Senate Bill Proposes Prison Time For Failure To Report Data Breaches

If a new Senate bill introduced on Nov. 30 is passed by the Senate and the House of Representatives, the failure to report a breach in a timely manner could land the people who knew about it in prison for as long as five years.

The new bill, the “Data Security and Breach Notification Act,” introduced by Senator Bill Nelson (D-FL) along with Senators Richard Blumenthal (D-CT) and Tammy Baldwin (D-WI), covers a wide range of topics involving the protection and destruction of data containing personal information. It also puts the Federal Trade Commission in charge of enforcing penalties for data breaches.

After the Senate returns to work after dealing with the current tax bill, the proposed breach notification act will likely be officially passed along to the Senate Commerce Committee. Effectively, it’s already there, since Sen. Nelson is the ranking member of the committee. But since it’s just been introduced, it’s too early for hearings to be scheduled.

Data Breach legislation

Besides to imposing significant penalties for the failure to report a breach, the bill contains provisions controlling how personal information, including names, social security and credit card numbers, must be protected.

The bill also exempts organizations from the worst penalties if a data breach occurs if they protected customer data from exposure and use in identify theft scams by enforcing adequate data encryption.

Once the bill becomes law, it requires the FTC to develop and promulgate regulations to require affected organizations to “establish and implement policies and procedures regarding information security practices for the treatment and protection of personal information.” The policies and procedures must take into account the type of activity, the state of the art, the cost and the impact on small business.

In addition, the law will require organizations to determine who is responsible for establishing and enforcing information security practices, maintaining processes for preventative and corrective action, and for safely disposing of unneeded data in both electronic and paper form. There are exemptions for organizations covered by other federal laws such as financial institutions and in the health care industry.

Another section of the bill requires organizations to notify the FTC and the people who are affected within 30 days from when the breach was discovered.

There are differences in how the notification is handled depending on whether the breach was at the affected organization or whether it was data being held by a third party, but in either case the notification and data protection requirements are the same. The only change is that the notification is required within 30 days of when the organization whose data was breached finds out about it.

In addition to notifying the people who have had their data compromised, the organization that had their data breached must notify the major credit reporting agencies and it must make credit monitoring services available for free to people who have had their data breached.

The bill also explicitly covers the manner in which the people affected by the breach would be notified. Those methods include email and website notification as well as by postal mail. The bill also allows the FTC to post a notice on its website.

The bill would allow state law enforcement bodies to take action for breaches that happen in their jurisdictions allow for coordination among law enforcement agencies.

It’s also worth noting that the bill would require organizations to have remediation plans in place, and to tell people with data that was breached what those plans are.

Security protection

Now that the bill has been introduced, the biggest question is whether it has any chance for passage. The three original sponsors are all Democrats, which in the current political environment would mean that it’s doomed. However, the bill is not political in nature and the Senate Commerce Committee has already announced that it’s going to be holding hearings on the Uber breach and the resulting delay in notification.

In addition, a spokesperson for the Committee told eWEEK in an email that Sen. Nelson and others will be reaching out to the Republican majority for support and co-sponsorship. Considering the non-partisan nature of the bill, and prominence of the Uber revelations, it would seem that there’s a better chance than usual that this bill will get a fair hearing and have a chance for passage in the Senate.

However, there is no companion bill in the House, but there doesn’t need to be as long as the bill remains non-partisan and as long as it appears to be needed. But remember, nothing is assured in Congress.

If that happens, it would be too bad. The bill is very well thought-out and it’s something that’s badly needed. Right now, breach notifications are controlled by a patchwork of state and local rules, but without a formal national requirement. Considering the borderless nature of the internet this situation has to change.

Originally published on eWeek

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