[IP] Preliminary analysis of new Specter-Leahy data security bill: opinions? [priv]
Begin forwarded message:
From: Declan McCullagh <declan@xxxxxxxx>
Date: June 30, 2005 1:13:55 AM EDT
To: politech@xxxxxxxxxxxxxxx
Subject: [Politech] Preliminary analysis of new Specter-Leahy data
security bill: opinions? [priv]
It's worth taking a close look at the new Specter-Leahy security
breach bill -- introduced Wednesday -- because it's the most
comprehensive so far and the leading candidate to be enacted into law
this year. It's even, at least in theory, going to be voted on in the
Senate Judiciary committee on Thursday:
http://judiciary.senate.gov/meeting_notice.cfm?id=1555
The sections dealing with government use of databases seem generally
useful (though some loopholes exist, like the requirement that a
database is "primarily" of Americans before its use is covered --
look for the FBI to start inserting random Mexican names to get
around the "primarily" requirement). So let's look at the private
sector components.
Bear with me as we get a little technical here...
Title III of the bill erects a complex regulatory scheme around any
"data broker." That's defined as a "business entity" that it's in the
regular business of "collecting, transmitting, or otherwise providing
personally identifiable information" of 5,000 or more people that are
not "customers" or "employees." Business entity is defined as any
organization, including a sole proprietorship, that's in the business
of making money, or a non-profit group that isn't.
Well, Politech is a sole proprietorship -- I have some Google text
ads on politechbot.com that make a princely $10-$15 or so a month. If
they made more I wouldn't complain. And I'm pleased to say that the
list includes over 5,000 subscribers.
Do I "collect[]" personal information? 18 USC 1028(d)(7) defines that
as "any name or number that may be used, alone or in conjunction with
any other information, to identify a specific individual." Mailman
gives subscribers the option of typing in their name, and obviously I
have everyone's email addresses. 18 USC 1028(d)(7)(C) explicitly
includes any "unique electronic identification number, address, or
routing code" so that seems to cover e-mail.
So that makes me a highly-regulated "data broker" unless I can skate
on some other technicality. Again, I'm arguably in the business of
regularly "collecting" information from people are aren't "customers"
-- you don't buy anything frome me. Let's assume I can't escape the
rule and continue this walk-through.
If I am indeed a data broker, what must I do?
* "Clearly and accurately" disclose all relevant "personal electronic
records" (maintained for disclosure to third parties) about an
individual if he or she asks me.
* "Develop and publish" a set of "procedures for correcting
inaccurate information."
* Offer to "investigate" "free of charge" any discrepancies.
* Provide an opportunity to insert a "100 word" notice of any dispute.
If I don't, I can be sued and fined $1,000-$2,000 per violation per day.
Title IV of the bill is far more exhausting. Any "business
entity" (that term again) including a sole proprietorship that
collects, accesses, transmits, stores, or disposes of personal info
in digital form on over 10,000 U.S. persons must create a "data
privacy and security program."
Well, there are over 10,000 Politech subscribers, and that's an even
broader definition (no requirement that it be limited to non-
customers or that the involvement be regular). So I'm likely covered.
If that happens, I must:
* "Implement a comprehensive personal data privacy and security program"
* Create a "risk assessment" to "identify reasonably foreseeable"
vulnerabilities
* "Assess the likelihood" of security breaches
* "Assess the sufficiency" of my policies to protect against them
* Protect information by encrypting it
* Publish the "terms of such program"
* Do "regular testing of key controls" to test security
* Select only superior "service providers" after doing "due diligence"
* Regularly "monitor, evaluate, and adjust" my security policies
If I don't, I can be fined up to $10,000 a day per violation.
Oh, and there's Title IV Subtitle B. It's pretty much the same
definition, and requires me to:
* In the case of a security breach of the Politech subscriber list, I
must notify the U.S. Secret Service and the state attorney general.
* And I must notify individual subscribers
* And I must notify consumer reporting agencies
* For individual subscribers, I must notify via physical mail to home
address, or if I can't, via telephone call to your home. There's no
provision for e-mail contact. But if I don't follow that procedures I
violate the law.
* I also must post this notice publicly on the Web and notify "major
media outlets"
If I don't follow those rules, I can be fined up to $10,000 a day per
violation -- and if I "willfully" conceal the security breach, I can
be fined something like $250,000 and be imprisoned for up to five years.
I recognize that senators Specter and Leahy are trying to target
ChoicePoint and Acxiom and so on. But their bill, as written, does
not appear to be written to include just those data warehouses. And
given that they've had months and (presumbly) very bright people
drafting it, that makes me worried.
In fact, the definitions could cover, for instance, news
organizations (many news sites arguably provide personal information
on thousands of people, and People magazine's Web site certainly
does). How about popular blogs that have thousands of registered
users? Search engines? Google's phone number finding service?
Libraries? Email service providers? Alumni organizations for schools?
Charities, like Golden Gate National Parks Association? What about
universities, especially in terms of all the applications they get?
Sweepstakes companies? I wonder if probable supporters of this bill
-- like the ACLU and EPIC -- would enjoy having to follow all these
complicated procedures (with the penalty of fines or prison terms if
they don't).
I admit this is just my preliminary reading, but my sense is that
these requirements will end up being another version of Sarbanes-
Oxley, with the same destructive, wealth-eroding implications:
http://www.politechbot.com/2005/06/16/richard-rahn-on/
Perhaps I'm wrong. I'd welcome responses (and "don't worry, trust
prosecutors' discretion" is not a useful one). If I'm right, how much
harm will be done in the name of "protecting privacy?"
-Declan
---
News article:
http://news.com.com/2100-7348_3-5769156.html
Text of legislation (Leahy's floor statement is below):
http://i.i.com.com/cnwk.1d/pdf/ne/2005/Specter-Leahy.pdf
Additional background material:
http://www.politechbot.com/docs/leahy.floor.statement.062905.txt
http://www.politechbot.com/docs/specter.leahy.sections.062905.doc
http://www.politechbot.com/docs/specter.leahy.summary.062905.doc
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