Updates to Massachusetts Breach Notification Law – Much More Than Mandatory Credit Monitoring
Observers of the recent changes in the Massachusetts data breach notification law likely will focus on the addition of the obligation to provide 18 months of credit monitoring following a breach involving Social Security numbers (42 months, if the breached entity is a consumer reporting agency). This certainly is a significant change, making Massachusetts only the fourth state to have enacted a similar mandate (See also, California, Connecticut, and Delaware). However, other changes are perhaps much more significant for an organization that has a breach triggering the updated Massachusetts law, which becomes effective April 11, 2019.
Data security and breach notification legislative developments are off to a running start in 2019. On January 1, 2019, Vermont began regulating data brokers and South Carolina’s adoption of the National Association of Insurance Commissioners’ (NAIC’s) Insurance Data Security Model Law became effective adding significant breach notification and information security requirements for entities licensed by state insurance regulators, including insurers and agents. The North Carolina Attorney General announced a proposal to make significant changes to that state’s notification law, among them requiring notification for ransomware attacks. The trend continues in Massachusetts, where last week Gov. Charlie Baker signed legislation substantially updating the state’s breach notification law.
Here is an overview of some of key changes:
Organizations that experience a breach must report to the Attorney General and the Office of Consumer Affairs and Business Regulation whether they have a written information security program (WISP). Nearly ten years ago, Massachusetts enacted one of the most comprehensive set of data security regulations affecting certain organizations in the state. (Read more about that and get a compliance checklist here.) Organizations that have not adopted a WISP will have to inform the government that they have not done so, which likely will lead to a follow up inquiry concerning compliance and potentially significant penalties. But that is not all, they also will have to report information such as the type of personal information involved in the incident (e.g., social security number, driver’s license number), steps the organization has taken or plans to take relating to the incident, including updating the WISP, and a certification that they have offered compliant credit monitoring services, if applicable.
Parent companies may have to answer for breaches by subsidiaries. Organizations that must report a breach under the new law and that are owned by another person or corporation, must inform affected residents of the name of the parent or affiliated corporation. This provision is sure to create some confusion. For example, there is no level of ownership that is needed to be listed in the notice to affected residents. Additionally, because a breached entity might be owned by a few different entities, it is unclear if all of those entities would have to be listed. Clearly, this provision may create some unfavorable publicity for organizations whose subsidiaries experience a breach. As such, it might spur them to be more actively involved with the date security compliance and breach response efforts of their subsidiary and affiliated entities. Parents and affiliated companies may also want to revisit their cyber insurance policies to assess coverage for losses that may arise out of a subsidiary’s breach. For the breached subsidiary, this provision may result in them involving their parent companies sooner and more extensively in the breach response process.
Once an organization knows about a breach affecting a Massachusetts resident, it must notify the resident as soon as practicable and without unreasonable delay, and cannot wait to determine the total number of residents affected by the incident. Security incident investigations sometimes take time and it is not uncommon during those investigations for the number affected persons to grow as the investigation continues. With this change, businesses need to notify continually, and not wait for the investigation to conclude before sending notification. Additionally, because state agency notifications must include the number of affected persons, business will need to keep these agencies apprised of the growing number of residents affected.
The Office of Consumer Affairs and Business Regulation will be reporting about your breach on its website. When an organization reports a breach to the Office of Consumer Affairs and Business Regulation (OCABR), under the new law OCABR must post on its website copies of the sample notice sent to affected residents within 1 business day of receipt and continually update the site with information learned from the investigation. OCABR also will be helping affected residents file public records requests to obtain the notices that organizations that experienced the breach have filed with the Attorney General and OCABR.
A number of the updates to the Massachusetts data breach notification law are not the typical changes we see made in many other states – e.g., expanding the definition of personal information, establishing a set number of days by which notice must be provided. Some of the changes seem intent on drawing attention to organizations that had a breach and their related companies (posting of OCABR website, helping affected residents get more information about the breach, requiring the name of parent companies be listed in the notice, etc.) and pushing for greater enforcement of data security safeguards (requiring reporting on whether a WISP is maintained). Organizations will need to revisit their overall incident response plans, as well as confirm their compliance with the state’s data security mandate, now nine years old.