Messy white jigsaw puzzle piecesIt’s once again time for a summary round-up for the puzzling array of state PII breach notification laws.

Back in 2002, California enacted the first state law mandating notification of individuals whose personally identifiable information (PII) is breached.  By 2018 every state had followed suit, along with the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands.  Each state has its own unique approach, and the states continue to expand their requirements, especially their definitions of what constitutes PII and the timing and content of mandated notifications (bold text below reflects changes since 2018).

These laws are triggered by the affected individuals’ residency, not where the breach occurred. So, when a business with employees and customers in many states suffers a data breach, it must comply with a wide variety of conflicting and evolving state breach notification laws. 

Scope of PII

State PII breach notification laws generally apply to a state resident’s name combined with another identifier useful for traditional identity theft, such as the individual’s Social Security number, driver’s or state identification number, or financial account number with access information. But an ever-growing number of states include other combination elements in their PII definition: Continue Reading The Puzzle of State PII Breach Notification Statutes

In this series we’ve looked at recent developments in United States’ data privacy and security laws, primarily at the state level, that are transforming retention schedules and data disposal from merely prudent practices into compliance requirements:

  • State statutes on PII data security and data disposal in Alabama, Colorado, New Mexico, New York, Oregon, and Rhode Island now require that PII be disposed of when no longer required by retention laws or otherwise needed for business purposes.
  • New York’s DFS cybersecurity regulations now require DFS-regulated financial services businesses to have a records retention schedule tying retention of nonpublic information to legal requirements and business need, and to dispose of such data when it is no longer necessary for legal compliance or legitimate business purposes.
  • State data security statutes in Alabama, Connecticut, Delaware, Indiana, Kentucky, Louisiana, Michigan, Mississippi, New Hampshire, Ohio, South Carolina, and Virginia now (or effective soon, will) require insurance licensees to have a retention schedule for nonpublic information and a mechanism for its disposal when no longer needed.
  • In 2019 and 2021 data security enforcement actions under FTC Act Section 5, the FTC now takes the position that over-retention of consumer PI is itself an unreasonable data security practice, and that a reasonable information security program includes data retention scheduling under which consumer PI is disposed of when no longer necessary.
  • State biometric data privacy statutes in Illinois, Texas, and Washington now require that biometric data subject to statutory protection must generally be disposed of after the collection purpose has been satisfied, and Illinois’ BIPA also requires that covered businesses must maintain and must comply with a publicly available, written data retention schedule for biometric data.
  • California’s CCPA, due to the consumers’ right to request deletion of personal information, incents covered businesses to manage consumer PI under a legally-validated retention schedule and to dispose of such PI under the retention schedule once the PI is no longer needed to comply with legal retention requirements and the business’s needs for the consumer transaction or contract.
  • Virginia’s Consumer Data Protection Act (CDPA), signed into law this week and effective January 1, 2023, will require covered businesses (“data controllers”) to limit their collection of personal data and to generally not retain personal data for purposes not reasonably necessary to, or compatible with, the disclosed purposes for which such personal data is processed, unless the consumer consents.
  • And under the California Consumer Privacy Rights Act (CPRA), effective January 1, 2023, covered businesses will be required to manage PI under data retention schedule rules disclosed through notice to consumers, including their employees, and to dispose of PI once it is no longer required for legal compliance or reasonably necessary for the disclosed purposes for its collection and use.

Virtually every one the above changes in data security and data privacy laws has happened in just the last few years, with similar legislation percolating in additional states’ legislatures across the country.  The trend is unmistakable, and the pace of change is quickening.  Managing data with retention scheduling and disposing of unnecessary data are becoming compliance requirements for data privacy and security.

What to do about this?

  • Clarify what constitutes protected information, based on your business’s geographic footprint and scope of operations.
  • Understand where protected information resides, both in your business’s data systems and through your relationships with service providers and contractors.
  • Update and legally validate your business’s data retention schedule, with particular attention to legally required retention periods for records and data sets containing protected information.
  • With that foundation in place, ensure that your business’s policies, contracts, privacy notices, training, and compliance systems ensure compliant practices for the safeguarding, timely disposal, and other processing of protected information.

But wait … aren’t these the same things that have always been good to do?  Of course.  Managing records and information (more broadly, Information Governance) has consistently been prudent, and increasingly so as our digital age has multiplied the volume and velocity of business data. Yet in the real world, what to do has never been as impactful as why to do it.  There needs to be an impetus to govern information, or at least to do it better, that drives actual change within the business.

