BILL REQ. #:  H-3858.2 

Prefiled 01/09/08. Read first time 01/14/08.   Referred to Committee on Technology, Energy & Communications.

     AN ACT Relating to securing personal information accessible through the internet; amending RCW 19.255.010; and adding new sections to chapter 19.255 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   A new section is added to chapter 19.255 RCW to read as follows:
     (1) Any person or business that conducts business in this state must use encryption to secure personal information if the person or business is transmitting or storing personal information on a computer server primarily accessed through either a direct connection to the internet, or a computer network that is primarily accessed over the internet.
     (2) A person or business is in compliance with this section if the person or business uses encryption practices that are generally accepted by the industry.
     (3) Any waiver of the provisions of this section is contrary to public policy, and is void and unenforceable.
     (4) This section does not apply to personal information transmitted or stored on a closed network or a virtual private network.
     (5) The department of information services shall adopt rules to implement this section.

NEW SECTION.  Sec. 2   A new section is added to chapter 19.255 RCW to read as follows:
     The legislature finds that the practices covered by this chapter are matters vitally affecting the public interest for the purpose of applying the consumer protection act, chapter 19.86 RCW. A violation of this chapter is not reasonable in relation to the development and preservation of business and is an unfair or deceptive act in trade or commerce and an unfair method of competition for the purpose of applying the consumer protection act, chapter 19.86 RCW.

NEW SECTION.  Sec. 3   A new section is added to chapter 19.255 RCW to read as follows:
     The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "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.
     (2) "Encryption" means use of an algorithmic process to transform data into a form in which the data is rendered unreadable or unusable without use of a confidential process or key.
     (3)(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.

Sec. 4   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.
     (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))) (5) 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))) (5) 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.
     (((9))) (6) Any waiver of the provisions of this section is contrary to public policy, and is void and unenforceable.
     (((10))) (7)(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.