S. 1490 (111th): Personal Data Privacy and Security Act of 2009

111th Congress, 2009–2010. Text as of Nov 05, 2009 (Reported by Senate Committee).

Status & Summary | PDF | Source: GPO

II

Calendar No. 208

111th CONGRESS

1st Session

S. 1490

IN THE SENATE OF THE UNITED STATES

July 22, 2009

(for himself, Mr. Brown, Mr. Feingold, Mr. Schumer, Mr. Specter, Mr. Cardin, and Mr. Hatch) introduced the following bill; which was read twice and referred to the Committee on the Judiciary

November 5, 2009

Reported by , with amendments

Omit the part struck through and insert the part printed in italic

A BILL

To prevent and mitigate identity theft, to ensure privacy, to provide notice of security breaches, and to enhance criminal penalties, law enforcement assistance, and other protections against security breaches, fraudulent access, and misuse of personally identifiable information.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Personal Data Privacy and Security Act of 2009.

(b)

Table of contents

The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Definitions.

TITLE I—Enhancing punishment for identity theft and other violations of data privacy and security

Sec. 101. Organized criminal activity in connection with unauthorized access to personally identifiable information.

Sec. 102. Concealment of security breaches involving sensitive personally identifiable information.

Sec. 103. Review and amendment of Federal sentencing guidelines related to fraudulent access to or misuse of digitized or electronic personally identifiable information.

Sec. 104. Effects of identity theft on bankruptcy proceedings.

TITLE II—Data brokers

Sec. 201. Transparency and accuracy of data collection.

Sec. 202. Enforcement.

Sec. 203. Relation to State laws.

Sec. 204. Effective date.

TITLE III—Privacy and security of personally identifiable information

Subtitle A—A data privacy and security program

Sec. 301. Purpose and applicability of data privacy and security program.

Sec. 302. Requirements for a personal data privacy and security program.

Sec. 303. Enforcement.

Sec. 304. Relation to other laws.

Subtitle B—Security breach notification

Sec. 311. Notice to individuals.

Sec. 312. Exemptions.

Sec. 313. Methods of notice.

Sec. 314. Content of notification.

Sec. 315. Coordination of notification with credit reporting agencies.

Sec. 316. Notice to law enforcement.

Sec. 317. Enforcement.

Sec. 318. Enforcement by State attorneys general.

Sec. 319. Effect on Federal and State law.

Sec. 320. Authorization of appropriations.

Sec. 321. Reporting on risk assessment exemptions.

Sec. 322. Effective date.

Subtitle C—Office of Federal Identity Protection

Sec. 331. Office of Federal Identity Protection.

TITLE IV—Government access to and use of commercial data

Sec. 401. General services administration review of contracts.

Sec. 402. Requirement to audit information security practices of contractors and third party business entities.

Sec. 403. Privacy impact assessment of government use of commercial information services containing personally identifiable information.

Sec. 404. Implementation of chief privacy officer requirements.

2.

Findings

Congress finds that—

(1)

databases of personally identifiable information are increasingly prime targets of hackers, identity thieves, rogue employees, and other criminals, including organized and sophisticated criminal operations;

(2)

identity theft is a serious threat to the Nation’s economic stability, homeland security, the development of e-commerce, and the privacy rights of Americans;

(3)

over 9,300,000 individuals were victims of identity theft in America last year;

(4)

security breaches are a serious threat to consumer confidence, homeland security, e-commerce, and economic stability;

(5)

it is important for business entities that own, use, or license personally identifiable information to adopt reasonable procedures to ensure the security, privacy, and confidentiality of that personally identifiable information;

(6)

individuals whose personal information has been compromised or who have been victims of identity theft should receive the necessary information and assistance to mitigate their damages and to restore the integrity of their personal information and identities;

(7)

data brokers have assumed a significant role in providing identification, authentication, and screening services, and related data collection and analyses for commercial, nonprofit, and government operations;

(8)

data misuse and use of inaccurate data have the potential to cause serious or irreparable harm to an individual’s livelihood, privacy, and liberty and undermine efficient and effective business and government operations;

(9)

there is a need to ensure that data brokers conduct their operations in a manner that prioritizes fairness, transparency, accuracy, and respect for the privacy of consumers;

(10)

government access to commercial data can potentially improve safety, law enforcement, and national security; and

(11)

because government use of commercial data containing personal information potentially affects individual privacy, and law enforcement and national security operations, there is a need for Congress to exercise oversight over government use of commercial data.

3.

Definitions

In this Act, the following definitions shall apply:

(1)

Agency

The term agency has the same meaning given such term in section 551 of title 5, United States Code.

(2)

Affiliate

The term affiliate means persons related by common ownership or by corporate control.

(3)

Business entity

The term business entity means any organization, corporation, trust, partnership, sole proprietorship, unincorporated association, or venture established to make a profit, or nonprofit.

(4)

Identity theft

The term identity theft means a violation of section 1028 of title 18, United States Code.

(5)

Data broker

The term data broker means a business entity which for monetary fees or dues regularly engages in the practice of collecting, transmitting, or providing access to sensitive personally identifiable information on more than 5,000 individuals who are not the customers or employees of that business entity or affiliate primarily for the purposes of providing such information to nonaffiliated third parties on an interstate basis.

(6)

Data furnisher

The term data furnisher means any agency, organization, corporation, trust, partnership, sole proprietorship, unincorporated association, or nonprofit that serves as a source of information for a data broker.

(7)

Encryption

The term encryption

(A)

means the protection of data in electronic form, in storage or in transit, using an encryption technology that has been adopted by an establisheda widely accepted standards setting body or, has been widely accepted as an effective industry practice which renders such data indecipherable in the absence of associated cryptographic keys necessary to enable decryption of such data; and

(B)

includes appropriate management and safeguards of such cryptographic keys so as to protect the integrity of the encryption.

(8)

Personal electronic record

(A)

In general

The term personal electronic record means data associated with an individual contained in a database, networked or integrated databases, or other data system that is provided to nonaffiliated third parties and includes sensitive personally identifiable information about that individual.

(B)

Exclusions

The term personal electronic record does not include—

(i)

any data related to an individual’s past purchases of consumer goods; or

(ii)

any proprietary assessment or evaluation of an individual or any proprietary assessment or evaluation of information about an individual.

(9)

Personally identifiable information

The term personally identifiable information means any information, or compilation of information, in electronic or digital form serving as a means of identification, as defined by section 1028(d)(7) of title 18, United State Code.

(10)

Public record source

The term public record source means the Congress, any agency, any State or local government agency, the government of the District of Columbia and governments of the territories or possessions of the United States, and Federal, State or local courts, courts martial and military commissions, that maintain personally identifiable information in records available to the public.

(11)

Security breach

(A)

In general

The term security breach means compromise of the security, confidentiality, or integrity of computerized data through misrepresentation or actions that result in, or there is a reasonable basis to conclude has resulted in, acquisition of or access to sensitive personally identifiable information that is unauthorized or in excess of authorization and which present a significant risk of harm or fraud to any individual.

(B)

Exclusion

The term security breach does not include—

(i)

a good faith acquisition of sensitive personally identifiable information by a business entity or agency, or an employee or agent of a business entity or agency, if the sensitive personally identifiable information is not subject to further unauthorized disclosure; or

(ii)

the release of a public record not otherwise subject to confidentiality or nondisclosure requirements.