In the 2000s, a powerful impetus for managing information retention and disposal was the rise of ediscovery, triggering concerns about (1) explosive litigation costs due to unnecessarily retained data and (2) the specter of spoliation sanctions if information is managed carelessly or poorly.  In the 2010s, a new impetus was the fear of data breaches, with their resulting reputational damage, business interruption, regulatory implications, and legal exposures, which are all multiplied by retaining unnecessary data.

For the 2020s, the dots already connect clearly – the new impetus for managing information retention and disposal will be data privacy and security compliance.  Buckle up.

Deleting DataThis series explores how recent changes in U.S. privacy and data security laws are elevating retention schedules and data disposal from merely prudent practices to compliance requirements.

As mentioned earlier, The FTC enforces privacy and data security beyond its regulatory ambit for sector-specific privacy and security laws such as GLBA, FACTA, and COPPA.  It does so under the authority of Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C. § 45(a)(1).  The FTC’s targeted businesses for Section 5 data security enforcement have ranged from the large and well-known to the small and obscure.  But the common theme is that the business, according to the FTC, either deceptively or unfairly engaged in unreasonable and inadequate data security practices for consumers’ personal information (PI).

In several Section 5 enforcement proceedings before 2019 the FTC alleged that the combination of several inadequate data security practices “taken together,” and including retaining consumers’ PI beyond any business need, can collectively be an unfair trade practice under Section 5.  Such past FTC data security matters mentioning over-retention include enforcement actions against BJ’s Wholesale Club, Inc., DSW Inc., Life is good, Inc., Ceridian Corporation, and Cbr Systems, Inc.

But in its recent Section 5 enforcement actions against InfoTrax Systems and SkyMed International, the FTC has changed its approach, elevating over-retention to be a core data security failure.  In each of these cases, as it had in the past, the FTC alleged multiple data security lapses, including the failure to dispose of PI once “no longer necessary.”  Yet the language of these recent complaints no longer uses the “taken together” language of the earlier enforcement actions, allowing over-retention of PI to stand on its own as an unreasonable data security practice.  And the consent orders in these cases, unlike the FTC’s earlier enforcement matters, set forth the explicit, independent requirement that the respondents must have policies, procedures, and measures to delete PI once it is no longer necessary. Continue Reading Less data is more than ever: The FTC and the reasonable data security program

Deleting DataThis series explores how recent changes in U.S. privacy and data security laws are elevating retention schedules and data disposal from merely prudent practices to compliance requirements.

As discussed previously in this series, there’s a shift in U.S. data security laws toward requiring data retention scheduling and disposal of unnecessary data.  Recent changes in state laws with data security requirements for financial services businesses are an excellent example of this trend.

First, some brief context.  The primary driver of financial sector data security has long been the Gramm-Leach-Bliley Act (GLBA), which requires the regulators of financial institutions to establish safeguards standards for the security and confidentiality of customer data.  15 U.S.C. § 6801(b).  The various regulators obliged, with different approaches typical of the idiosyncratic U.S. regulatory ecosystem.  The federal banking agencies (FRB, OCC, & FDIC) promulgated the Interagency Guidelines Establishing Information Security Standards, see 12 C.F.R. Part 30, App. B, with detailed, granular security requirements.  The NCUA adopted similarly specific safeguards for credit unions.  12 C.F.R. Part 748, App. A.    In contrast, the SEC (Regulation S-P, 17 C.F.R. § 248.30(a)) and the FTC (16 C.F.R. Part 314) took a high-level approach with their respective standards, requiring safeguards reasonably designed to ensure security and confidentiality and to protect against anticipated threats and unauthorized access or use.  And for the insurance industry, GLBA security standards were left to state insurance regulators, consistent with federal deference to the state-level regulation of insurance.

The salient point here is that none of the GLBA federal regulators crafted security standards that directly require either data retention scheduling or disposal of customer data once no longer required for legal compliance or business purposes.  The SEC and FTC standards are silent on these topics, and the banking agencies’ and NCUA’s standards speak only to the proper means of disposal, not when customer data must be disposed of.

But this is beginning to change.  And as seen elsewhere in this series, states are leading the way: Continue Reading Less data is more than ever: state-level data security laws for the financial services sector

Deleting DataThis series explores how recent changes in U.S. privacy and data security laws are elevating retention schedules and data disposal from merely prudent practices to compliance requirements.

