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BILL NUMBER: AB 779 ENROLLED
BILL TEXT

PASSED THE SENATE SEPTEMBER 6, 2007
PASSED THE ASSEMBLY SEPTEMBER 10, 2007
AMENDED IN SENATE AUGUST 31, 2007
AMENDED IN SENATE AUGUST 20, 2007
AMENDED IN SENATE JULY 10, 2007
AMENDED IN SENATE JULY 3, 2007
AMENDED IN ASSEMBLY JUNE 1, 2007
AMENDED IN ASSEMBLY MAY 14, 2007
AMENDED IN ASSEMBLY MAY 1, 2007
AMENDED IN ASSEMBLY APRIL 10, 2007

INTRODUCED BY Assembly Member Jones
(Coauthors: Assembly Members DeSaulnier, Huffman, and Krekorian)
(Coauthor: Senator Migden)

FEBRUARY 22, 2007

An act to add Sections 1724.4 and 1724.5 to, and to repeal and
amend Sections 1798.29 and 1798.82 of, the Civil Code, relating to
personal information.

LEGISLATIVE COUNSEL’S DIGEST

AB 779, Jones. Personal information: state agencies and
businesses.
(1) Existing law imposes specified duties upon certain persons or
businesses that conduct business in California to, among other
things, take reasonable steps to destroy customer records, implement
and maintain reasonable security measures, disclose a breach of
computerized data, and, upon request, provide specified information
to a customer in relation to the disclosure of personal information
to 3rd parties. For a violation of any of the above-described
provisions, existing law allows an injured customer to institute a
civil action to recover damages or for injunctive relief.
This bill, on and after July 1, 2008, would prohibit a person,
business, or agency, as defined, that sells goods or services to any
resident of California and accepts as payment a credit card, debit
card, or other payment device, from storing, retaining, sending, or
failing to limit access to payment-related data, as defined,
retaining a primary account number, or storing sensitive
authentication data subsequent to an authorization, as specified,
unless a specified exception applies. Upon a violation, and as
applicable, the bill would apply specified reimbursement and notice
provisions, as described below.
(2) Existing law requires any state agency, or a person or
business that conducts business in California, that owns or licenses
computerized data that includes personal information, as defined, to
disclose any breach of the security of that data to any resident of
California whose unencrypted personal information was, or is
reasonably believed to have been, acquired by an unauthorized person.
Existing law allows for that disclosure by written notice,
electronic notice, or, upon a specified condition, by substitute
notice, which, if utilized, also requires notification to major
statewide media.
This bill, if substitute notice is utilized, would require that
notice to also be provided to the Office of Privacy Protection. The
bill would also repeal duplicative provisions of law.
(3) Existing law requires any agency, person, or business that
maintains computerized data that includes personal information that
the agency, person, or business does not own to 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.
This bill, on and after July 1, 2008, would require that
notification to the owner or licensee of the information to include,
among other things, a description of the categories of personal
information that were, or may have been, acquired, a toll-free or
local telephone number or electronic mail address that individuals
may use to contact the agency, person, or business, and the telephone
numbers and addresses of the major credit reporting agencies. If the
owner or licensee of the information is the issuer of the credit or
debit card or the payment device, or maintains the account from which
the payment device orders payment, the bill would require the owner
or licensee to disclose the same information to the California
resident in plain language, as specified.
(4) This bill would provide that its provisions are severable.
(5) This bill would incorporate additional changes in Section
1798.29 of the Civil Code, proposed by AB 1298, to be operative only
if AB 1298 and this bill are both chaptered and become effective on
or before January 1, 2008, and this bill is chaptered last.
(6) This bill would incorporate additional changes in Section
1798.82 of the Civil Code, proposed by AB 1298, to be operative only
if AB 1298 and this bill are both chaptered and become effective on
or before January 1, 2008, and this bill is chaptered last.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. Section 1724.4 is added to the Civil Code, to read:
1724.4. (a) For purposes of this section, "payment related data"
means any computerized information described in paragraph (3) of
subdivision (e) of Section 1798.82, whether individually or in
combination with any other information described in paragraph (3) of
subdivision (e) of Section 1798.82.