(12)

Sensitive personally identifiable information

The term sensitive personally identifiable information means any information or compilation of information, in electronic or digital form that includes—

(A)

an individual's first and last name or first initial and last name in combination with any 1 of the following data elements:

(i)

A non-truncated social security number, driver's license number, passport number, or alien registration number.

(ii)

Any 2 of the following:

(I)

Home address or telephone number.

(II)

Mother's maiden name, if identified as such.

(III)

Month, day, and year of birth.

(iii)

Unique biometric data such as a finger print, voice print, a retina or iris image, or any other unique physical representation.

(iv)

A unique account identifier, electronic identification number, user name, or routing code in combination with any associated security code, access code, or password that is required for an individual to obtain money, goods, services, or any other thing of value; or

(B)

a financial account number or credit or debit card number in combination with any security code, access code, or password that is required for an individual to obtain credit, withdraw funds, or engage in a financial transaction.

I

Enhancing punishment for identity theft and other violations of data privacy and security

101.

Organized criminal activity in connection with unauthorized access to personally identifiable information

Section 1961(1) of title 18, United States Code, is amended by inserting section 1030(a)(2)(D) (relating to fraud and related activity in connection with unauthorized access to sensitive personally identifiable information as defined in the Personal Data Privacy and Security Act of 2009, before section 1084.

102.

Concealment of security breaches involving sensitive personally identifiable information

(a)

In general

Chapter 47 of title 18, United States Code, is amended by adding at the end the following:

1041.

Concealment of security breaches involving sensitive personally identifiable information

(a)

Whoever, having knowledge of a security breach and of the obligation to provide notice of such breach to individuals under title III of the Personal Data Privacy and Security Act of 2009, and having not otherwise qualified for an exemption from providing notice under section 312 of such Act, intentionally and willfully conceals the fact of such security breach and which breach causes economic damage to 1 or more persons, shall be fined under this title or imprisoned not more than 5 years, or both.

(b)

For purposes of subsection (a), the term person has the same meaning as in section 1030(e)(12) of title 18, United States Code.

(c)

Any person seeking an exemption under section 312(b) of the Personal Data Privacy and Security Act of 2009 shall be immune from prosecution under this section if the United States Secret Service does not indicate, in writing, that such notice be given under section 312(b)(3) of such Act.

.

(b)

Conforming and technical amendments

The table of sections for chapter 47 of title 18, United States Code, is amended by adding at the end the following:

1041. Concealment of security breaches involving personally identifiable information.

.

(c)

Enforcement authority

(1)

In general

The United States Secret Service shall have the authority to investigate offenses under this section.

(2)

Nonexclusivity

The authority granted in paragraph (1) shall not be exclusive of any existing authority held by any other Federal agency.

103.

Review and amendment of Federal sentencing guidelines related to fraudulent access to or misuse of digitized or electronic personally identifiable information

(a)

Review and amendment

The United States Sentencing Commission, pursuant to its authority under section 994 of title 28, United States Code, and in accordance with this section, shall review and, if appropriate, amend the Federal sentencing guidelines (including its policy statements) applicable to persons convicted of using fraud to access, or misuse of, digitized or electronic personally identifiable information, including identity theft or any offense under—

(1)

sections 1028, 1028A, 1030, 1030A, 2511, and 2701 of title 18, United States Code; and

(2)

any other relevant provision.

(b)

Requirements

In carrying out the requirements of this section, the United States Sentencing Commission shall—

(1)

ensure that the Federal sentencing guidelines (including its policy statements) reflect—

(A)

the serious nature of the offenses and penalties referred to in this Act;

(B)

the growing incidences of theft and misuse of digitized or electronic personally identifiable information, including identity theft; and

(C)

the need to deter, prevent, and punish such offenses;

(2)

consider the extent to which the Federal sentencing guidelines (including its policy statements) adequately address violations of the sections amended by this Act to—

(A)

sufficiently deter and punish such offenses; and

(B)

adequately reflect the enhanced penalties established under this Act;

(3)

maintain reasonable consistency with other relevant directives and sentencing guidelines;

(4)

account for any additional aggravating or mitigating circumstances that might justify exceptions to the generally applicable sentencing ranges;

(5)

consider whether to provide a sentencing enhancement for those convicted of the offenses described in subsection (a), if the conduct involves—

(A)

the online sale of fraudulently obtained or stolen personally identifiable information;

(B)

the sale of fraudulently obtained or stolen personally identifiable information to an individual who is engaged in terrorist activity or aiding other individuals engaged in terrorist activity; or

(C)

the sale of fraudulently obtained or stolen personally identifiable information to finance terrorist activity or other criminal activities;

(6)

make any necessary conforming changes to the Federal sentencing guidelines to ensure that such guidelines (including its policy statements) as described in subsection (a) are sufficiently stringent to deter, and adequately reflect crimes related to fraudulent access to, or misuse of, personally identifiable information; and

(7)

ensure that the Federal sentencing guidelines adequately meet the purposes of sentencing under section 3553(a)(2) of title 18, United States Code.

(c)

Emergency authority to sentencing commission

The United States Sentencing Commission may, as soon as practicable, promulgate amendments under this section in accordance with procedures established in section 21(a) of the Sentencing Act of 1987 (28 U.S.C. 994 note) as though the authority under that Act had not expired.

104.

Effects of identity theft on bankruptcy proceedings

(a)

Definitions

Section 101 of title 11, United States Code, is amended—

(1)

by redesignating paragraph (27B) as paragraph (27D); and

(2)

by inserting after paragraph (27A) the following:

(27)

The term identity theft means a fraud committed or attempted using the personally identifiable information of another person.

(28)

The term identity theft victim means a debtor who, as a result of an identify theft in any consecutive 12-month period during the 3-year period before the date on which a petition is filed under this title, had claims asserted against such debtor in excess of the least of—

(A)

$20,000;

(B)

50 percent of all claims asserted against such debtor; or

(C)

25 percent of the debtor's gross income for such 12-month period.

.

(b)

Prohibition

Section 707(b) of title 11, United States Code, is amended by adding at the end the following:

(8)

No judge, United States trustee (or bankruptcy administrator, if any), trustee, or other party in interest may file a motion under paragraph (2) if the debtor is an identity theft victim.

.

II

Data brokers

201.

Transparency and accuracy of data collection

(a)

In general

Data brokers engaging in interstate commerce are subject to the requirements of this title for any product or service offered to third parties that allows access or use of sensitive personally identifiable information.

(b)

Limitation

Notwithstanding any other provision of this title, this section shall not apply to—

(1)

any product or service offered by a data broker engaging in interstate commerce where such product or service is currently subject to, and in compliance with, access and accuracy protections similar to those under subsections (c) through (f)(e) of this section under the Fair Credit Reporting Act (Public Law 91–508);

(2)

any data broker that is subject to regulation under the Gramm-Leach-Bliley Act (Public Law 106–102);

(3)

any data broker currently subject to and in compliance with the data security requirements for such entities under the Health Insurance Portability and Accountability Act (Public Law 104–191), and its implementing regulations;

(4)

information in a personal electronic record that—

(A)

the data broker has identified as inaccurate, but maintains for the purpose of aiding the data broker in preventing inaccurate information from entering an individual's personal electronic record; and

(B)

is not maintained primarily for the purpose of transmitting or otherwise providing that information, or assessments based on that information, to nonaffiliated third parties; and

(5)

information concerning proprietary methodologies, techniques, scores, or algorithms relating to fraud prevention not normally provided to third parties in the ordinary course of business. ; and

(6)

information that is used for legitimate governmental or fraud prevention purposes that would be compromised by disclosure to the individual.

