A bill to require certain entities that collect and maintain personal information of individuals to secure such information and to provide notice to such individuals in the case of a breach of security involving such information, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Data Security and Breach 
Notification Act of 2012''.

SEC. 2. REQUIREMENTS FOR INFORMATION SECURITY.

    Each covered entity shall take reasonable measures to protect and 
secure data in electronic form containing personal information.

SEC. 3. NOTIFICATION OF INFORMATION SECURITY BREACH.

    (a) Notification.--
            (1) In general.--A covered entity that owns or licenses 
        data in electronic form containing personal information shall 
        give notice of any breach of the security of the system 
        following discovery by the covered entity of the breach of the 
        security of the system to each individual who is a citizen or 
        resident of the United States whose personal information was or 
        that the covered entity reasonably believes to have been 
        accessed and acquired by an unauthorized person and that the 
        covered entity reasonably believes has caused or will cause, 
        identity theft or other financial harm.
            (2) Law enforcement.--A covered entity shall notify the 
        Secret Service or the Federal Bureau of Investigation of the 
        fact that a breach of security has occurred if the number of 
        individuals whose personal information the covered entity 
        reasonably believes to have been accessed and acquired by an 
        unauthorized person exceeds 10,000.
    (b) Special Notification Requirements.--
            (1) Third-party agents.--
                    (A) In general.--In the event of a breach of 
                security of a system maintained by a third-party entity 
                that has been contracted to maintain, store, or process 
                data in electronic form containing personal information 
                on behalf of a covered entity who owns or possesses 
                such data, such third-party entity shall notify such 
                covered entity of the breach of security.
                    (B) Covered entities who receive notice from third 
                parties.--Upon receiving notification from a third 
                party under subparagraph (A), a covered entity shall 
                provide notification as required under subsection (a).
                    (C) Exception for service providers.--A service 
                provider shall not be considered a third-party agent 
                for purposes of this paragraph.
            (2) Service providers.--
                    (A) In general.--If a service provider becomes 
                aware of a breach of security involving data in 
                electronic form containing personal information that is 
                owned or possessed by a covered entity that connects to 
                or uses a system or network provided by the service 
                provider for the purpose of transmitting, routing, or 
                providing intermediate or transient storage of such 
                data, such service provider shall notify the covered 
                entity who initiated such connection, transmission, 
                routing, or storage if such covered entity can be 
                reasonably identified.
                    (B) Covered entities who receive notice from 
                service providers.--Upon receiving notification from a 
                service provider under subparagraph (A), a covered 
                entity shall provide notification as required under 
                subsection (a).
    (c) Timeliness of Notification.--
            (1) In general.--Unless subject to a delay authorized under 
        paragraph (2), a notification required under subsection (a) 
        with respect to a security breach shall be made as 
        expeditiously as practicable and without unreasonable delay, 
        consistent with any measures necessary to determine the scope 
        of the security breach and restore the reasonable integrity of 
        the data system that was breached.
            (2) Delay of notification authorized for law enforcement or 
        national security purposes.--
                    (A) Law enforcement.--If a Federal law enforcement 
                agency determines that the notification required under 
                subsection (a) would impede a civil or criminal 
                investigation, such notification shall be delayed upon 
                the written request of the law enforcement agency for 
                any period which the law enforcement agency determines 
                is reasonably necessary. A law enforcement agency may, 
                by a subsequent written request, revoke such delay or 
                extend the period set forth in the original request 
                made under this subparagraph by a subsequent request if 
                further delay is necessary.
                    (B) National security.--If a Federal national 
                security agency or homeland security agency determines 
                that the notification required under this section would 
                threaten national or homeland security, such 
                notification may be delayed upon the written request of 
                the national security agency or homeland security 
                agency for any period which the national security 
                agency or homeland security agency determines is 
                reasonably necessary. A Federal national security 
                agency or homeland security agency may revoke such 
                delay or extend the period set forth in the original 
                request made under this subparagraph by a subsequent 
                written request if further delay is necessary.
    (d) Method and Content of Notification.--
            (1) Direct notification.--
                    (A) Method of notification.--A covered entity 
                required to provide notification to an individual under 
                subsection (a) shall be in compliance with such 
                requirement if the covered entity provides such notice 
                by one of the following methods:
                            (i) Written notification, sent to the 
                        postal address of the individual in the records 
                        of the covered entity.
                            (ii) Telephone.
                            (iii) Email or other electronic means.
                    (B) Content of notification.--Regardless of the 
                method by which notification is provided to an 
                individual under subparagraph (A) with respect to a 
                security breach, such notification, to the extent 
                practicable, shall include--
                            (i) the date, estimated date, or estimated 
                        date range of the breach of security;
                            (ii) a description of the personal 
                        information that was accessed and acquired, or 
                        reasonably believed to have been accessed and 
                        acquired, by an unauthorized person as a part 
                        of the security breach; and
                            (iii) information that the individual can 
                        use to contact the covered entity to inquire 
                        about--
                                    (I) the breach of security; or
                                    (II) the information the covered 
                                entity maintained about that 
                                individual.
            (2) Substitute notification.--
                    (A) Circumstances giving rise to substitute 
                notification.--A covered entity required to provide 
                notification to an individual under subsection (a) may 
                provide substitute notification in lieu of the direct 
                notification required by paragraph (1) if such direct 
                notification is not feasible due to--
                            (i) excessive cost to the covered entity 
                        required to provide such notification relative 
                        to the resources of such covered entity; or
                            (ii) lack of sufficient contact information 
                        for the individual required to be notified.
                    (B) Form of substitute notification.--Such 
                substitute notification shall include at least one of 
                the following:
                            (i) A conspicuous notice on the Internet 
                        Web site of the covered entity (if such covered 
                        entity maintains such a Web site).
                            (ii) Notification in print and to broadcast 
                        media, including major media in metropolitan 
                        and rural areas where the individuals whose 
                        personal information was acquired reside.
    (e) Treatment of Persons Governed by Other Federal Law.--Except as 
provided in section 4(b), a covered entity who is in compliance with 
any other Federal law that requires such covered entity to provide 
notification to individuals following a breach of security shall be 
deemed to be in compliance with this section.

