Delaware Adds More Stringent Data Breach Notice Requirements

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By Leslie A. Pappas

Companies doing business in Delaware have until spring 2018 to meet more stringent data breach notification requirements under a new law signed Aug. 17.

Companies will be required to tell state residents affected by a data breach within 60 days and notify the state attorney general if a breach affects more than 500 residents. The standard for determining the level of risk that triggers the need to notify individuals will also change. Medical and biometric data is included in the list of protected personal data for the first time in Delaware.

The new law also requires companies to provide a year of free credit monitoring services to any Delaware resident whose Social Security number is compromised in a breach.

The changes will go into effect on or about April 14, 2018—240 days after enactment—in order to allow businesses time to adapt to the new requirements.

Crafting a bill that addressed cybersecurity for large corporations and small business was challenging, Gov. John Carney (D) said at at a bill-signing ceremony in Newark, Del. “The weakest link tends to be those small companies,” he said.

Risk of Harm Trigger

The new measure amends Delaware’s 2005 data breach notice law, which required that companies give notice to affected state residents “as soon as possible” after investigating a breach and concluding that a “misuse of information about a Delaware resident has occurred or is reasonably likely to occur.”

The amended law requires notice within 60 days unless a company investigation “reasonably determines that the breach of security is unlikely to result in harm to the individuals whose personal information has been breached.”

Under the 2005 law, companies weren’t required to notify the attorney general of breaches.

The bill expands the definition of protected personal information to add medical information, biometric data, user names and passwords, passport numbers, routing numbers to financial accounts, and individual taxpayer identification numbers.

Facebook Inc. spokesman Andy Stone told Bloomberg BNA that the company supports the new law.

Small Business Concerns

The Delaware State Chamber of Commerce was involved in the drafting process but didn’t ultimately support the measure because of the potential large burden it could place on small business owners.

The new requirement that a company pay for a year’s worth of credit monitoring for every customer in the event of a breach would “disproportionately impact small business,” James DeChene, the chamber’s senior vice president of government affairs, told Bloomberg BNA.

It opens them up to “a level of liability that is large enough to put them out of business,” he said. If a breach involved several hundred customers, for example, “that can rack up pretty quickly into large dollar amounts.” And “there’s no insurance policy that a business could take out to prevent an attack,” he said.

DeChene also said he was concerned that small business owners might not learn about the law if it isn’t well-publicized.

To contact the reporter on this story: Leslie A. Pappas in Philadelphia at LPappas@bna.com

To contact the editor responsible for this story: Donald Aplin at daplin@bna.com

For More Information

The final text of the bill is available at http://src.bna.com/rKn.

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