(c)

Disclosures to individuals

(1)

In general

A data broker shall, upon the request of an individual, disclose to such individual for a reasonable fee all personal electronic records pertaining to that individual maintained specifically for disclosure to third parties that request information on that individual in the ordinary course of business in the databases or systems of the data broker at the time of such request.

(2)

Information on how to correct inaccuracies

The disclosures required under paragraph (1) shall also include guidance to individuals on procedures for correcting inaccuracies.

(d)

Disclosure to individuals of adverse actions taken by third parties

(1)

In general

In addition to any other rights established under this Act, if a person takes any adverse action with respect to any individual that is based, in whole or in part, on any information contained in a personal electronic record that is maintained, updated, or otherwise owned or possessed by a data broker, such person, at no cost to the affected individual, shall provide—

(A)

written or electronic notice of the adverse action to the individual;

(B)

to the individual, in writing or electronically, the name, address, and telephone number of the data broker that furnished the information to the person;

(C)

a copy of the information such person obtained from the data broker; and

(D)

information to the individual on the procedures for correcting any inaccuracies in such information.

(2)

Accepted methods of notice

A person shall be in compliance with the notice requirements under paragraph (1) if such person provides written or electronic notice in the same manner and using the same methods as are required under section 313(1) of this Act.

(e)

Accuracy resolution process

(1)

Information from a public record or licensor

(A)

In general

If an individual notifies a data broker of a dispute as to the completeness or accuracy of information disclosed to such individual under subsection (c) that is obtained from a public record source or a license agreement, such data broker shall determine within 30 days whether the information in its system accurately and completely records the information available from the licensor or public record source.

(B)

Data broker actions

If a data broker determines under subparagraph (A) that the information in its systems does not accurately and completely record the information available from a public record source or licensor, the data broker shall—

(i)

correct any inaccuracies or incompleteness, and provide to such individual written notice of such changes; and

(ii)

provide such individual with the contact information of the public record or licensor.

(2)

Information not from a public record source or licensor

If an individual notifies a data broker of a dispute as to the completeness or accuracy of information not from a public record or licensor that was disclosed to the individual under subsection (c), the data broker shall, within 30 days of receiving notice of such dispute—

(A)

review and consider free of charge any information submitted by such individual that is relevant to the completeness or accuracy of the disputed information; and

(B)

correct any information found to be incomplete or inaccurate and provide notice to such individual of whether and what information was corrected, if any.

(3)

Extension of review period

The 30-day period described in paragraph (1) may be extended for not more than 30 additional days if a data broker receives information from the individual during the initial 30-day period that is relevant to the completeness or accuracy of any disputed information.

(4)

Notice identifying the data furnisher

If the completeness or accuracy of any information not from a public record source or licensor that was disclosed to an individual under subsection (c) is disputed by such individual, the data broker shall provide, upon the request of such individual, the contact information of any data furnisher that provided the disputed information.

(5)

Determination that dispute is frivolous or irrelevant

(A)

In general

Notwithstanding paragraphs (1) through (3), a data broker may decline to investigate or terminate a review of information disputed by an individual under those paragraphs if the data broker reasonably determines that the dispute by the individual is frivolous or intended to perpetrate fraud.

(B)

Notice

A data broker shall notify an individual of a determination under subparagraph (A) within a reasonable time by any means available to such data broker.

202.

Enforcement

(a)

Civil penalties

(1)

Penalties

Any data broker that violates the provisions of section 201 shall be subject to civil penalties of not more than $1,000 per violation per day while such violations persist, up to a maximum of $250,000 per violation.

(2)

Intentional or willful violation

A data broker that intentionally or willfully violates the provisions of section 201 shall be subject to additional penalties in the amount of $1,000 per violation per day, to a maximum of an additional $250,000 per violation, while such violations persist.

(3)

Equitable relief

A data broker engaged in interstate commerce that violates this section may be enjoined from further violations by a court of competent jurisdiction.

(4)

Other rights and remedies

The rights and remedies available under this subsection are cumulative and shall not affect any other rights and remedies available under law.

(b)

Federal trade commission authority

Any data broker shall have the provisions of this title enforced against it by the Federal Trade Commission.

(c)

State enforcement

(1)

Civil actions

In any case in which the attorney general of a State or any State or local law enforcement agency authorized by the State attorney general or by State statute to prosecute violations of consumer protection law, has reason to believe that an interest of the residents of that State has been or is threatened or adversely affected by the acts or practices of a data broker that violate this title, the State may bring a civil action on behalf of the residents of that State in a district court of the United States of appropriate jurisdiction, or any other court of competent jurisdiction, to—

(A)

enjoin that act or practice;

(B)

enforce compliance with this title; or

(C)

obtain civil penalties of not more than $1,000 per violation per day while such violations persist, up to a maximum of $250,000 per violation.

(2)

Notice

(A)

In general

Before filing an action under this subsection, the attorney general of the State involved shall provide to the Federal Trade Commission—

(i)

a written notice of that action; and

(ii)

a copy of the complaint for that action.

(B)

Exception

Subparagraph (A) shall not apply with respect to the filing of an action by an attorney general of a State under this subsection, if the attorney general of a State determines that it is not feasible to provide the notice described in subparagraph (A) before the filing of the action.

(C)

Notification when practicable

In an action described under subparagraph (B), the attorney general of a State shall provide the written notice and the copy of the complaint to the Federal Trade Commission as soon after the filing of the complaint as practicable.

(3)

Federal trade commission authority

Upon receiving notice under paragraph (2), the Federal Trade Commission shall have the right to—

(A)

move to stay the action, pending the final disposition of a pending Federal proceeding or action as described in paragraph (4);

(B)

intervene in an action brought under paragraph (1); and

(C)

file petitions for appeal.

(4)

Pending proceedings

If the Federal Trade Commission has instituted a proceeding or civil action for a violation of this title, no attorney general of a State may, during the pendency of such proceeding or civil action, bring an action under this subsection against any defendant named in such civil action for any violation that is alleged in that civil action.

(5)

Rule of construction

For purposes of bringing any civil action under paragraph (1), nothing in this title shall be construed to prevent an attorney general of a State from exercising the powers conferred on the attorney general by the laws of that State to—

(A)

conduct investigations;

(B)

administer oaths and affirmations; or

(C)

compel the attendance of witnesses or the production of documentary and other evidence.

(6)

Venue; service of process

(A)

Venue

Any action brought under this subsection may be brought in the district court of the United States that meets applicable requirements relating to venue under section 1391 of title 28, United States Code.

(B)

Service of process

In an action brought under this subsection, process may be served in any district in which the defendant—

(i)

is an inhabitant; or

(ii)

may be found.

(d)

No private cause of action

Nothing in this title establishes a private cause of action against a data broker for violation of any provision of this title.

203.

Relation to State laws

No requirement or prohibition may be imposed under the laws of any State with respect to any subject matter regulated under section 201, relating to individual access to, and correction of, personal electronic records held by data brokers.

