As cyber-criminals up their game in trolling for personal information, so too are laws aimed at fighting them.
New Jersey is on the verge of joining six other states—California, Alaska, Iowa, South Carolina, Virginia and West Virginia—that recently enacted laws to combat the growing online menace of data breaches.
Legislation that expands the types of personal information that would trigger notification to customers that their online account has been breached so they can make quick changes passed the state Assembly 76-0 on Monday and is headed to Gov. Murphy’s desk. The Senate previously voted it through.
Proponents say the measure is needed in light of recent data breaches at major corporations—including last month’s incident at Starwood Hotels and Resorts, a subsidiary of Marriott International, where up to 500 million guests’ personal information was allegedly compromised by an unauthorized third party.
The Senate approved the identical bill, S-52, on June 25, 2018, by a 37-0 vote, shortly after the Senate Commerce Committee approved it by a 5-0 vote.
In the previous legislative session, the same bill was passed 33-0 by the Senate, but never acted on by then-Gov. Chris Christie.
“Protecting the security of online accounts is important for consumers, as a breach of security of these accounts can lead to the compromise of personal information and expose consumers to identity theft,” said the Assembly’s prime sponsor Ralph Caputo (D-Essex) after Monday’s unanimous vote. “If an individual’s personal information has become unwillingly available to someone else, they have the right to know as quickly as possible.”
Current law requires all businesses and public entities that compile digital data to notify consumers of breaches involving personal information, such as Social Security numbers, driver’s license numbers, or credit and debit card information, in combination with any required security code, access code or password.
A-3245/S-52 would amend the law to include among the information triggering a notification requirement: usernames, email addresses, and any passwords or security questions and answers that would permit access to an online account.
The legislation also seeks to prohibit any business or public entity that furnishes an email account from providing notice of a security breach to the email account being affected. Instead it would have to notify the user through another method or “provide a clear and conspicuous notice delivered to the consumer online while he or she is connected to the online account” from an IP address or location the business knows the consumer connects from regularly.
“With online databases and private account information being hacked so frequently now, consumers are more vulnerable to exposure and harm,” said Sen. Troy Singleton (D-Burlington), S-52’s primary sponsor. “This bill will bolster consumers’ rights to privacy and protection and instill a greater sense of security.”
The data breach law is a supplement to the Consumer Fraud Act, and those penalties apply for willful, knowing and reckless violation of the notification requirements: $10,000 for the first offense and $20,000 for the second and any subsequent offense; and treble damages in a civil suit.
The bill requires breach alerts to be provided to state residents through written notice, electronic notice, or if the business or entity demonstrates that the cost of providing notice would exceed $250,000, or that the number of affected consumers exceeds 500,000.
If the business or public entity does not have sufficient contact information, a substitute notice would include an email notice, a posting of the notice on the business or entity’s website and notification to major statewide media.
Starwood announced last month that an unauthorized party had access to the Starwood guest reservation database for four years. The database contained names, addresses, phone numbers, email addresses, passport numbers, date of birth, reservation dates, and credit and debit card information of Starwood guests.
Other large companies like Yahoo!, Ebay, Equifax and Target have also encountered data breaches in the past several years.
“Data breaches are an unfortunate side effect of the technological age in which we live,” said Assembly co-sponsor Carol Murphy (D-Burlington). “The reality is, many people give out their personal information when shopping or doing business online without a second thought. When those breaches inevitably occur, we have to make sure those potentially impacted have the chance to take steps to secure their information.”