It seems like Data Security 101 to say that there cannot be a security breach of data a business no longer retains.  Carefully managing data retention and disposal is one of the most potent and effective security safeguards for any business.  Yet oddly, U.S. state laws mandating reasonable data security for personally identifiable information (PII) traditionally have not required that PII be disposed of once no longer needed.  And state laws requiring secure disposal of records containing PII have commonly focused on how such records must compliantly be disposed of, not when.  But recent changes in state-level security program and secure disposal statutes signal a change, with state laws now requiring businesses to dispose of PII when no longer required by retention laws or otherwise needed for business purposes.

State-level Secure Disposal Laws 

A majority of the states have statutes requiring businesses with PII of state residents to take reasonable measures to protect such information when it is disposed of or discarded.  Most such statutes were enacted in the 2000s and, similar to the federal Disposal Rule under FACTA, specify compliant means for securely disposing of protected information.  For examples, Nevada as of 2006 requires secure destruction or records containing customer personal information “when the business decides that it will no longer maintain the records,” and New York in 2006 mandated secure disposal of records containing PII, without any mention of when such records should be disposed of.   Nev. Rev. Stat. § 603A.200(1); N.Y. Gen. Bus. Law § 399-h(2).

But now, such state-level secure disposal statutes have begun to also speak to when such records must be disposed of, tied to legal retention requirements and business need: Continue Reading Less data is more than ever: state PII data security and disposal laws

This series explores how recent changes in U.S. privacy and data security laws are elevating retention schedules and data disposal from merely prudent practices to compliance requirements.

Today’s companion post explores how the California Consumer Privacy Act (CCPA), without statutory provisions explicitly requiring data minimization or storage limitation, nevertheless incents covered businesses to carefully manage retention and disposal of personal information (PI).  But less than two years from now, the script gets flipped, with California mandating both data minimization and storage limitation for businesses covered by the California Privacy Rights Act (CPRA).

The CPRA became law through a November 2020 ballot initiative.  Generally effective on January 1, 2023, the CPRA makes sweeping changes to the CCPA, including new provisions that directly require data retention management and data disposal.  Under the CPRA, covered businesses:

  • Must inform consumers how long the business intends to retain each category of PI the business collects, or if that is not possible, the criteria used to determine the retention period.
  • Must not retain PI for longer than is reasonably necessary and proportionate for the disclosed purpose(s) of collection or processing.

Cal. Civ. Code § 1798.100(a)(3) & (c) (effective January 1, 2023).  Thus, for the first time under any U.S. federal or state comprehensive data privacy law, The CPRA will explicitly and directly require covered businesses (1) to manage the CPRA’s broad range of PI under data retention schedule rules disclosed through notice to consumers, and (2) to dispose of PI once it is no longer required for legal compliance or reasonably necessary for the disclosed purposes for its collection and use. Continue Reading Less data is more than ever: the CPRA and beyond

Deleting DataThis series explores how recent changes in U.S. privacy and data security laws are elevating retention schedules and data disposal from merely prudent practices to compliance requirements.

The California Consumer Privacy Act, effective January 1, 2020, was the Untied States’ first state-level comprehensive data privacy law.  And the CCPA blogging blitzkreig has not been merely hype – the CCPA presages a fundamental shift in U.S. privacy law.

The statute was a bit convoluted in its original form, almost as if the California legislature had hurriedly cobbled it together in a week’s time to avoid different provisions becoming law through a ballot initiative spearheaded by private activists, and which would have been essentially immune to subsequent direct amendment by the legislature (oops, that’s actually what happened).  Today’s CCPA is the also the product of a flurry of legislative clean-up amendments, supplemented by now-final California regulations (not that anything is ever quite final in California), and with a few targeted statutory amendments effective now due to last November’s adoption of the CPRA by ballot referendum.

Much thoughtful guidance is available elsewhere on the CCPA’s scope, applicability, and the various consumer rights it creates, including notice/transparency, access, deletion, and sale opt-out.  Our narrow focus here is on whether and how the CCPA affects the need of covered businesses (1) to manage PI with retention scheduling and (2) to dispose of PI once no longer necessary.

Continue Reading Less data is more than ever: the CCPA

Deleting DataThis series explores how recent changes in U.S. privacy and data security laws are elevating retention schedules and data disposal from merely prudent practices to compliance requirements.