204.

Effective date

This title shall take effect 180 days after the date of enactment of this Act.

III

Privacy and security of personally identifiable information

A

A data privacy and security program

301.

Purpose and applicability of data privacy and security program

(a)

Purpose

The purpose of this subtitle is to ensure standards for developing and implementing administrative, technical, and physical safeguards to protect the security of sensitive personally identifiable information.

(b)

In general

A business entity engaging in interstate commerce that involves collecting, accessing, transmitting, using, storing, or disposing of sensitive personally identifiable information in electronic or digital form on 10,000 or more United States persons is subject to the requirements for a data privacy and security program under section 302 for protecting sensitive personally identifiable information.

(c)

Limitations

Notwithstanding any other obligation under this subtitle, this subtitle does not apply to:

(1)

Financial institutions

Financial institutions—

(A)

subject to the data security requirements and implementing regulations under the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq.); and

(B)

subject to—

(i)

examinations for compliance with the requirements of this Act by a Federal Functional Regulator or State Insurance Authority (as those terms are defined in section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809)); or

(ii)

compliance with part 314 of title 16, Code of Federal Regulations.

(2)

HIPPA regulated entities

(A)

Covered entities

Covered entities subject to the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. 1301 et seq.), including the data security requirements and implementing regulations of that Act.

(B)

Business entities

A business entity shall be deemed in compliance with the privacy and security program requirements under section 302 if the business entity is acting as a business associate as that term is defined in the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. 1301 et seq.) and is in compliance with requirements imposed under that Act and its implementing regulations.

(3)

Public records

Public records not otherwise subject to a confidentiality or nondisclosure requirement, or information obtained from a news report or periodical.

(d)

Safe harbors

(1)

In general

A business entity shall be deemed in compliance with the privacy and security program requirements under section 302 if the business entity complies with or provides protection equal to industry standards or widely accepted as an effective industry practice, as identified by the Federal Trade Commission, that are applicable to the type of sensitive personally identifiable information involved in the ordinary course of business of such business entity.

(2)

Limitation

Nothing in this subsection shall be construed to permit, and nothing does permit, the Federal Trade Commission to issue regulations requiring, or according greater legal status to, the implementation of or application of a specific technology or technological specifications for meeting the requirements of this title.

302.

Requirements for a personal data privacy and security program

(a)

Personal data privacy and security program

A business entity subject to this subtitle shall comply with the following safeguards and any other administrative, technical, or physical safeguards identified by the Federal Trade Commission in a rulemaking process pursuant to section 553 of title 5, United States Code, for the protection of sensitive personally identifiable information:

(1)

Scope

A business entity shall implement a comprehensive personal data privacy and security program that includes administrative, technical, and physical safeguards appropriate to the size and complexity of the business entity and the nature and scope of its activities.

(2)

Design

The personal data privacy and security program shall be designed to—

(A)

ensure the privacy, security, and confidentiality of sensitive personally identifying information;

(B)

protect against any anticipated vulnerabilities to the privacy, security, or integrity of sensitive personally identifying information; and

(C)

protect against unauthorized access to use of sensitive personally identifying information that could result in substantial harm or inconvenience to any individualcreate a significant risk of harm or fraud to any individual.

(3)

Risk assessment

A business entity shall—

(A)

identify reasonably foreseeable internal and external vulnerabilities that could result in unauthorized access, disclosure, use, or alteration of sensitive personally identifiable information or systems containing sensitive personally identifiable information;

(B)

assess the likelihood of and potential damage from unauthorized access, disclosure, use, or alteration of sensitive personally identifiable information;

(C)

assess the sufficiency of its policies, technologies, and safeguards in place to control and minimize risks from unauthorized access, disclosure, use, or alteration of sensitive personally identifiable information; and

(D)

assess the vulnerability of sensitive personally identifiable information during destruction and disposal of such information, including through the disposal or retirement of hardware.

(4)

Risk management and control

Each business entity shall—

(A)

design its personal data privacy and security program to control the risks identified under paragraph (3); and

(B)

adopt measures commensurate with the sensitivity of the data as well as the size, complexity, and scope of the activities of the business entity that—

(i)

control access to systems and facilities containing sensitive personally identifiable information, including controls to authenticate and permit access only to authorized individuals;

(ii)

detect actual and attempted fraudulent, unlawful, or unauthorized access, disclosure, use, or alteration of sensitive personally identifiable information, including by employees and other individuals otherwise authorized to have access;

(iii)

protect sensitive personally identifiable information during use, transmission, storage, and disposal by encryption, redaction, or access controls that are widely accepted as an effective industry practice or industry standard, or other reasonable means (including as directed for disposal of records under section 628 of the Fair Credit Reporting Act (15 U.S.C. 1681w) and the implementing regulations of such Act as set forth in section 682 of title 16, Code of Federal Regulations);

(iv)

ensure that sensitive personally identifiable information is properly destroyed and disposed of, including during the destruction of computers, diskettes, and other electronic media that contain sensitive personally identifiable information;

(v)

trace access to records containing sensitive personally identifiable information so that the business entity can determine who accessed or acquired such sensitive personally identifiable information pertaining to specific individuals; and

(vi)

ensure that no third party or customer of the business entity is authorized to access or acquire sensitive personally identifiable information without the business entity first performing sufficient due diligence to ascertain, with reasonable certainty, that such information is being sought for a valid legal purpose.

(b)

Training

Each business entity subject to this subtitle shall take steps to ensure employee training and supervision for implementation of the data security program of the business entity.

(c)

Vulnerability testing

(1)

In general

Each business entity subject to this subtitle shall take steps to ensure regular testing of key controls, systems, and procedures of the personal data privacy and security program to detect, prevent, and respond to attacks or intrusions, or other system failures.

(2)

Frequency

The frequency and nature of the tests required under paragraph (1) shall be determined by the risk assessment of the business entity under subsection (a)(3).

(d)

Relationship to service providers

In the event a business entity subject to this subtitle engages service providers not subject to this subtitle, such business entity shall—

(1)

exercise appropriate due diligence in selecting those service providers for responsibilities related to sensitive personally identifiable information, and take reasonable steps to select and retain service providers that are capable of maintaining appropriate safeguards for the security, privacy, and integrity of the sensitive personally identifiable information at issue; and

(2)

require those service providers by contract to implement and maintain appropriate measures designed to meet the objectives and requirements governing entities subject to section 301, this section, and subtitle B.

(e)

Periodic assessment and personal data privacy and security modernization

Each business entity subject to this subtitle shall on a regular basis monitor, evaluate, and adjust, as appropriate its data privacy and security program in light of any relevant changes in—

(1)

technology;

(2)

the sensitivity of personally identifiable information;

(3)

internal or external threats to personally identifiable information; and

(4)

the changing business arrangements of the business entity, such as—

(A)

mergers and acquisitions;

(B)

alliances and joint ventures;

(C)

outsourcing arrangements;

(D)

bankruptcy; and

(E)

changes to sensitive personally identifiable information systems.

(f)

Implementation timeline

Not later than 1 year after the date of enactment of this Act, a business entity subject to the provisions of this subtitle shall implement a data privacy and security program pursuant to this subtitle.

303.

