1.1 	A bill for an act
1.2 	relating to consumer protection; requiring disclosure
1.3 	to consumers of a breach in security by businesses
1.4 	maintaining personal information in electronic form;
1.5 	proposing coding for new law in Minnesota Statutes,
1.6 	chapter 325G.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. [325G.48] BUSINESS MAINTAINING COMPUTERIZED
1.9 	DATA THAT INCLUDES PERSONAL INFORMATION; DISCLOSURE OF BREACH IN
1.10 	SECURITY.
1.11 		Subdivision 1.Definitions. For purposes of this
1.12 	section, the terms defined in this subdivision have the meanings
1.13 	given them.
1.14 	(a) "Breach of the security of the system" means
1.15 	unauthorized acquisition of computerized data that compromises
1.16 	the security, confidentiality, or integrity of personal
1.17 	information maintained by the person or business.  Good faith
1.18 	acquisition of personal information by an employee or agent of
1.19 	the person or business for the purposes of the person or
1.20 	business is not a breach of the security of the system, provided
1.21 	that the personal information is not used or subject to further
1.22 	unauthorized disclosure.
1.23 	(b) "Personal information" means an individual's first name
1.24 	or first initial and last name in combination with any one or
1.25 	more of the following data elements, when either the name or the
1.26 	data elements are not encrypted:
2.1 	(1) Social Security number;
2.2 	(2) driver's license number or Minnesota identification
2.3 	card number; or 
2.4 	(3) account number, credit or debit card number, in
2.5 	combination with any required security code, access code, or
2.6 	password that would permit access to an individual's financial
2.7 	account.
2.8 	Personal information does not include publicly available
2.9 	information that is lawfully made available to the general
2.10 	public from federal, state, or local government records.
2.11 		Subd. 2.Notice to consumers. Any person or business
2.12 	that conducts business in Minnesota, and that owns or licenses
2.13 	computerized data that includes personal information, shall
2.14 	disclose any breach of the security of the system following
2.15 	discovery or notification of the breach in the security of the
2.16 	data to any resident of Minnesota whose unencrypted personal
2.17 	information was, or is reasonably believed to have been,
2.18 	acquired by an unauthorized person.  The disclosure must be made
2.19 	in the most expedient time possible and without unreasonable
2.20 	delay, consistent with the legitimate needs of law enforcement,
2.21 	as provided in subdivision 4, or any measures necessary to
2.22 	determine the scope of the breach and restore the reasonable
2.23 	integrity of the data system.
2.24 		Subd. 3.Notice to owner or licensee of personal
2.25 	information.
 2.26 	Any person or business that maintains data that includes
2.27 	personal information shall notify the owner or licensee of the
2.28 	information of any breach of the security of the data, including
2.29 	the nature of the personal information taken, immediately
2.30 	following discovery, if the personal information was, or is
2.31 	reasonably believed to have been, acquired by an unauthorized
2.32 	person.
2.33 		Subd. 4.Delayed notice. The notification required by
2.34 	this section may be delayed to a date certain if a law
2.35 	enforcement agency affirmatively determines that the
2.36 	notification will impede a criminal investigation.
3.1 		Subd. 5.Method of notice. Notice under this section
3.2 	shall be provided by one of the following methods:
3.3 	(1) written notice to the last known address or addresses;
3.4 	(2) electronic notice, if the notice provided is consistent
3.5 	with the provisions regarding electronic records and signatures
3.6 	set forth in United States Code, title 15, section 7001;
3.7 	(3) substitute notice, if the person or business
3.8 	demonstrates that the cost of providing notice would exceed
3.9 	$250,000, or that the affected class of subject persons to be
3.10 	notified exceeds 500,000, or the person or business does not,
3.11 	after a good-faith effort to acquire it, have sufficient contact
3.12 	information.  Substitute notice consists of all of the following:
3.13 	(i) e-mail notice when the person or business has an e-mail
3.14 	address for the subject persons;
3.15 	(ii) conspicuous posting of the notice on the Web site page
3.16 	of the person or business, if the person or business maintains
3.17 	one; and 
3.18 	(iii) notification to major statewide media.
3.19 		Subd. 6.Alternate compliance. Notwithstanding
3.20 	subdivision 5, a person or business that maintains notification
3.21 	procedures in accordance with state and federal law as part of
3.22 	an information security policy for the treatment of personal
3.23 	information in accordance with state and federal law and is
3.24 	otherwise consistent with the timing requirements of this
3.25 	section, is considered to be in compliance with the notification
3.26 	requirements of this section if the person or business notifies
3.27 	subject persons in accordance with its policies in the event of
3.28 	a breach of security of the system.
3.29 		Subd. 7.Coordination with consumer reporting agencies.
 3.30 	In the event that a person or business discovers circumstances
3.31 	requiring notification pursuant to this section of more than 100
3.32 	persons at one time, the person or business shall also notify,
3.33 	within 48 hours, all consumer reporting agencies that compile
3.34 	and maintain files on consumers on a nationwide basis, as
3.35 	defined by United States Code, title 15, section 1681A, of the
3.36 	timing, distribution, and content of the notices.
4.1 		Subd. 8.Enforcement. This section may be enforced
4.2 	pursuant to section 8.31, subdivisions 1 and 3a.

4.3 	Sec. 2. EFFECTIVE DATE.
 4.4 	This act takes effect January 1, 2006.