The SHIELD Act broadens the scope of information covered under New York’s existing data breach notification law and updates the notification requirements when there has been a breach of data. Notably, the new law’s data breach notification requirements apply to any person or entity with private information of a New York resident, not just to those that conduct business in New York State. That means New Jersey businesses, specifically, and all business, generally, with employees and/or customers in New York will also be subject to these new compliance obligations.
SHIELD’s Mandatory Data Protection Measures
Under the SHIELD Act, “any person or business that owns or licenses computerized data which includes private information of a resident of New York shall develop, implement and maintain reasonable safeguards to protect the security, confidentiality and integrity of the private information including, but not limited to, disposal of data.” Small businesses, defined as those with less than 50 employees and under $3 million in gross revenue; or less than $5 million in assets, will be deemed compliant if they “implement and maintain reasonable safeguards that are appropriate to the size and complexity of the small business to protect the security, confidentiality and integrity of the private information.”
The bill also contains a carve-out for certain other businesses. It provides that “certified compliant entities,” defined as those already regulated by, and compliant with, existing or future regulations of any federal or New York State government entity (including NYS DFS regulations; regulations under Gramm-Leach-Bliley; Health Insurance Portability and Accountability Act of 1996 (HIPAA) regulations, or with International Organization for Standardization (ISO)/National Institute of Standards and Technology (NIST) cybersecurity standards, will receive safe harbor from enforcement actions under the SHIELD Act.
Definition of Private Information
The SHIELD Act broadens the scope of information covered under New York’s existing data breach notification law, the NYS Information Security Breach and Notification Act. Existing regulations only applied to personally-identifying information that included social security numbers. Under the SHIELD Act, the definition of private information is expanded to include “any information concerning a natural person which, because of name, number, personal mark, or other identifier, can be used to identify such natural person.”
Driver’s license number or non-driver identification card number;
Account number, credit or debit card number, in combination with a security code or without, if the numbers can be used alone to access the financial account of the individual.
Biometric information, meaning data generated by electronic measurements of an individual’s unique physical characteristics, such as a fingerprint, voice print, retina or iris image, or other unique physical representation or digital representation of biometric data which are used to authenticate or ascertain the individual’s identity; or
A username or e-mail address in combination with a password or security question and answer that would permit access to an online account.
Definition of Data Breach
The definition of a data breach will also be expanded to include unauthorized access to private information. New York’s previous data breach law only covered the unauthorized acquisition of computerized data. Under the SHIELD Act, the definition of “breach of the security of the system” is expanded to include unauthorized “access” of computerized data that compromises the security, confidentiality, or integrity of private information, and it provides sample indicators of access. In determining whether information has been accessed, or is reasonably believed to have been accessed, by an unauthorized person or a person without valid authorization, such business may consider, among other factors, indications that the information was viewed, communicated with, used, or altered by a person without valid authorization or by an unauthorized person.
Penalties for Violating the SHIELD Act
Failure to provide required reasonable data security will be considered be a violation of section 349 of the General Business Law, thereby authorizing New York’s Attorney General to bring suit against any business for noncompliance. Businesses may be fined $5,000 for each violation or up to $20 per instance of failed notification, provided that the latter’s aggregate amount doesn’t exceed $250,000. The upside for businesses is that the SHIELD Act does not create a private right of action.
It is pertinent for businesses to review their information security programs to assess the private information they collect and implement data security requirements specified in the SHIELD Act. This is a time-consuming and complex process. The compliance date is looming and business are best served if they begin their review process sooner rather than later.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Maryam Meseha, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
New York’s SHIELD Act Takes Effect on March 21 – Are You Ready?
Author: Scarinci Hollenbeck, LLC
New York’s “Stop Hacks and Improve Electronic Data Security Handling Act,” better known as the SHIELD Act, takes effect on March 21, 2020…
The SHIELD Act broadens the scope of information covered under New York’s existing data breach notification law and updates the notification requirements when there has been a breach of data. Notably, the new law’s data breach notification requirements apply to any person or entity with private information of a New York resident, not just to those that conduct business in New York State. That means New Jersey businesses, specifically, and all business, generally, with employees and/or customers in New York will also be subject to these new compliance obligations.
SHIELD’s Mandatory Data Protection Measures
Under the SHIELD Act, “any person or business that owns or licenses computerized data which includes private information of a resident of New York shall develop, implement and maintain reasonable safeguards to protect the security, confidentiality and integrity of the private information including, but not limited to, disposal of data.” Small businesses, defined as those with less than 50 employees and under $3 million in gross revenue; or less than $5 million in assets, will be deemed compliant if they “implement and maintain reasonable safeguards that are appropriate to the size and complexity of the small business to protect the security, confidentiality and integrity of the private information.”
The bill also contains a carve-out for certain other businesses. It provides that “certified compliant entities,” defined as those already regulated by, and compliant with, existing or future regulations of any federal or New York State government entity (including NYS DFS regulations; regulations under Gramm-Leach-Bliley; Health Insurance Portability and Accountability Act of 1996 (HIPAA) regulations, or with International Organization for Standardization (ISO)/National Institute of Standards and Technology (NIST) cybersecurity standards, will receive safe harbor from enforcement actions under the SHIELD Act.
Definition of Private Information
The SHIELD Act broadens the scope of information covered under New York’s existing data breach notification law, the NYS Information Security Breach and Notification Act. Existing regulations only applied to personally-identifying information that included social security numbers. Under the SHIELD Act, the definition of private information is expanded to include “any information concerning a natural person which, because of name, number, personal mark, or other identifier, can be used to identify such natural person.”
Driver’s license number or non-driver identification card number;
Account number, credit or debit card number, in combination with a security code or without, if the numbers can be used alone to access the financial account of the individual.
Biometric information, meaning data generated by electronic measurements of an individual’s unique physical characteristics, such as a fingerprint, voice print, retina or iris image, or other unique physical representation or digital representation of biometric data which are used to authenticate or ascertain the individual’s identity; or
A username or e-mail address in combination with a password or security question and answer that would permit access to an online account.
Definition of Data Breach
The definition of a data breach will also be expanded to include unauthorized access to private information. New York’s previous data breach law only covered the unauthorized acquisition of computerized data. Under the SHIELD Act, the definition of “breach of the security of the system” is expanded to include unauthorized “access” of computerized data that compromises the security, confidentiality, or integrity of private information, and it provides sample indicators of access. In determining whether information has been accessed, or is reasonably believed to have been accessed, by an unauthorized person or a person without valid authorization, such business may consider, among other factors, indications that the information was viewed, communicated with, used, or altered by a person without valid authorization or by an unauthorized person.
Penalties for Violating the SHIELD Act
Failure to provide required reasonable data security will be considered be a violation of section 349 of the General Business Law, thereby authorizing New York’s Attorney General to bring suit against any business for noncompliance. Businesses may be fined $5,000 for each violation or up to $20 per instance of failed notification, provided that the latter’s aggregate amount doesn’t exceed $250,000. The upside for businesses is that the SHIELD Act does not create a private right of action.
It is pertinent for businesses to review their information security programs to assess the private information they collect and implement data security requirements specified in the SHIELD Act. This is a time-consuming and complex process. The compliance date is looming and business are best served if they begin their review process sooner rather than later.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Maryam Meseha, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