Enforcement

(a)

Civil penalties

(1)

In general

Any business entity that violates the provisions of sections 301 or 302 shall be subject to civil penalties of not more than $5,000 per violation per day while such a violation exists, with a maximum of $500,000 per violation.

(2)

Intentional or willful violation

A business entity that intentionally or willfully violates the provisions of sections 301 or 302 shall be subject to additional penalties in the amount of $5,000 per violation per day while such a violation exists, with a maximum of an additional $500,000 per violation.

(3)

Equitable relief

A business entity engaged in interstate commerce that violates this section may be enjoined from further violations by a court of competent jurisdiction.

(4)

Other rights and remedies

The rights and remedies available under this section are cumulative and shall not affect any other rights and remedies available under law.

(b)

Federal trade commission authority

Any data brokerbusiness entity shall have the provisions of this subtitle enforced against it by the Federal Trade Commission.

(c)

State enforcement

(1)

Civil actions

In any case in which the attorney general of a State or any State or local law enforcement agency authorized by the State attorney general or by State statute to prosecute violations of consumer protection law, has reason to believe that an interest of the residents of that State has been or is threatened or adversely affected by the acts or practices of a data brokerbusiness entity that violate this subtitle, the State may bring a civil action on behalf of the residents of that State in a district court of the United States of appropriate jurisdiction, or any other court of competent jurisdiction, to—

(A)

enjoin that act or practice;

(B)

enforce compliance with this subtitle; or

(C)

obtain civil penalties of not more than $5,000 per violation per day while such violations persist, up to a maximum of $500,000 per violation.

(2)

Notice

(A)

In general

Before filing an action under this subsection, the attorney general of the State involved shall provide to the Federal Trade Commission—

(i)

a written notice of that action; and

(ii)

a copy of the complaint for that action.

(B)

Exception

Subparagraph (A) shall not apply with respect to the filing of an action by an attorney general of a State under this subsection, if the attorney general of a State determines that it is not feasible to provide the notice described in this subparagraph before the filing of the action.

(C)

Notification when practicable

In an action described under subparagraph (B), the attorney general of a State shall provide the written notice and the copy of the complaint to the Federal Trade Commission as soon after the filing of the complaint as practicable.

(3)

Federal trade commission authority

Upon receiving notice under paragraph (2), the Federal Trade Commission shall have the right to—

(A)

move to stay the action, pending the final disposition of a pending Federal proceeding or action as described in paragraph (4);

(B)

intervene in an action brought under paragraph (1); and

(C)

file petitions for appeal.

(4)

Pending proceedings

If the Federal Trade Commission has instituted a proceeding or action for a violation of this subtitle or any regulations thereunder, no attorney general of a State may, during the pendency of such proceeding or action, bring an action under this subsection against any defendant named in such criminal proceeding or civil action for any violation that is alleged in that proceeding or action.

(5)

Rule of construction

For purposes of bringing any civil action under paragraph (1) nothing in this subtitle shall be construed to prevent an attorney general of a State from exercising the powers conferred on the attorney general by the laws of that State to—

(A)

conduct investigations;

(B)

administer oaths and affirmations; or

(C)

compel the attendance of witnesses or the production of documentary and other evidence.

(6)

Venue; service of process

(A)

Venue

Any action brought under this subsection may be brought in the district court of the United States that meets applicable requirements relating to venue under section 1391 of title 28, United States Code.

(B)

Service of process

In an action brought under this subsection, process may be served in any district in which the defendant—

(i)

is an inhabitant; or

(ii)

may be found.

(d)

No private cause of action

Nothing in this subtitle establishes a private cause of action against a business entity for violation of any provision of this subtitle.

304.

Relation to other laws

(a)

In general

No State may require any business entity subject to this subtitle to comply with any requirements with respect to administrative, technical, and physical safeguards for the protection of sensitive personally identifying information.

(b)

Limitations

Nothing in this subtitle shall be construed to modify, limit, or supersede the operation of the Gramm-Leach-Bliley Act or its implementing regulations, including those adopted or enforced by States.

B

Security breach notification

311.

Notice to individuals

(a)

In general

Any agency, or business entity engaged in interstate commerce, that uses, accesses, transmits, stores, disposes of or collects sensitive personally identifiable information shall, following the discovery of a security breach of such information, notify any resident of the United States whose sensitive personally identifiable information has been, or is reasonably believed to have been, accessed, or acquired.

(b)

Obligation of owner or licensee

(1)

Notice to owner or licensee

Any agency, or business entity engaged in interstate commerce, that uses, accesses, transmits, stores, disposes of, or collects sensitive personally identifiable information that the agency or business entity does not own or license shall notify the owner or licensee of the information following the discovery of a security breach involving such information.

(2)

Notice by owner, licensee or other designated third party

Nothing in this subtitle shall prevent or abrogate an agreement between an agency or business entity required to give notice under this section and a designated third party, including an owner or licensee of the sensitive personally identifiable information subject to the security breach, to provide the notifications required under subsection (a).

(3)

Business entity relieved from giving notice

A business entity obligated to give notice under subsection (a) shall be relieved of such obligation if an owner or licensee of the sensitive personally identifiable information subject to the security breach, or other designated third party, provides such notification.

(c)

Timeliness of notification

(1)

In general

All notifications required under this section shall be made without unreasonable delay following the discovery by the agency or business entity of a security breach.

(2)

Reasonable delay

Reasonable delay under this subsection may include any time necessary to determine the scope of the security breach, prevent further disclosures, and restore the reasonable integrity of the data system and provide notice to law enforcement when required.

(3)

Burden of proof

The agency, business entity, owner, or licensee required to provide notification under this section shall have the burden of demonstrating that all notifications were made as required under this subtitle, including evidence demonstrating the reasons for any delay.

(d)

Delay of notification authorized for law enforcement purposes

(1)

In general

If a Federal law enforcement agency determines that the notification required under this section would impede a criminal investigation, such notification shall be delayed upon written notice from such Federal law enforcement agency to the agency or business entity that experienced the breach.

(2)

Extended delay of notification

If the notification required under subsection (a) is delayed pursuant to paragraph (1), an agency or business entity shall give notice 30 days after the day such law enforcement delay was invoked unless a Federal law enforcement agency provides written notification that further delay is necessary.

(3)

Law enforcement immunity

No cause of action shall lie in any court against any law enforcement agency for acts relating to the delay of notification for law enforcement purposes under this subtitle.

312.

Exemptions

(a)

Exemption for national security and law enforcement

(1)

In general

Section 311 shall not apply to an agency or business entity if the agency or business entity certifies, in writing, that notification of the security breach as required by section 311 reasonably could be expected to—

(A)

cause damage to the national security; or

(B)

hinder a law enforcement investigation or the ability of the agency to conduct law enforcement investigations.

(2)

Limits on certifications

An agency or business entity may not execute a certification under paragraph (1) to—

(A)

conceal violations of law, inefficiency, or administrative error;

(B)

prevent embarrassment to a business entity, organization, or agency; or

(C)

restrain competition.

(3)

Notice

In every case in which an agency or business agency issues a certification under paragraph (1), the certification, accompanied by a description of the factual basis for the certification, shall be immediately provided to the United States Secret Service.

(4)

Secret service review of certifications

(A)

In general

The United States Secret Service may review a certification provided by an agency under paragraph (3), and shall review a certification provided by a business entity under paragraph (3), to determine whether an exemption under paragraph (1) is merited. Such review shall be completed not later than 10 business days after the date of receipt of the certification, except as provided in paragraph (5)(C).

