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Schwarzenegger terminates data breach bill

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California Governor Arnold Schwarzenegger vetoed a bill on Saturday designed to give new protections to credit card holders by placing tough limits on the type of payment information retailers can store on their customers. The governor said the bill would have driven up costs for merchants.

Assembly Bill 779 was championed by advocates of consumers and credit card issuers amid the fallout of a massive data breach in which online thieves stole account information belonging to more than 45.6 million people from TJX Companies. TJX was widely criticized for storing more information than necessary and for failing to lock down its network.

The bill, among other things, would have specified the information firms must provide when they experience a data breach and would have required retailers to safeguard data in ways that are more stringent than the current methods spelled out by the Payment Card Industry Data Security Standard. The bill also prohibited the maintaining of "sensitive authentication data subsequent to authorization, even if that data is encrypted."

In vetoing the measure, Schwarzenegger seemed to suggest that consumer information was already adequately safeguarded by the marketplace.

"This industry has the contractual ability to mandate the use of these standards, and is in a superior position to ensure that these standards keep up with changes in technology and the marketplace," he said in a message to members of the California State Assembly. "This measure creates the potential for California law to be in conflict with private sector data security standards." ®

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