Jan 30 2014

Senators Introduce Bill to Protect Against Data Breaches

Data Security and Breach Notification Act would create federal standards for securing personal information and for rapid consumer notification in event of an unauthorized breach

Washington—Four senior senators today introduced legislation that would, for the first time, provide a federal standard for companies to safeguard consumers’ personal information throughout their systems and to quickly notify consumers if those systems are breached.

The Data Security and Breach Notification Act was introduced by Senators Dianne Feinstein (D-Calif.), chairman of the Intelligence Committee; John Rockefeller (D-W.Va.), chairman of the Committee on Commerce, Science and Transportation; Mark Pryor (D-Ark.), chairman of the Commerce Subcommittee on Communications, Technology, and the Internet; and Bill Nelson (D-Fla.), chairman of the Commerce Subcommittee on Science and Space.

The bill, similar to legislation introduced in past years, addresses security vulnerabilities that were exploited by criminals in the recent massive data breaches of major U.S. retailers. Those breaches left tens of millions of Americans vulnerable to identity theft and credit fraud.

The Data Security and Breach Notification Act would require the Federal Trade Commission (FTC) to issue security standards for companies that hold consumers’ personal and financial information. In the event of a data breach, companies would be obligated to notify their affected customers so they can take steps to protect themselves from the risk of identity theft and fraud.

“Recent massive data breaches at Target and Neiman Marcus have put the personal information of tens of millions of Americans at risk,” Senator Feinstein said. “This is a real and growing problem. The legislation I introduce today with Chairman Rockefeller will ensure that Americans’ sensitive personal and financial information is stored securely, that Americans receive prompt notification when this information is compromised and that law enforcement is promptly notified in order to prosecute cybercrime. For more than a decade, I have worked to pass data breach legislation. The breaches are getting more frequent, and members of Congress—of both parties and across different congressional committees—must come together to pass this common-sense plan to protect the American consumer.”

“Companies constantly collect personal information about their customers, like credit card information, financial account numbers and passwords. In return, I believe those companies should be responsible for securing this personal information throughout their systems that store this sensitive data,” Senator Rockefeller said. “The recent string of massive data breaches proves companies need to do more to protect their customers. They should be fighting back against hackers who will do whatever it takes to exploit troves of consumer information. Our bill gives consumers the peace of mind that companies are doing everything they can to protect and secure their personal information from criminals.”

“From Target to Neiman Marcus, we’ve seen far too many data breaches leave our families wondering whether their financial and personal information is secure,” Senator Pryor said. “If companies are going to collect and store consumers’ personal information, safeguarding that data should be their number one priority. By implementing more stringent standards and requiring businesses who are breached to notify those affected, our common-sense bill will help prevent these incidents in the future and give American consumers assurance that their information is protected.”

The Data Security and Breach Notification Act would:

  • Provide security standards for databases. The FTC would be directed to develop robust but flexible rules that require businesses that possess consumers’ personal information to adopt reasonable security protocols to protect that information from unauthorized access. The FTC would have the flexibility to broaden, through rulemaking, their ability to protect other types of personal information if it furthers the purpose of the law and does not unnecessarily burden business.
  • Establish strong breach notification requirements. These requirements would allow all potentially affected consumers to take steps to protect themselves from identity theft and other crimes.
  • Increase the use of technology to combat hackers. Businesses would have incentives to adopt state of the art technologies that would render consumer electronic data unreadable or unusable in the case of a breach.
  • Strengthen law enforcement. The bill would establish a two pronged enforcement regime whereby the FTC and state Attorneys General would enforce the law. Breached companies would be required to notify a central, designated federal entity (established by the Department of Homeland Security), which would in-turn notify other relevant law enforcement and government agencies of the breach. The bill would impose civil penalties for violations of the law as well as criminal penalties on corporate personnel that deliberately conceal a data breach.

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