending.--If the Commission has instituted a civil
action for violation of this Act, no State attorney
general, or official or agency of a State, may bring an
action under this subsection during the pendency of
that action against any defendant named in the
complaint of the Commission for any violation of this
Act alleged in the complaint.
(4) Construction.--For purposes of bringing any civil
action under paragraph (1), nothing in this Act shall be
construed to prevent an attorney general of a State from
exercising the powers conferred on the attorney general by the
laws of that State--
(A) to conduct investigations;
(B) to administer oaths or affirmations; or
(C) to compel the attendance of witnesses or the
production of documentary and other evidence.
(e) Notice to Law Enforcement; Civil Enforcement by Attorney
General.--
(1) In general.--The Attorney General may bring a civil
action in the appropriate United States district court against
any covered entity that engages in conduct constituting a
violation of section 4.
(2) Penalties.--
(A) In general.--Upon proof of such conduct by a
preponderance of the evidence, a covered entity shall
be subject to a civil penalty of not more than $1,000
per individual whose personal information was or is
reasonably believed to have been accessed or acquired
as a result of the breach of security that is the basis
of the violation, up to a maximum of $100,000 per day
while such violation persists.
(B) Limitations.--The total amount of the civil
penalty assessed under this subsection against a
covered entity for acts or omissions relating to a
single breach of security shall not exceed $1,000,000,
unless the conduct constituting a violation of section
4 was willful or intentional, in which case an
additional civil penalty of up to $1,000,000 may be
imposed.
(C) Adjustment for inflation.--Beginning on the
date that the Consumer Price Index is first published
by the Bureau of Labor Statistics that is after 1 year
after the date of enactment of this Act, and each year
thereafter, the amounts specified in subparagraphs (A)
and (B) shall be increased by the percentage increase
in the Consumer Price Index published on that date from
the Consumer Price Index published the previous year.
(3) Injunctive actions.--If it appears that a covered
entity has engaged, or is engaged, in any act or practice that
constitutes a violation of section 4, the Attorney General may
petition an appropriate United States district court for an
order enjoining such practice or enforcing compliance with
section 4.
(4) Issuance of order.--A court may issue such an order
under paragraph (3) if it finds that the conduct in question
constitutes a violation of section 4.
(f) Concealment of Breaches of Security.--
(1) In general.--Chapter 47 of title 18, United States
Code, is amended by adding at the end the following:
``Sec. 1041. Concealment of breaches of security involving personal
information
``(a) In General.--Any person who, having knowledge of a breach of
security and of the fact that notification of the breach of security is
required under the Data Security and Breach Notification Act of 2015,
intentionally and willfully conceals the fact of the breach of
security, shall, in the event that the breach of security results in
economic harm to any individual in the amount of $1,000 or more, be
fined under this title, imprisoned for not more than 5 years, or both.
``(b) Person Defined.--For purposes of subsection (a), the term
`person' has the same meaning as in section 1030(e)(12) of this title.
``(c) Enforcement Authority.--
``(1) In general.--The United States Secret Service and the
Federal Bureau of Investigation shall have the authority to
investigate offenses under this section.
``(2) Construction.--The authority granted in paragraph (1)
shall not be exclusive of any existing authority held by any
other Federal agency.''.
(2) Conforming and technical amendments.--The table of
sections for chapter 47 of title 18, United States Code, is
amended by adding at the end the following:
``1041. Concealment of breaches of security involving personal
information.''.
SEC. 6. DEFINITIONS.
In this Act:
(1) Breach of security.--
(A) In general.--The term ``breach of security''
means compromise of the security, confidentiality, or
integrity of, or loss of, data in electronic form that
results in, or there is a reasonable basis to conclude
has resulted in, unauthorized access to or acquisition
of personal information from a covered entity.
(B) Exclusions.--The term ``breach of security''
does not include--
(i) a good faith acquisition of personal
information by a covered entity, or an employee
or agent of a covered entity, if the personal
information is not subject to further use or
unauthorized disclosure;
(ii) any lawfully authorized investigative,
protective, or intelligence activity of a law
enforcement or an intelligence agency of the
United States, a State, or a political
subdivision of a State; or
(iii) the release of a public record not
otherwise subject to confidentiality or
nondisclosure requirements.
(2) Commission.--The term ``Commission'' means the Federal
Trade Commission.
(3) Covered entity.--The term ``covered entity'' means a
sole proprietorship, partnership, corporation, trust, estate,
cooperative, association, or other commercial entity, and any
charitable, educational, or nonprofit organization, that
acquires, maintains, or utilizes personal information.