(B)

Notice

Upon completing a review under subparagraph (A) the United States Secret Service shall immediately notify the agency or business entity, in writing, of its determination of whether an exemption under paragraph (1) is merited.

(C)

Exemption

The exemption under paragraph (1) shall not apply if the United States Secret Service determines under this paragraph that the exemption is not merited.

(5)

Additional authority of the secret service

(A)

In general

In determining under paragraph (4) whether an exemption under paragraph (1) is merited, the United States Secret Service may request additional information from the agency or business entity regarding the basis for the claimed exemption, if such additional information is necessary to determine whether the exemption is merited.

(B)

Required compliance

Any agency or business entity that receives a request for additional information under subparagraph (A) shall cooperate with any such request.

(C)

Timing

If the United States Secret Service requests additional information under subparagraph (A), the United States Secret Service shall notify the agency or business entity not later than 10 business days after the date of receipt of the additional information whether an exemption under paragraph (1) is merited.

(b)

Safe harbor

An agency or business entity will be exempt from the notice requirements under section 311, if—

(1)

a risk assessment concludes that—

(A)

there is no significant risk that a security breach has resulted in, or will result in, harm to the individuals whose sensitive personally identifiable information was subject to the security breach, with the encryption of such information establishing a presumption that no significant risk exists; or

(B)

there is no significant risk that a security breach has resulted in, or will result in, harm to the individuals whose sensitive personally identifiable information was subject to the security breach, with the rendering of such sensitive personally identifiable information indecipherable through the use of best practices or methods, such as redaction, access controls, or other such mechanisms, which are widely accepted as an effective industry practice, or an effective industry standard, establishing a presumption that no significant risk exists;

(2)

without unreasonable delay, but not later than 45 days after the discovery of a security breach, unless extended by the United States Secret Service, the agency or business entity notifies the United States Secret Service, in writing, of—

(A)

the results of the risk assessment; and

(B)

its decision to invoke the risk assessment exemption; and

(3)

the United States Secret Service does not indicate, in writing, within 10 business days from receipt of the decision, that notice should be given.

(c)

Financial fraud prevention exemption

(1)

In general

A business entity will be exempt from the notice requirement under section 311 if the business entity utilizes or participates in a security program that—

(A)

is designed to block the use of the sensitive personally identifiable information to initiate unauthorized financial transactions before they are charged to the account of the individual; and

(B)

provides for notice to affected individuals after a security breach that has resulted in fraud or unauthorized transactions.

(2)

Limitation

The exemption by this subsection does not apply if

(A)

the information subject to the security breach includes sensitive personally identifiable information, other than a credit card or credit card security code, of any type of the sensitive personally identifiable information identified in section 3; or

(B)

the security breach includes both the individual's credit card number and the individual’s first and last name.

313.

Methods of notice

An agency or business entity shall be in compliance with section 311 if it provides both:

(1)

Individual notice

Notice to individuals by 1 of the following means:

(A)

Written notification to the last known home mailing address of the individual in the records of the agency or business entity.

(B)

Telephone notice to the individual personally.

(C)

E-mail notice, if the individual has consented to receive such notice and the notice is consistent with the provisions permitting electronic transmission of notices under section 101 of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7001).

(2)

Media notice

Notice to major media outlets serving a State or jurisdiction, if the number of residents of such State whose sensitive personally identifiable information was, or is reasonably believed to have been, accessed or acquired by an unauthorized person exceeds 5,000.

314.

Content of notification

(a)

In general

Regardless of the method by which notice is provided to individuals under section 313, such notice shall include, to the extent possible—

(1)

a description of the categories of sensitive personally identifiable information that was, or is reasonably believed to have been, accessed or acquired by an unauthorized person;

(2)

a toll-free number—

(A)

that the individual may use to contact the agency or business entity, or the agent of the agency or business entity; and

(B)

from which the individual may learn what types of sensitive personally identifiable information the agency or business entity maintained about that individual; and

(3)

the toll-free contact telephone numbers and addresses for the major credit reporting agencies.

(b)

Additional content

Notwithstanding section 319, a State may require that a notice under subsection (a) shall also include information regarding victim protection assistance provided for by that State.

315.

Coordination of notification with credit reporting agencies

If an agency or business entity is required to provide notification to more than 5,000 individuals under section 311(a), the agency or business entity shall also notify all consumer reporting agencies that compile and maintain files on consumers on a nationwide basis (as defined in section 603(p) of the Fair Credit Reporting Act (15 U.S.C. 1681a(p)) of the timing and distribution of the notices. Such notice shall be given to the consumer credit reporting agencies without unreasonable delay and, if it will not delay notice to the affected individuals, prior to the distribution of notices to the affected individuals.

316.

Notice to law enforcement

(a)

Secret service

Any business entity or agency shall notify the United States Secret Service of the fact that a security breach has occurred if—

(1)

the number of individuals whose sensitive personally identifying information was, or is reasonably believed to have been accessed or acquired by an unauthorized person exceeds 10,000;

(2)

the security breach involves a database, networked or integrated databases, or other data system containing the sensitive personally identifiable information of more than 1,000,000 individuals nationwide;

(3)

the security breach involves databases owned by the Federal Government; or

(4)

the security breach involves primarily sensitive personally identifiable information of individuals known to the agency or business entity to be employees and contractors of the Federal Government involved in national security or law enforcement.

(b)

Notice to other law enforcement agencies

The United States Secret Service shall be responsible for notifying—

(1)

the Federal Bureau of Investigation, if the security breach involves espionage, foreign counterintelligence, information protected against unauthorized disclosure for reasons of national defense or foreign relations, or Restricted Data (as that term is defined in section 11y of the Atomic Energy Act of 1954 (42 U.S.C. 2014(y)), except for offenses affecting the duties of the United States Secret Service under section 3056(a) of title 18, United States Code;

(2)

the United States Postal Inspection Service, if the security breach involves mail fraud; and

(3)

the attorney general of each State affected by the security breach.

(c)

Timing of notices

The notices required under this section shall be delivered as follows:

(1)

Notice under subsection (a) shall be delivered as promptly as possible, but not later than 14 days after discovery of the events requiring notice.

(2)

Notice under subsection (b) shall be delivered not later than 14 days after the Service receives notice of a security breach from an agency or business entity.

317.

Enforcement

(a)

Civil actions by the Attorney General

The Attorney General may bring a civil action in the appropriate United States district court against any business entity that engages in conduct constituting a violation of this subtitle and, upon proof of such conduct by a preponderance of the evidence, such business entity shall be subject to a civil penalty of not more than $1,000 per day per individual whose sensitive personally identifiable information was, or is reasonably believed to have been, accessed or acquired by an unauthorized person, up to a maximum of $1,000,000 per violation, unless such conduct is found to be willful or intentional.

(b)

Injunctive actions by the Attorney General

(1)

In general

If it appears that a business entity has engaged, or is engaged, in any act or practice constituting a violation of this subtitle, the Attorney General may petition an appropriate district court of the United States for an order—

(A)

enjoining such act or practice; or

(B)

enforcing compliance with this subtitle.

(2)

Issuance of order

A court may issue an order under paragraph (1), if the court finds that the conduct in question constitutes a violation of this subtitle.

