BILL REQ. #: S-3940.4
| State of Washington | 60th Legislature | 2008 Regular Session |
Read first time 01/16/08. Referred to Committee on Financial Institutions & Insurance.
AN ACT Relating to personal information associated with debit and credit cards issued by financial institutions; amending RCW 19.255.010; adding new sections to chapter 19.255 RCW; creating new sections; and providing an effective date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1 In 2005, the Washington state legislature
passed data breach legislation that requires any person or business
that conducts business in this state or that owns or licenses
computerized data that includes consumer personal information to
disclose any breach of the security of the system following discovery
or notification of the breach in the security of the data to Washington
state residents whose unencrypted personal information was, or is
reasonably believed to have been, acquired by an unauthorized person.
Because persons or businesses who have allowed a breach to occur rarely
have the information necessary to contact affected consumers, financial
institutions are called upon to notify affected consumers about the
data breach.
This notification process creates reoccurring financial and
operational issues when information custodians fail to safeguard
consumer personal information. In the aftermath of a system breach
that results in compromised debit and credit card information, card-issuing financial institutions incur significant costs in determining
the nature and scope of the breach, communicating with consumers,
absorbing losses due to unauthorized use of cards or other personal
information, ongoing fraud monitoring costs to protect against future
fraud, and the costs associated with reissuing cards that have been
compromised as a result of the breach.
It is the legislature's intent to encourage financial institutions
to communicate with compromised consumers and take steps to protect
consumers from fraud and harm by creating a direct cause of action for
financial institutions against data custodians that unnecessarily
retain consumer personal information or fail to meet rudimentary
precautions designed to protect consumer personal information.
NEW SECTION. Sec. 2 The definitions in this section apply
throughout this chapter unless the context clearly requires otherwise.
(1) "Access device" means a card or device issued by a financial
institution that contains a magnetic stripe, microprocessor chip, radio
frequency identification, or other means for storage of information
that includes, but is not limited to, a credit card, debit card, or
stored value card.
(2) "Breach of the security of the system" means unauthorized
acquisition of computerized data that compromises the security,
confidentiality, or integrity of personal information maintained by the
person or business. Good faith acquisition of personal information by
an employee or agent of the person or business for the purposes of the
person or business is not a breach of the security of the system when
the personal information is not used or subject to further unauthorized
disclosure.
(3) "Financial institution" has the same meaning as in RCW
30.22.040.
(4) Except under RCW 19.255.010(4), "notice" may be provided by one
of the following methods:
(a) Written notice;
(b) Electronic notice, if the notice provided is consistent with
the provisions regarding electronic records and signatures set forth in
15 U.S.C. Sec. 7001; or
(c) Substitute notice, if the person or business demonstrates that
the cost of providing notice would exceed two hundred fifty thousand
dollars, or that the affected class of subject persons to be notified
exceeds five hundred thousand, or the person or business does not have
sufficient contact information. Substitute notice shall consist of all
of the following:
(i) E-mail notice when the person or business has an e-mail address
for the subject persons;
(ii) Conspicuous posting of the notice on the web site page of the
person or business, if the person or business maintains one; and
(iii) Notification to major statewide media.
(5)(a) "Personal information" means an individual's first name or
first initial and last name in combination with any one or more of the
following data elements, when either the name or the data elements are
not encrypted:
(i) Social security number;
(ii) Driver's license number or Washington identification card
number; or
(iii) Account number or credit or debit card number, in combination
with any required security code, access code, or password that would
permit access to an individual's financial account.
(b) "Personal information" does not include publicly available
information that is lawfully made available to the general public from
federal, state, or local government records.
NEW SECTION. Sec. 3 Any person or business conducting business
in Washington that accepts an access device in connection with a
transaction shall dispose of personal information associated with the
access device subsequent to the authorization of the transaction
expeditiously and within a reasonable period of time.
NEW SECTION. Sec. 4 Any person or business that, in the regular
course of business and in connection with an access device, collects or
stores personal information must comply with payment card industry data
security standards established by the PCI security standards council.
NEW SECTION. Sec. 5 (1) A financial institution may bring an
action against a person or business that has experienced a breach of
the security of the system if, at the time of the breach, the person or
business was in violation of section 3 or 4 of this act.
(2)(a) Before filing an action under subsection (1) of this
section, a financial institution must provide to the person or business
written notice requesting that the person or business provide
certification or an assessment of the person's or business's compliance
with payment card industry data security standards, which must be
issued by a payment card industry-approved auditor or another person
authorized to issue that certification or assessment under payment card
industry data security standards.
(b) The court shall, on motion, dismiss with prejudice an action
brought under this section if the person or business provides to the
financial institution the certification of compliance required under
(a) of this subsection not later than thirty days after receiving the
notice.
