Feeds

California returns once more unto the breaches

Breach and tell to include credit card info

The Power of One eBook: Top reasons to choose HP BladeSystem

Any business that takes card payments from residents of California will face strict new duties on the security of card data under proposals that are just a signature away from becoming law. A breach would trigger unprecedented reimbursement provisions.

Final amendments to the measure, called Assembly Bill No. 779, were approved by the California State Assembly last week and it now awaits the signature of Governor Arnold Schwarzenegger. Observers have called this last step a formality: Schwarzenegger is said to back the bill.

In passing the measure California would extend its national lead in security breach notification law to include some data protection elements. Back in 2003 the state was the first to introduce a law that required businesses to disclose data breaches that could expose individuals to identity theft. That law has since been adopted by most other US states. Last month a committee of the House of Lords called for a similar security breach notification law to be introduced in the UK.

The new bill amends an existing state law on the protection of personal data of a financial nature.

AB 779 forbids retailers from storing payment-related data unless the business has a data retention and disposal policy which limits the amount of data held. Sensitive authentication data, such as the data on a card's magnetic strip, must not be held after card authorisation, even if that data is encrypted, says the bill. Payment-related data must not be sent over the internet unless "encrypted using strong cryptography and security protocols or otherwise rendered indecipherable," it adds.

Businesses must also limit access to payment-related data to only those individuals whose job requires that access.

If required to notify a data breach under the state's existing legislation, a business must now give more comprehensive details of the breach.

If a business fails to comply with the new requirements it shall be liable to the owner or licensee of compromised information "for the reimbursement of all reasonable and actual costs of providing notice to consumers pursuant to the breach […] and for the reasonable and actual cost of card replacement as a result of the breach of the security of the system."

American banking industry sources have estimated the cost of notifying customers of a qualifying breach, and providing them with new cards, at between $12 and $15 per customer.

Dr Chris Pounder, a privacy law expert with Pinsent Masons, the law firm behind OUT-LAW.COM, said: "As with security breach notification laws, the recognition that there needs to be additional protection for individuals has been seen by politicians at the state level rather than at the federal level. With the Bush administration coming to an end and the primaries due in the next few months, one can expect that the protection of individual privacy could well become an element in the various political campaigns of presidential hopefulls."

If the new bill is signed it will come into force on 1st July 2008 to give retailers time to put in place the required security controls.

See: Full text of the bill (16-page / 106KB PDF)

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Designing a Defense for Mobile Applications

More from The Register

next story
Secure microkernel that uses maths to be 'bug free' goes open source
Hacker-repelling, drone-protecting code will soon be yours to tweak as you see fit
How long is too long to wait for a security fix?
Synology finally patches OpenSSL bugs in Trevor's NAS
Roll out the welcome mat to hackers and crackers
Security chap pens guide to bug bounty programs that won't fail like Yahoo!'s
HIDDEN packet sniffer spy tech in MILLIONS of iPhones, iPads – expert
Don't panic though – Apple's backdoor is not wide open to all, guru tells us
Researcher sat on critical IE bugs for THREE YEARS
VUPEN waited for Pwn2Own cash while IE's sandbox leaked
Four fake Google haxbots hit YOUR WEBSITE every day
Goog the perfect ruse to slip into SEO orfice
Putin: Crack Tor for me and I'll make you a MILLIONAIRE
Russian Interior Ministry offers big pile o' roubles for busting pro-privacy browser
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.