(c)

Other rights and remedies

The rights and remedies available under this subtitle are cumulative and shall not affect any other rights and remedies available under law.

(d)

Fraud alert

Section 605A(b)(1) of the Fair Credit Reporting Act (15 U.S.C. 1681c–1(b)(1)) is amended by inserting , or evidence that the consumer has received notice that the consumer's financial information has or may have been compromised, after identity theft report.

318.

Enforcement by State attorneys general

(a)

In general

(1)

Civil actions

In any case in which the attorney general of a State or any State or local law enforcement agency authorized by the State attorney general or by State statute to prosecute violations of consumer protection law, has reason to believe that an interest of the residents of that State has been or is threatened or adversely affected by the engagement of a business entity in a practice that is prohibited under this subtitle, the State or the State or local law enforcement agency on behalf of the residents of the agency’s jurisdiction, may bring a civil action on behalf of the residents of the State or jurisdiction in a district court of the United States of appropriate jurisdiction or any other court of competent jurisdiction, including a State court, to—

(A)

enjoin that practice;

(B)

enforce compliance with this subtitle; or

(C)

civil penalties of not more than $1,000 per day per individual whose sensitive personally identifiable information was, or is reasonably believed to have been, accessed or acquired by an unauthorized person, up to a maximum of $1,000,000 per violation, unless such conduct is found to be willful or intentional.

(2)

Notice

(A)

In general

Before filing an action under paragraph (1), the attorney general of the State involved shall provide to the Attorney General of the United States—

(i)

written notice of the action; and

(ii)

a copy of the complaint for the action.

(B)

Exemption

(i)

In general

Subparagraph (A) shall not apply with respect to the filing of an action by an attorney general of a State under this subtitle, if the State attorney general determines that it is not feasible to provide the notice described in such subparagraph before the filing of the action.

(ii)

Notification

In an action described in clause (i), the attorney general of a State shall provide notice and a copy of the complaint to the Attorney General at the time the State attorney general files the action.

(b)

Federal proceedings

Upon receiving notice under subsection (a)(2), the Attorney General shall have the right to—

(1)

move to stay the action, pending the final disposition of a pending Federal proceeding or action;

(2)

initiate an action in the appropriate United States district court under section 317 and move to consolidate all pending actions, including State actions, in such court;

(3)

intervene in an action brought under subsection (a)(2); and

(4)

file petitions for appeal.

(c)

Pending proceedings

If the Attorney General has instituted a proceeding or action for a violation of this subtitle or any regulations thereunder, no attorney general of a State may, during the pendency of such proceeding or action, bring an action under this subtitle against any defendant named in such criminal proceeding or civil action for any violation that is alleged in that proceeding or action.

(d)

Construction

For purposes of bringing any civil action under subsection (a), nothing in this subtitle regarding notification shall be construed to prevent an attorney general of a State from exercising the powers conferred on such attorney general by the laws of that State to—

(1)

conduct investigations;

(2)

administer oaths or affirmations; or

(3)

compel the attendance of witnesses or the production of documentary and other evidence.

(e)

Venue; service of process

(1)

Venue

Any action brought under subsection (a) may be brought in—

(A)

the district court of the United States that meets applicable requirements relating to venue under section 1391 of title 28, United States Code; or

(B)

another court of competent jurisdiction.

(2)

Service of process

In an action brought under subsection (a), process may be served in any district in which the defendant—

(A)

is an inhabitant; or

(B)

may be found.

(f)

No private cause of action

Nothing in this subtitle establishes a private cause of action against a business entity for violation of any provision of this subtitle.

319.

Effect on Federal and State law

The provisions of this subtitle shall supersede any other provision of Federal law or any provision of law of any State relating to notification by a business entity engaged in interstate commerce or an agency of a security breach, except as provided in section 314(b).

320.

Authorization of appropriations

There are authorized to be appropriated such sums as may be necessary to cover the costs incurred by the United States Secret Service to carry out investigations and risk assessments of security breaches as required under this subtitle.

321.

Reporting on risk assessment exemptions

The United States Secret Service shall report to Congress not later than 18 months after the date of enactment of this Act, and upon the request by Congress thereafter, on—

(1)

the number and nature of the security breaches described in the notices filed by those business entities invoking the risk assessment exemption under section 312(b) and the response of the United States Secret Service to such notices; and

(2)

the number and nature of security breaches subject to the national security and law enforcement exemptions under section 312(a), provided that such report may not disclose the contents of any risk assessment provided to the United States Secret Service pursuant to this subtitle.

322.

Effective date

This subtitle shall take effect on the expiration of the date which is 90 days after the date of enactment of this Act.

C

Office of Federal Identity Protection

331.

Office of Federal Identity Protection

(a)

Establishment

There is established in the Federal Trade Commission an Office of Federal Identity Protection.

(b)

Duties

The Office of Federal Identity Protection shall be responsible for assisting each consumer with—

(1)

addressing the consequences of the theft or compromise of the personally identifiable information of that consumer;

(2)

accessing remedies provided under Federal law and providing information about remedies available under State law;

(3)

restoring the accuracy of—

(A)

the personally identifiable information of that consumer; and

(B)

records containing the personally identifiable information of that consumer that were stolen or compromised; and

(4)

retrieving any stolen or compromised personally identifiable information of that consumer.

(c)

Activities

In order to perform the duties required under subsection (b), the Office of Federal Identity Protection shall carry out the following activities:

(1)

Establish a website, easily and conspicuously accessible from ftc.gov, dedicated to assisting consumers with the retrieval of the stolen or compromised personally identifiable information of the consumer.

(2)

Maintain a toll-free phone number to help answer questions concerning identity theft from consumers.

(3)

Establish online and offline consumer-service teams to assist consumers seeking the retrieval of the personally identifiable information of the consumer.

(4)

Provide guidance and information to service organizations or pro bono legal services programs that offer individualized assistance or counseling to victims of identity theft.

(5)

Establish a reasonable standard for determining when an individual becomes a victim of identity theft.

(6)

Issue certifications to individuals who, under the standard described in paragraph (5), are identity theft victims.

(7)

Permit an individual to use the Office of Federal Identity Protection certification—

(A)

in all Federal, State, and local jurisdictions, in lieu of a police report or any other document required by State or local law, as a prerequisite to accessing business records of transactions done by someone claiming to be the individual; and

(B)

to establish the eligibility of that individual for—

(i)

the fraud alert protections under section 605A of the Fair Credit Reporting Act (15 U.S.C. 1681c–1); and

(ii)

the reporting protections under section 605B(a) of the Fair Credit Reporting Act (15 U.S.C. 1681c–2(a)).

(8)

Coordinate, as the Office determines necessary, with the designated Chief Privacy Officer of each Federal agency, or any other designated senior official in such agency in charge of privacy, in order to meet the duties of assisting consumers as required under subsection (b).

(9)

In addition to the requirements in paragraphs (1) through (7), the Federal Trade Commission shall promulgate regulations that enable the Office of Federal Identity Protection to help consumers restore their stolen or otherwise compromised personally identifiable information quickly and inexpensively.

(d)

Authorization of appropriations

There are authorized to be appropriated for the Office of Federal Identity Protection such sums as are necessary for fiscal year 2010 and each of the 4 succeeding fiscal years.

IV

Government access to and use of commercial data

401.