Last week’s post was a whirlwind history tour of U.S. data privacy law, honing in on the privacy principles of data minimization and storage limitation.  The punchline was that unlike most foreign data privacy regimes, and with but few exceptions, U.S. data privacy laws have focused primarily on notice and consent and have avoided requiring businesses (1) to manage data under a retention schedule and (2) to dispose of personal data once no longer necessary for legal compliance or business need.

This began to change in state laws focused on a small niche of privacy – biometric data privacy.  Data security for biometric data is becoming a staple of state-level breach notification statutes (to date, in 17 states and the District of Columbia) and in some states’ laws that affirmatively require reasonable data security programs for protected personal information.  But state-level data privacy laws for biometric data have been more of an outlier.

Illinois’ Biometric Information Privacy Act (BIPA) became effective in 2008.  BIPA has been blogged about endlessly, largely because, after a bit of a sleepy start, its provisions allowing private-party class actions for statutory damages (thereby bypassing the standing impediment vexing many privacy and data security claimants) thrust BIPA to center stage in headline-grabbing litigation.

Our focus here is on a particular provision in BIPA: Continue Reading Less data is more than ever: state biometric data privacy laws

Digital DataThis series explores how recent changes in U.S. privacy and data security laws are elevating retention schedules and data disposal from merely prudent practices to compliance requirements.  

Forgive me, but to fully appreciate the impact of state data privacy laws on managing records retention and disposing of unnecessary data, a bit of history is needed (if you’re allergic to history, skip this post).  Our focus is through the narrow lens of two key elements of data privacy regimes: data minimization (only collecting the minimum of personal data needed for the collection purposes) and storage limitation (only keeping personal data for as long as needed for these purposes).

United States data privacy law is a global outlier.  That’s ironic, given that the building blocks of modern data privacy law, the Fair Information Privacy Practices (FIPPs), were first expressed in a 1973 report by the U.S. Department of Health, Education, and Welfare, Records, Computers, and the Rights of Citizens.  As originally framed, the FIPPs (Transparency, Access, Choice, Correction, and Quality/Protection) did not speak directly to data minimization or storage limitation.  At least at the outset, the FIPPs did not expressly call for minimizing collection of personal data or deleting personal data once its collection purpose was satisfied.

If data privacy were a religion, and the FIPPs its original Word, what came next was inevitable – inspiration spread globally and resulted in various denominations, each restating and taking the core beliefs in different directions, as influenced by cultural factors and, with data privacy law, governing philosophies: Continue Reading Less data is more than ever: for context, a ridiculously brief history of U.S. data privacy law

Businesses in the United States have a new imperative to carefully manage records retention and promptly dispose of unnecessary information (and no, it’s not due to GDPR or other global privacy law developments).  Recent changes in U.S. data security and privacy laws, and the trends they portend, are elevating the disposal of unnecessary data from a risk management strategy to a compliance requirement.

Managing data volumes has always been prudent.  Using retention schedules to curb relentless data growth remains an established, sensible way to keep business operations efficient, manage storage expense, mitigate ediscovery costs, and limit data security and privacy exposures.  Perhaps the most trenchant explanation was offered by former U.S. District Court Magistrate Judge John Facciola:  “If your clients don’t have a records management system, they may as well take their money out into the parking lot and set it on fire.”

But as a matter of pure legal compliance, U.S. federal and state laws have historically followed a “mandatory minimum” retention approach, requiring that businesses keep specified records for at least a mandated retention period, but not compelling disposal.  With precious few exceptions, U.S. businesses have not been legally required to (1) manage data with retention schedules and (2) dispose of unnecessary data.  And U.S. privacy and data security laws have generally been silent on retention periods for protected information.  For example, HIPAA and its Privacy and Security Standards impose no retention period on covered entities for protected health information (PHI); the Gramm-Leach-Bliley Act (GLBA) and its federal functional regulators’ privacy regulations and Interagency Security Guidelines do not explicitly require financial institutions to dispose of unnecessary nonpublic customer information (NPI); and the FACTA Disposal Rule only speaks to how, not when, to compliantly dispose of consumer report information.

Well … that was then, and this is a new now, driven by recent changes in U.S. data security and privacy laws.  I’ll dig deeper into these developments in upcoming posts, but here are the high points: Continue Reading For U.S. businesses, less data is more than ever