GoVanguard Blog

Are you Compliant with the New York SHIELD Act?

Posted Feb 18, 2020 4:23:00 PM by avatar Kurt Wuckert
Shield Act

Are you Compliant with the New York SHIELD Act?

 

The New York Shield Act has broadly increased the scope of how “private information” is defined, and how it must be dealt with by any business that maintains the customer data of any citizen of the state of New York. The “Stop Hacks & Improve Electronic Data Security” Act is an attempt to modernize the way that financial data is secured. It also expands the definition of a breach, and changes the threshold at which a company is obligated to disclose the theft of data to the state and to citizens of New York.

While there are many federal and state laws across the country with varying standards, SHIELD intermingles with some, but is written in such a way that it supersedes older laws, and applies more broadly than existing law in New York. Any business, of any size, in any state that collects Social Security numbers, W2 forms or other relevant financial data of a New York citizen breach notification components came into effect on October 23, 2019. The security safeguard requirements of the SHIELD Act will be in effect on March 21, 2020.

The new law broadly expands on requirements and specifies many new steps that companies must go through in the reporting of a data breach, and offers plenty of suggestions to create reasonable safeguards against malicious attack.

 

Data Breach Notification

The SHIELD Act amends New York’s existing laws to broaden the obligations of all businesses to notify customers of a breach. The big change in the definition of “private information” now includes e-mail addresses, biometrics, as well as security questions and answers for password and identity authentication in addition to the more typical definition that includes financial account numbers and personal contact data. SHIELD also expands the definition of a “data breach” from unauthorized acquisition to merely unauthorized access to private information. If any unauthorized person in the business environment could view the protected information of client, the data should be considered compromised.

 

Another significant change is that rather than simply notifying customers of a breach, the offending business party must also provide relevant links, phone numbers or other contact information for the agencies most appropriate to compensate for the specific types of compromised data. In some circumstances, this could include mandatory credit monitoring, but it could go as far as reporting specific cases to state and federal agencies for recovery and compensation of the individual affected parties.

 

Another shift is that for health care organizations which are bound to Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and are currently required to notify the Secretary of Health and Human Services of breaches under those regulations, the SHIELD Act adds the requirement to provide notification to the state Attorney General within ten business days of notifying the Secretary.

In-state businesses that experience a breach must also notify the New York State Office of Information Technology Services, who will provide a report on the scope of the breach and recommendations to improve the security of the system to the offending New York based business.

With such a large step in reporting requirements, it is crucial to make sure your compliance with SHIELD is up to par. If you are unsure, GoVanguard offers compliance assessment consultation and reporting as a first step to limiting your company’s exposure.

 

Safeguards

The SHIELD Act requires businesses to first be compliant with all other existing regulations like HIPPA… Businesses must also implement administrative, technical and physical safeguards to minimize risk.

 

This includes the following:

 

- SHIELD requires staff to be trained to be in compliance with the new law.

- Businesses must also have sufficient software and hardware controls, and they must maintain malware detection and protection tools. We recommend regular pentesting intervals to confirm the effectiveness of these systems.

- The law may also mean records must be stored in a locked and monitored room and disposed of in accordance with very tight procedures.

 

While the law gives no leniency on penalties for small business, it does give some slack on standards that are “reasonable” and “appropriate” for the size of the business and the value of the data to comply with security standards.

 

Penalties

The SHIELD Act does not eliminate private rights to pursue restoration in court, but it does double the civil penalty from $10 to $20 per incident or $5,000, whichever is greater, for businesses who fail to sufficiently report a data breach. SHIELD also increases the statutory cap on the penalty from $150,000 to $250,000.

 

But even with the new and increased regulations and penalties, not everyone feels the Act goes far enough! Crane’s New York editorialist, Fouad Khalil, states:

“…the Shield Act, though a promising first step, is still very much a stopgap in the fight for complete consumer privacy. Organizations will still have more “control” over our private data because of a lack of enforcement.”

 

He goes on:

“At a time where consumer data protection is more important than ever, organizations trying to maintain sanity with all the laws and regulations must keep their privacy and security programs up to date. And government must be clear and forceful with the laws it is instituting. If both can play their part, this would be a victory for both consumers and businesses in New York.”

 

At GoVanguard, we recommend a systematic approach to information security. Carefully and simply implemented security protocols can minimize the risk of exposure to data breaches and the penalties the proceed them. In order to comply with The Shield Act, compliance protocols must be in place. That is why we have a rigorous cybersecurity risk assessment and program implementation regimen in place!

Reach out to us today and see how easy it is take control of your security and keep your brand’s reputation secure.

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