(b) In addition to being subject to the provisions of Title 1.81
(commencing with Section 1798.80) of Part 4, a person, business, or
agency, as defined in subdivision (b) of Section 1798.3, that sells
goods or services to any resident of California and accepts as
payment a credit card, debit card, or other payment device shall not
do any of the following:
(1) Store payment related data, except when the person, business,
or public agency has a payment data retention and disposal policy,
which limits the amount of payment related data and the time that
data is retained to the amount and time that is required for
business, legal, or regulatory purposes as documented in the payment
data retention policy, and payment related data is stored only for a
time period and in a manner that is permitted by the policy.
(2) Store sensitive authentication data subsequent to
authorization, even if that data is encrypted. Sensitive
authentication data includes, but is not limited to, all of the
following:
(A) The full contents of any data track from a payment card or
other payment device.
(B) The card verification code or any value used to verify
transactions when the payment device is not present.
(C) The personal identification number (PIN) or the encrypted PIN
block.
(3) Store any payment-related data that is not needed for business
purposes.
(4) Store any of the following data elements:
(A) Payment verification code.
(B) Payment verification value.
(C) PIN verification value.
(5) Retain the primary account number unless retained in a manner
consistent with the other requirements of this subdivision and in a
form that is unreadable and unusable by unauthorized persons anywhere
it is stored.
(6) Send payment-related data over open, public networks unless
the data is encrypted using strong cryptography and security
protocols or otherwise rendered indecipherable.
(7) Fail to limit access to payment-related data to only those
individuals whose job requires that access.
(c) This section shall not apply to any person or business subject
to Sections 6801 to 6809, inclusive, of Title 15 of the United
States Code and state or federal statutes or regulations implementing
those sections, if the person or business is subject to compliance
oversight by a state or federal regulatory agency with respect to
those sections.
SEC. 2. Section 1724.5 is added to the Civil Code, to read:
1724.5. (a) Any person, business, or agency subject to Section
1724.4 that is required to give notice of a breach of the security of
the system pursuant to subdivision (b) of Section 1798.29 or
subdivision (b) of Section 1798.82 shall include in that notification
to the owner or licensee of the information, in plain language, all
of the following information if available at the time the notice is
provided:
(1) The date of the notice.
(2) The name of the agency, person, or business that maintained
the computerized data at the time of the breach.
(3) The date, or estimated date, that the breach occurred, if the
date or estimated date is possible to determine.
(4) A description of the categories of personal information that
was, or is reasonably believed to have been, acquired by an
unauthorized person.
(5) A toll-free telephone number for the agency, person, or
business subject to the breach of the security of the system of that
agency, person, or business or, if the primary method used by that
agency, person, or business to communicate with the individuals whose
information is the subject of the breach is by electronic means, an
electronic mail address that the individuals may use to contact the
agency, person, or business so that the individuals may learn what
types of personal information that agency, person, or business
maintained about the individuals were subject to the security breach.
If the agency, person, or business that experienced the breach does
not have a toll-free telephone number, a local telephone number may
be provided to the owner or licensee of the information to contact
the agency, person, or business.
(6) The toll-free telephone numbers and addresses for the major
credit reporting agencies.
(b) The notification required by subdivision (a) may be delayed if
a law enforcement agency determines that the notification will
impede a criminal investigation. The notification required by
subdivision (a) shall be made after the law enforcement agency
determines that it will not compromise the investigation.
(c) If the owner or licensee of the information is the issuer of
the credit or debit card or the payment device, or maintains the
account from which the payment device orders payment, the owner or
licensee shall disclose to the California resident in any
notification provided pursuant to subdivision (a) of Section 1798.29
or subdivision (a) of Section 1798.82, in plain language, all
information described in paragraphs (1) to (6), inclusive, of
subdivision (a) that is available at the time that notification is
made, except however, with respect to paragraph (5), an electronic
mail address may be provided in lieu of a toll-free or local
telephone number to those individuals with whom the primary method
used by that agency, person, or business to communicate is by
electronic means.
(d) (1) In addition, a person, business, or agency subject to
Section 1724.4 shall be liable to the owner or licensee of the
information for the reimbursement of all reasonable and actual costs
of providing notice to consumers pursuant to the breach as required
by subdivision (a) of Section 1798.29 or subdivision (a) of Section
1798.82 and for the reasonable and actual cost of card replacement as
a result of the breach of the security of the system.
(2) A person, business, or agency subject to Section 1724.4 may be
excused, in whole or in part, from any obligation to reimburse the
owner or licensee pursuant to this section if the person, business,
or agency can demonstrate compliance with all provisions of Section
1724.4 at the time of the breach of security of the system.
