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California Privacy Initiatives Go into Effect January 1, 2014 - Are You Ready?

Tuesday, November 19, 2013

The Reports of the Death of Privacy Were Exaggerated:
California Breathes New Life into the Privacy Rights of its Residents

In a series of new bills amending existing California privacy laws, the State of California increases the protections presently provided to its residents by broadening the requirements for reporting breach of personal data; requiring providers to disclose how their site or service responds to “do not track” signals sent by web browsers; and requiring companies that maintain health information, or provide hardware or software, including mobile applications, to refrain from sharing, selling or using patient medical information without consent.

CalOPPA – Say What You Do and Do What You Say

AB 370, a bill amending the California Online Privacy Protection Act (CalOPPA)1 was signed into law by Gov. Jerry Brown on September 27, 2013.2 The law requires operators of commercial Web sites or online services to disclose how the site or service responds to “do not track” signals sent by Web browsers. The manner of response will trigger enforceability by state authorities.

CalOPPA requires that each person or business that owns a commercial Web site or online service and collects “personally identifiable information” about California residents, post a conspicuous privacy policy on the Web site or service and abide by it. The policy should notify users of: the categories of personally identifiable information collected; the third parties with whom the information may be shared; any process by which consumers can review and change the collected personally identifiable information; the process for amendment of the policy and the effective date of the policy. “Personally identifiable information” is defined as “individually identifiable information about an individual consumer collected online by the operator from that individual and maintained by the operator in an accessible form, including: first and last name; physical address; e-mail address; telephone number; social security number; any other identifier that permits the physical or online contacting of a specific individual; or information concerning a user that the Web site or online service collects online from the user and maintains in personally identifiable form in combination with one of the identifiers listed above.

Effective January 1, 2014, AB 370 will require operators to disclose in their privacy policies two additional matters:

  • how the Web site or online service “responds to ‘do not track’ signals or other mechanisms that provide consumers a choice regarding the collection of personally identifiable information about an individual consumer’s online activities over time and across different Web sites or online services,” and
  • whether other parties may collect personally identifiable information about an individual consumer’s online activities when a consumer uses the operator’s Web site or service.

The disclosure requirements may be satisfied by providing a clear and conspicuous hyperlink in the privacy policy to an online location containing a description, including the effects, of any program or protocol the Web site or online service follows that offers the consumer that choice. Before any enforcement actions are taken, a Web site or “online service” will receive 30 days’ advance notice and an opportunity to cure.

“Do not track” is the proposed HTTP header field “DNT” that requests that a Web application disable either its tracking or cross-site user tracking of an individual user. Originally proposed in 2009, efforts to standardize “Do Not Track,” including by the World Wide Web Consortium (W3C) as the main international standards organization for the World Wide Web, have been unsuccessful. To date, there is no clear definition or standard for how a “Do Not Track” signal is to be conveyed, nor as to the definition of tracking, sharing, and permitted uses when a “Do Not Track” preference is expressed. Support for the DNT signal is currently found in the following Internet browsers: Explorer 9, Mozilla Firefox, Apple Safari, Opera and Google Chrome.3

Expanded Data Breach Disclosure Requirement

Effective January 1, 2014, California Civil Code 1798.824 will be amended by S.B. 465 and A.B. 1149,6 two bills signed by Gov. Brown on September 27, 2013. Pursuant to these amendments, California will become the first state to require disclosure of the breach of “[a] user name or e-mail address, in combination with a password or security question and answer that would permit access to an online account.” This would likely include a breach of an e-mail account username and password or username and password of a social networking service or online game. Currently, breach notification in California is only triggered by the unauthorized acquisition of an individual’s first name or initial and last name in combination with one or more of the following: social security number; driver’s license or state identification number; account, credit card or debit card number in combination with any required security or access codes; medical information; or health information. The amendment also extends the applicability of the law to a breach of computerized data that is owned or licensed by local government agencies. The local government agency would need to disclose such breaches.

Because data breaches of online credentials are being compromised increasingly often, leading to both financial damages and negative publicity to the relevant entities, it is likely that these amendments will encourage organizations to encrypt online credentials and strengthen protections for personal information in order to decrease the likelihood of breach. Other states will likely follow California’s lead in establishing new or expanded breach notification requirements.

Patient Information

January 1, 2014 will also be the date on which companies that maintain health information, or provide hardware or software, including mobile applications, would be required to comply with California’s patient confidentiality law. This is pursuant to AB 658,7 signed into law by Gov. Brown on September 9 and amending the California Confidentiality of Medical Information Act, California Civil Code 56. To comply, such companies would need to refrain from sharing, selling or using patient medical information without consent. This amendment closes a loophole that existed to date with respect to the confidentiality of personal health records (PHRs). PHRs maintained by doctors have been protected both by the California statute and by the Health Insurance Portability and Accountability Act (HIPAA). PHRs from commercial vendors, including the providers of mobile apps, have not been so protected. Following the amendment, “providers of health care” to which the law applies would include: a business that maintains medical information for an individual or a provider of health care at the request of the individual to allow the individual to manage his or her information, or for the diagnosis and treatment of the individual. The law is also expanded to apply to a business offering software or hardware to consumers, including mobile applications and other related devices, designed to maintain medical information or to assist in the diagnosis and treatment of individuals.

Pepper Point: To address these legislative developments, companies with Web sites accessible to California residents should revisit and amend, as necessary, both their existing privacy policies and their data breach response plans. Companies or software providers dealing with personal health records should seek legal counseling to specifically address the new confidentiality requirements pertaining to such information.

Endnotes

1 California Business and Professions Code 22575-22579.

2 http://legiscan.com/CA/text/AB370.

3 http://en.wikipedia.org/wiki/Do_Not_Track.

4 http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=01001-02000&file=1798.80-1798.84.

5 http://leginfo.ca.gov/pub/13-14/bill/sen/sb_0001-0050/sb_46_bill_20121214_introduced.html.

6 http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB1149.

7 http://www.leginfo.ca.gov/pub/13-14/bill/asm/ab_0651-0700/ab_658_bill_20130422_amended_asm_v98.pdf.

Sharon R. Klein and Odia Kagan

Written by

Sharon R. Klein
Phone: 949.567.3506
215.981.4172
213.928.9800

Fax: 949.863.0151
215.981.4750
213.928.9850

kleins@pepperlaw.com

Odia Kagan
Phone: 215.981.4647
Fax: 215.981.4750
kagano@pepperlaw.com


The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.

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