(4) Data in electronic form.--The term ``data in electronic
form'' means any data stored electronically or digitally on any
computer system or other database, including recordable tapes
and other mass storage devices.
(5) Designated entity.--The term ``designated entity''
means the Federal Government entity designated by the Secretary
of Homeland Security under section 4.
(6) Encryption.--The term ``encryption'' means the
protection of data in electronic form in storage or in transit
using an encryption technology that has been adopted by an
established standards setting body which renders such data
indecipherable in the absence of associated cryptographic keys
necessary to enable decryption of such data. Such encryption
must include appropriate management and safeguards of such keys
to protect the integrity of the encryption.
(7) Identity theft.--The term ``identity theft'' means the
unauthorized use of another person's personal information for
the purpose of engaging in commercial transactions under the
identity of such other person, including any contact that
violates section 1028A of title 18, United States Code.
(8) Major credit reporting agency.--The term ``major credit
reporting agency'' means a consumer reporting agency that
compiles and maintains files on consumers on a nationwide basis
within the meaning of section 603(p) of the Fair Credit
Reporting Act (15 U.S.C. 1681a(p)).
(9) Personal information.--
(A) Definition.--The term ``personal information''
means any information or compilation of information
that includes--
(i) a non-truncated social security number;
(ii) a financial account number or credit
or debit card number in combination with any
security code, access code, or password that is
required for an individual to obtain credit,
withdraw funds, or engage in a financial
transaction; or
(iii) an individual's first and last name
or first initial and last name in combination
with--
(I) a driver's license number, a
passport number, or an alien
registration number, or other similar
number issued on a government document
used to verify identity;
(II) unique biometric data such as
a finger print, voice print, retina or
iris image, or any other unique
physical representation;
(III) a unique account identifier,
electronic identification number, user
name, or routing code in combination
with any associated security code,
access code, or password that is
required for an individual to obtain
money, goods, services, or any other
thing of value; or
(IV) 2 of the following:
(aa) Home address or
telephone number.
(bb) Mother's maiden name,
if identified as such.
(cc) Month, day, and year
of birth.
(B) Modified definition by rulemaking.--If the
Commission determines that the definition under
subparagraph (A) is not reasonably sufficient to
protect individuals from identity theft, fraud, or
other unlawful conduct, the Commission by rule
promulgated under section 553 of title 5, United States
Code, may modify the definition of ``personal
information'' under subparagraph (A) to the extent the
modification will not unreasonably impede interstate
commerce.
(10) Service provider.--The term ``service provider'' means
a person that provides electronic data transmission, routing,
intermediate and transient storage, or connections to its
system or network, where the person providing such services
does not select or modify the content of the electronic data,
is not the sender or the intended recipient of the data, and
does not differentiate personal information from other
information that such person transmits, routes, or stores, or
for which such person provides connections. Any such person
shall be treated as a service provider under this Act only to
the extent that it is engaged in the provision of such
transmission, routing, intermediate and transient storage, or
connections.
SEC. 7. EFFECT ON OTHER LAWS.
(a) Preemption of State Information Security Laws.--
(1) Covered entities under section 5(a).--With respect to a
covered entity subject to the Act under section 5(a), this Act
supersedes any provision of a statute, regulation, or rule of a
State or political subdivision of a State that expressly--
(A) requires information security practices and
treatment of data containing personal information
similar to any of those required under section 2; or
(B) requires notification to individuals of a
breach of security as defined in section 6.
(2) Covered entities under section 5(b).--With respect to a
covered entity subject to the Act under section 5(b), this Act
supersedes any provision of a statute, regulation, or rule of a
State or political subdivision of a State that expressly
requires notification to individuals of a breach of security as
defined in section 6.
(b) Additional Preemption.--
(1) In general.--No person other than a person specified in
section 5(d) may bring a civil action under the laws of any
State if such action is premised in whole or in part upon the
defendant violating any provision of this Act.
(2) Protection of consumer protection laws.--Except as
provided in subsection (a) of this section, this subsection
shall not be construed to limit the enforcement of any State
consumer protection law by an attorney general of a State.
(c) Protection of Certain State Laws.--This Act shall not be
construed to preempt the applicability of--
(1) State trespass, contract, or tort law; or
(2) any other State laws to the extent that those laws
relate to acts of fraud.
(d) Preservation of FTC Authority.--Nothing in this Act may be
construed in any way to limit or affect the Commission's authority
under any other provision of law.
SEC. 8. EFFECTIVE DATE.
This Act and the amendments made by this Act shall take effect 1
year after the date of enactment of this Act.
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