(3) A presumption that a person or business has complied with
section 4 of this act exists if:
(a) The person or business contracts for or otherwise uses the
services of a third party to collect, maintain, or store sensitive
personal information in connection with an access device;
(b) The person or business requires that the third party attest to
or offer proof of compliance with payment card industry data security
standards; and
(c) The person or business contractually requires the third party's
continued compliance with payment card industry data security
standards.
NEW SECTION. Sec. 6 Notwithstanding any other provision of law,
a financial institution that brings an action under section 3 or 4 of
this act may obtain actual damages arising from the violation. Actual
damages include any cost incurred by the financial institution in
connection with:
(1) The cancellation or reissuance of an access device affected by
the breach;
(2) The closing of a deposit, transaction, share draft, or other
account affected by the breach and any action to stop payment or block
a transaction with respect to the account;
(3) The opening or reopening of a deposit, transaction, share
draft, or other account affected by the breach;
(4) A refund or credit made to an account holder to cover the cost
of any unauthorized transaction related to the breach;
(5) The notification of account holders affected by the breach;
(6) Credit monitoring services on accounts affected by the breach
for a period of one year from the time the financial institution is
notified of the breach; and
(7) Reasonable attorneys' fees and costs associated with the
action.
Sec. 7 RCW 19.255.010 and 2005 c 368 s 2 are each amended to read
as follows:
(1) Any person or business that conducts business in this state and
that owns or licenses computerized data that includes personal
information shall disclose any breach of the security of the system
following discovery or notification of the breach in the security of
the data to any resident of this state whose unencrypted personal
information was, or is reasonably believed to have been, acquired by an
unauthorized person. The disclosure shall be made in the most
expedient time possible and without unreasonable delay, consistent with
the legitimate needs of law enforcement, as provided in subsection (3)
of this section, or any measures necessary to determine the scope of
the breach and restore the reasonable integrity of the data system.
(2) Any person or business that maintains computerized data that
includes personal information that the person or business does not own
shall notify the owner or licensee of the information of any breach of
the security of the data immediately following discovery, if the
personal information was, or is reasonably believed to have been,
acquired by an unauthorized person.
(3) The notification required by this section may be delayed if a
law enforcement agency determines that the notification will impede a
criminal investigation. The notification required by this section
shall be made after the law enforcement agency determines that it will
not compromise the investigation.
(4) ((For purposes of this section, "breach of the security of the
system" means unauthorized acquisition of computerized data that
compromises the security, confidentiality, or integrity of personal
information maintained by the person or business. Good faith
acquisition of personal information by an employee or agent of the
person or business for the purposes of the person or business is not a
breach of the security of the system when the personal information is
not used or subject to further unauthorized disclosure.)) A person or business that maintains its own notification
procedures as part of an information security policy for the treatment
of personal information and is otherwise consistent with the timing
requirements of this section is in compliance with the notification
requirements of this section if the person or business notifies subject
persons in accordance with its policies in the event of a breach of
security of the system.
(5) For purposes of this section, "personal information" means an
individual's first name or first initial and last name in combination
with any one or more of the following data elements, when either the
name or the data elements are not encrypted:
(a) Social security number;
(b) Driver's license number or Washington identification card
number; or
(c) Account number or credit or debit card number, in combination
with any required security code, access code, or password that would
permit access to an individual's financial account.
(6) For purposes of this section, "personal information" does not
include publicly available information that is lawfully made available
to the general public from federal, state, or local government records.
(7) For purposes of this section and except under subsection (8) of
this section, "notice" may be provided by one of the following methods:
(a) Written notice;
(b) Electronic notice, if the notice provided is consistent with
the provisions regarding electronic records and signatures set forth in
15 U.S.C. Sec. 7001; or
(c) Substitute notice, if the person or business demonstrates that
the cost of providing notice would exceed two hundred fifty thousand
dollars, or that the affected class of subject persons to be notified
exceeds five hundred thousand, or the person or business does not have
sufficient contact information. Substitute notice shall consist of all
of the following:
(i) E-mail notice when the person or business has an e-mail address
for the subject persons;
(ii) Conspicuous posting of the notice on the web site page of the
person or business, if the person or business maintains one; and
(iii) Notification to major statewide media.
(8)
(((9))) (5) Any waiver of the provisions of this section is
contrary to public policy, and is void and unenforceable.
(((10))) (6)(a) Any customer injured by a violation of this section
may institute a civil action to recover damages.
(b) Any business that violates, proposes to violate, or has
violated this section may be enjoined.
(c) The rights and remedies available under this section are
cumulative to each other and to any other rights and remedies available
under law.
(d) A person or business under this section shall not be required
to disclose a technical breach of the security system that does not
seem reasonably likely to subject customers to a risk of criminal
activity.
NEW SECTION. Sec. 8 Sections 2 through 6 of this act are each
added to chapter
NEW SECTION. Sec. 9 This act applies prospectively and not
retroactively. It applies only to causes of action that arise on or
after January 1, 2009.
NEW SECTION. Sec. 10 This act takes effect January 1, 2009.