SEC. 3. Section 1798.29 of the Civil Code, as added by Section 2
of Chapter 915 of the Statutes of 2002, is repealed.
SEC. 4. Section 1798.29 of the Civil Code, as added by Section 2
of Chapter 1054 of the Statutes of 2002, is amended to read:
1798.29. (a) Any agency 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 California
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 subdivision (c), or any measures
necessary to determine the scope of the breach and restore the
reasonable integrity of the data system.
(b) Any agency that maintains computerized data that includes
personal information that the agency 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.
(c) 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.
(d) 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 agency. Good faith acquisition of
personal information by an employee or agent of the agency for the
purposes of the agency is not a breach of the security of the system,
provided that the personal information is not used or subject to
further unauthorized disclosure.
(e) 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:
(1) Social security number.
(2) Driver’s license number or California identification card
number.
(3) Account number, 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.
(f) 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.
(g) For purposes of this section, "notice" may be provided by one
of the following methods:
(1) Written notice.
(2) Electronic notice, if the notice provided is consistent with
the provisions regarding electronic records and signatures set forth
in Section 7001 of Title 15 of the United States Code.
(3) Substitute notice, if the agency demonstrates that the cost of
providing notice would exceed two hundred fifty thousand dollars
($250,000), or that the affected class of subject persons to be
notified exceeds 500,000, or the agency does not have sufficient
contact information. Substitute notice shall consist of all of the
following:
(A) E-mail notice when the agency has an e-mail address for the
subject persons.
(B) Conspicuous posting of the notice on the agency’s Internet Web
site page, if the agency maintains one.
(C) Notification to major statewide media and the Office of
Privacy Protection.
(h) Notwithstanding subdivision (g), an agency 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 part shall be deemed
to be in compliance with the notification requirements of this
section if it notifies subject persons in accordance with its
policies in the event of a breach of security of the system.
SEC. 4.5. Section 1798.29 of the Civil Code, as added by Section 2
of Chapter 1054 of the Statutes of 2002, is amended to read:
1798.29. (a) Any agency 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 California
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 subdivision (c), or any measures
necessary to determine the scope of the breach and restore the
reasonable integrity of the data system.
(b) Any agency that maintains computerized data that includes
personal information that the agency 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.
(c) 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.
(d) 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 agency. Good faith acquisition of
personal information by an employee or agent of the agency for the
purposes of the agency is not a breach of the security of the system,
provided that the personal information is not used or subject to
further unauthorized disclosure.
(e) 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:
(1) Social security number.
(2) Driver’s license number or California identification card
number.
(3) Account number, 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.
(4) Medical information.
(5) Health insurance information.
(f) (1) 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.
(2) For purposes of this section, "medical information" means any
information regarding an individual’s medical history, mental or
physical condition, or medical treatment or diagnosis by a health
care professional.
(3) For purposes of this section, "health insurance information"
means an individual’s health insurance policy number or subscriber
identification number, any unique identifier used by a health insurer
to identify the individual, or any information in an individual’s
application and claims history, including any appeals records.
(g) For purposes of this section, "notice" may be provided by one
of the following methods:
(1) Written notice.
(2) Electronic notice, if the notice provided is consistent with
the provisions regarding electronic records and signatures set forth
in Section 7001 of Title 15 of the United States Code.
(3) Substitute notice, if the agency demonstrates that the cost of
providing notice would exceed two hundred fifty thousand dollars
($250,000), or that the affected class of subject persons to be
notified exceeds 500,000, or the agency does not have sufficient
contact information. Substitute notice shall consist of all of the
following:
(A) E-mail notice when the agency has an e-mail address for the
subject persons.
(B) Conspicuous posting of the notice on the agency’s Internet Web
site page, if the agency maintains one.
(C) Notification to major statewide media and the Office of
Privacy Protection.
(h) Notwithstanding subdivision (g), an agency 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 part shall be deemed
to be in compliance with the notification requirements of this
section if it notifies subject persons in accordance with its
policies in the event of a breach of security of the system.
SEC. 5. Section 1798.82 of the Civil Code, as added by Section 4
of Chapter 915 of the Statutes of 2002, is repealed.
SEC. 6. Section 1798.82 of the Civil Code, as added by Section 4
of Chapter 1054 of the Statutes of 2002, is amended to read:
1798.82. (a) Any person or business that conducts business in
California, 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 California 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 subdivision (c), or any measures necessary to determine the scope
of the breach and restore the reasonable integrity of the data
system.
