Three Key Requirements Imposed by Colorado’s New Consumer Data Privacy Statute
August 29, 2018
August 29, 2018
Be careful what you ask for (and maintain) about Colorado residents…especially if you don’t have the proper data security policies in place. On September 1, 2018, Colorado’s new privacy law, HB 18-1128, will go into effect, imposing new requirements on any business or government entity that maintains, owns, or licenses personal identifying information about Colorado residents.
The new law imposes three key requirements on businesses subject to the rule:
Personal information is defined broadly under the new law to include a resident’s first name or first initial and last name (e.g., Jane Doe or J. Doe), in combination with one of the following: medical information; health insurance identification number; biometric data; social security number; student, military, or passport identification number; driver’s license number or identification card. Personal information also includes—even when not tied to a resident’s name—a resident’s username or email address with a password or a security question and answer that permits access to an online account, or an account number or credit/debit card number in combination with a security code, access code or password that permits access to an online account.
Business that do not already have written data disposal and security policies should act quickly to ensure that they are compliant with the nuances of the new law. Additionally, businesses need to operationalize procedures designed to ensure that employees and third-party service providers are adhering to privacy policies, since mere “paper compliance” falls short of protecting from the risk and exposure attendant to a breach.
Colorado’s breach notification requirement imposes a more aggressive requirement for notifying affected residents than requirements under the Health Insurance Portability and Accountability Act (HIPAA) and virtually any other U.S. state. A business must provide written notification with certain information to affected residents in the most expedient time possible and without unreasonable delay, but not later than 30 days after the point in time when there is sufficient evidence to conclude that a security breach has occurred. For breaches believed to have affected 500 residents or more or 1000 residents or more, businesses must notify the Colorado Attorney General and certain consumer reporting agencies, respectively.
Reflective of the shift towards providing consumers with more control over their personal information, the bill is codified under the Colorado Consumer Protection Act (CCPA), C.R.S. §6-1-713, et seq., and potentially creates a private right of recourse against businesses who misuse a resident’s information. CCPA causes of action oftentimes include assertion of a right to treble (or triple) damages and reasonable attorneys’ fees. Additionally, the Colorado Attorney General may bring civil, or in some cases criminal, actions for violation of the law.
The frequently unforgiving nature of civil monetary penalties imposed by the HHS Office of Civil Rights (OCR) for HIPAA violations should be cautionary. But, not only is there great risk of exposure for unprepared or noncompliant businesses facing enforcement by state and federal regulatory agencies, now more than ever, individual or class action liability seems to be on the horizon. Last, but not least, businesses never envision themselves as “the ones” making headlines about their data breaches…until it happens…and happens quickly.
What if I already comply with other state or federal privacy laws?
The new law indicates that businesses already regulated by other state or federal law are in compliance if adhering to such regulator’s procedures for the protection and disposal of personal identifying information. If the business operates in interstate, international and/or online commerce involving Colorado residents, however, a thorough review of policies and procedures is recommended to ensure that the mandates of the various applicable laws are reconciled against each other. For example, Colorado’s breach notification provision indicates that the time period for notice to affected individuals with the shortest timeframe will control. Healthcare entities which are typically subject to a HIPAA’s 60-day notification requirement need to implement measures to comply with the shortened period under Colorado law.
Businesses subject to the privacy law should take the following steps, at a minimum, to ensure that they are prepared to comply.
The U.S. Department of Health and Human Services (HHS) recently announced that it is seeking comments regarding potential changes in HIPAA and 42 CFR Part 2,1 with the indication that action to reform the rules will be taken to ease the regulatory burden on the healthcare sector and coordinate better care at a lower cost. These efforts, however, must be juxtaposed with HHS’s continued aggressive enforcement of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy and Security Rules2 and many States’ efforts to enact their own heightened data security and breach laws.3
There is no uniform mechanism for determining how best to implement the necessary measures. Legal counsel specializing in data privacy and security law are instrumental resources when ensuring that adequate measures are taken to navigate compliance with state and federal laws, especially in today’s rapidly changing environment.