General services administration review of contracts

(a)

In general

In considering contract awards totaling more than $500,000 and entered into after the date of enactment of this Act with data brokers, the Administrator of the General Services Administration shall evaluate—

(1)

the data privacy and security program of a data broker to ensure the privacy and security of data containing personally identifiable information, including whether such program adequately addresses privacy and security threats created by malicious software or code, or the use of peer-to-peer file sharing software;

(2)

the compliance of a data broker with such program;

(3)

the extent to which the databases and systems containing personally identifiable information of a data broker have been compromised by security breaches; and

(4)

the response by a data broker to such breaches, including the efforts by such data broker to mitigate the impact of such security breaches.

(b)

Compliance safe harbor

The data privacy and security program of a data broker shall be deemed sufficient for the purposes of subsection (a), if the data broker complies with or provides protection equal to industry standards, as identified by the Federal Trade Commission, that are applicable to the type of personally identifiable information involved in the ordinary course of business of such data broker.

(c)

Penalties

In awarding contracts with data brokers for products or services related to access, use, compilation, distribution, processing, analyzing, or evaluating personally identifiable information, the Administrator of the General Services Administration shall—

(1)

include monetary or other penalties—

(A)

for failure to comply with subtitles A and B of title III; or

(B)

if a contractor knows or has reason to know that the personally identifiable information being provided is inaccurate, and provides such inaccurate information; and

(2)

require a data broker that engages service providers not subject to subtitle A of title III for responsibilities related to sensitive personally identifiable information to—

(A)

exercise appropriate due diligence in selecting those service providers for responsibilities related to personally identifiable information;

(B)

take reasonable steps to select and retain service providers that are capable of maintaining appropriate safeguards for the security, privacy, and integrity of the personally identifiable information at issue; and

(C)

require such service providers, by contract, to implement and maintain appropriate measures designed to meet the objectives and requirements in title III.

(d)

Limitation

The penalties under subsection (c) shall not apply to a data broker providing information that is accurately and completely recorded from a public record source or licensor.

402.

Requirement to audit information security practices of contractors and third party business entities

Section 3544(b) of title 44, United States Code, is amended—

(1)

in paragraph (7)(C)(iii), by striking and after the semicolon;

(2)

in paragraph (8), by striking the period and inserting ; and; and

(3)

by adding at the end the following:

(9)

procedures for evaluating and auditing the information security practices of contractors or third party business entities supporting the information systems or operations of the agency involving personally identifiable information (as that term is defined in section 3 of the Personal Data Privacy and Security Act of 2009) and ensuring remedial action to address any significant deficiencies.

.

403.

Privacy impact assessment of government use of commercial information services containing personally identifiable information

(a)

In general

Section 208(b)(1) of the E-Government Act of 2002 (44 U.S.C. 3501 note) is amended—

(1)

in subparagraph (A)(i), by striking or; and

(2)

in subparagraph (A)(ii), by striking the period and inserting ; or; and

(3)

by inserting after clause (ii) the following:

(iii)

purchasing or subscribing for a fee to personally identifiable information from a data broker (as such terms are defined in section 3 of the Personal Data Privacy and Security Act of 2009).

.

(b)

Limitation

Notwithstanding any other provision of law, commencing 1 year after the date of enactment of this Act, no Federal agency may enter into a contract with a data broker to access for a fee any database consisting primarily of personally identifiable information concerning United States persons (other than news reporting or telephone directories) unless the head of such department or agency—

(1)

completes a privacy impact assessment under section 208 of the E-Government Act of 2002 (44 U.S.C. 3501 note), which shall subject to the provision in that Act pertaining to sensitive information, include a description of—

(A)

such database;

(B)

the name of the data broker from whom it is obtained; and

(C)

the amount of the contract for use;

(2)

adopts regulations that specify—

(A)

the personnel permitted to access, analyze, or otherwise use such databases;

(B)

standards governing the access, analysis, or use of such databases;

(C)

any standards used to ensure that the personally identifiable information accessed, analyzed, or used is the minimum necessary to accomplish the intended legitimate purpose of the Federal agency;

(D)

standards limiting the retention and redisclosure of personally identifiable information obtained from such databases;

(E)

procedures ensuring that such data meet standards of accuracy, relevance, completeness, and timeliness;

(F)

the auditing and security measures to protect against unauthorized access, analysis, use, or modification of data in such databases;

(G)

applicable mechanisms by which individuals may secure timely redress for any adverse consequences wrongly incurred due to the access, analysis, or use of such databases;

(H)

mechanisms, if any, for the enforcement and independent oversight of existing or planned procedures, policies, or guidelines; and

(I)

an outline of enforcement mechanisms for accountability to protect individuals and the public against unlawful or illegitimate access or use of databases; and

(3)

incorporates into the contract or other agreement totaling more than $500,000, provisions—

(A)

providing for penalties—

(i)

for failure to comply with title III of this Act; or

(ii)

if the entity knows or has reason to know that the personally identifiable information being provided to the Federal department or agency is inaccurate, and provides such inaccurate information; and

(B)

requiring a data broker that engages service providers not subject to subtitle A of title III for responsibilities related to sensitive personally identifiable information to—

(i)

exercise appropriate due diligence in selecting those service providers for responsibilities related to personally identifiable information;

(ii)

take reasonable steps to select and retain service providers that are capable of maintaining appropriate safeguards for the security, privacy, and integrity of the personally identifiable information at issue; and

(iii)

require such service providers, by contract, to implement and maintain appropriate measures designed to meet the objectives and requirements in title III.

(c)

Limitation on penalties

The penalties under subsection (b)(3)(A) shall not apply to a data broker providing information that is accurately and completely recorded from a public record source.

(d)

Study of government use

(1)

Scope of study

Not later than 180 days after the date of enactment of this Act, the Comptroller General of the United States shall conduct a study and audit and prepare a report on Federal agency actions to address the recommendations in the Government Accountability Office's April 2006 report on agency adherence to key privacy principles in using data brokers or commercial databases containing personally identifiable information.

(2)

Report

A copy of the report required under paragraph (1) shall be submitted to Congress.

404.

Implementation of chief privacy officer requirements

(a)

Designation of the chief privacy officer

Pursuant to the requirements under section 522 of the Transportation, Treasury, Independent Agencies, and General Government Appropriations Act, 2005 (division H of Public Law 108–447; 118 Stat. 3199) that each agency designate a Chief Privacy Officer, the Department of Justice shall implement such requirements by designating a department-wide Chief Privacy Officer, whose primary role shall be to fulfill the duties and responsibilities of Chief Privacy Officer and who shall report directly to the Deputy Attorney General.

(b)

Duties and responsibilities of chief privacy officer

In addition to the duties and responsibilities outlined under section 522 of the Transportation, Treasury, Independent Agencies, and General Government Appropriations Act, 2005 (division H of Public Law 108–447; 118 Stat. 3199), the Department of Justice Chief Privacy Officer shall—

(1)

oversee the Department of Justice’s implementation of the requirements under section 403 to conduct privacy impact assessments of the use of commercial data containing personally identifiable information by the Department; and

(2)

coordinate with the Privacy and Civil Liberties Oversight Board, established in the Intelligence Reform and Terrorism Prevention Act of 2004 (Public Law 108–458), in implementing this section.

November 5, 2009

Reported with amendments