(b) 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.
(c) 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.
(d) 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, provided that the personal
information is not used or subject to further unauthorized
disclosure.
(e) For purposes of this section, "personal information" means an
individual’s first name or first initial and last name in combination
with one or more of the following data elements, when either the
name or the data elements are not encrypted:
(1) Social security number.
(2) Driver’s license number or California identification card
number.
(3) Account number, 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.
(f) 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.
(g) For purposes of this section, "notice" may be provided by one
of the following methods:
(1) Written notice.
(2) Electronic notice, if the notice provided is consistent with
the provisions regarding electronic records and signatures set forth
in Section 7001 of Title 15 of the United States Code.
(3) Substitute notice, if the person or business demonstrates that
the cost of providing notice would exceed two hundred fifty thousand
dollars ($250,000), or that the affected class of subject persons to
be notified exceeds 500,000, or the person or business does not have
sufficient contact information. Substitute notice shall consist of
all of the following:
(A) E-mail notice when the person or business has an e-mail
address for the subject persons.
(B) Conspicuous posting of the notice on the Internet Web site
page of the person or business, if the person or business maintains
one.
(C) Notification to major statewide media and the Office of
Privacy Protection.
(h) Notwithstanding subdivision (g), 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 part, shall
be deemed to be 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.
SEC. 6.5. Section 1798.82 of the Civil Code, as added by Section 4
of Chapter 1054 of the Statutes of 2002, is amended to read:
1798.82. (a) Any person or business that conducts business in
California, 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 California 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 subdivision (c), or any measures necessary to determine the scope
of the breach and restore the reasonable integrity of the data
system.
(b) 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.
(c) 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.
(d) 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, provided that the personal
information is not used or subject to further unauthorized
disclosure.
(e) For purposes of this section, "personal information" means an
individual’s first name or first initial and last name in combination
with one or more of the following data elements, when either the
name or the data elements are not encrypted:
(1) Social security number.
(2) Driver’s license number or California identification card
number.
(3) Account number, 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.
(4) Medical information.
(5) Health insurance information.
(f) (1) 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.
(2) For purposes of this section, "medical information" means any
information regarding an individual’s medical history, mental or
physical condition, or medical treatment or diagnosis by a health
care professional.
(3) For purposes of this section, "health insurance information"
means an individual’s health insurance policy number or subscriber
identification number, any unique identifier used by a health insurer
to identify the individual, or any information in an individual’s
application and claims history, including any appeals records.
(g) For purposes of this section, "notice" may be provided by one
of the following methods:
(1) Written notice.
(2) Electronic notice, if the notice provided is consistent with
the provisions regarding electronic records and signatures set forth
in Section 7001 of Title 15 of the United States Code.
(3) Substitute notice, if the person or business demonstrates that
the cost of providing notice would exceed two hundred fifty thousand
dollars ($250,000), or that the affected class of subject persons to
be notified exceeds 500,000, or the person or business does not have
sufficient contact information. Substitute notice shall consist of
all of the following:
(A) E-mail notice when the person or business has an e-mail
address for the subject persons.
(B) Conspicuous posting of the notice on the Internet Web site
page of the person or business, if the person or business maintains
one.
(C) Notification to major statewide media and the Office of
Privacy Protection.
(h) Notwithstanding subdivision (g), 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 part, shall
be deemed to be 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.
SEC. 7. The provisions of this act are severable. If any provision
of this act or its application is held invalid, that invalidity
shall not affect other provisions or applications that can be given
effect without the invalid provision or application.
SEC. 8. Section 4.5 of this bill incorporates amendments to
Section 1798.29 of the Civil Code proposed by both this bill and AB
1298. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2008, (2) each bill
amends Section 1798.29 of the Civil Code, and (3) this bill is
enacted after AB 1298, in which case Section 4 of this bill shall not
become operative.
SEC. 9. Section 6.5 of this bill incorporates amendments to
Section 1798.82 of the Civil Code proposed by both this bill and AB
1298. It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2008, (2) each bill
amends Section 1798.82 of the Civil Code, and (3) this bill is
enacted after AB 1298, in which case Section 6 of this bill shall not
become operative.
SEC. 10. Sections 1 and 2 of this act shall become operative on
July 1, 2008.