SEC. 4. APPLICATION AND ENFORCEMENT.

    (a) General Application.--The requirements of sections 2 and 3 
apply to--
            (1) those persons, partnerships, or corporations over which 
        the Commission has authority pursuant to section 5(a)(2) of the 
        Federal Trade Commission Act (15 U.S.C. 45(a)(2)); and
            (2) notwithstanding section 5(a)(2) of the Federal Trade 
        Commission Act (15 U.S.C. 45(a)(2)), common carriers subject to 
        the Communications Act of 1934 (47 U.S.C. 151 et seq.).
    (b) Application to Cable Operators, Satellite Operators, and 
Telecommunications Carriers.--Sections 222, 338, and 631 of the 
Communications Act of 1934 (47 U.S.C. 222, 338, and 551), and any 
regulations promulgated thereunder, shall not apply with respect to the 
information security practices, including practices relating to the 
notification of unauthorized access to data in electronic form, of any 
covered entity otherwise subject to those sections.
    (c) Enforcement by Federal Trade Commission.--
            (1) Unfair or deceptive acts or practices.--A violation of 
        section 2 or 3 shall be treated as an unfair or deceptive act 
        or practice in violation of a regulation under section 
        18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 
        57a(a)(1)(B)) regarding unfair or deceptive acts or practices.
            (2) Powers of commission.--
                    (A) In general.--Except as provided in subsection 
                (a), the Commission shall enforce this Act in the same 
                manner, by the same means, and with the same 
                jurisdiction, powers, and duties as though all 
                applicable terms and provisions of the Federal Trade 
                Commission Act (15 U.S.C. 41 et seq.) were incorporated 
                into and made a part of this Act.
                    (B) Privileges and immunities.--Any person who 
                violates section 3 or 4 shall be subject to the 
                penalties and entitled to the privileges and immunities 
                provided in such Act.
            (3) Maximum total liability.--Notwithstanding the number of 
        actions which may be brought against a covered entity under 
        this subsection, the maximum civil penalty for which any 
        covered entity may be liable under this subsection for all 
        actions shall not exceed--
                    (A) $500,000 for all violations of section 2 
                resulting from the same related act or omission; and
                    (B) $500,000 for all violations of section 3 
                resulting from a single breach of security.
    (d) No Private Cause of Action.--Nothing in this Act shall be 
construed to establish a private cause of action against a person for a 
violation of this Act.

SEC. 5. DEFINITIONS.

    In this Act:
            (1) Breach of security.--The term ``breach of security'' 
        means unauthorized access and acquisition of data in electronic 
        form containing personal information.
            (2) Commission.--The term ``Commission'' means the Federal 
        Trade Commission.
            (3) Covered entity.--
                    (A) In general.--The term ``covered entity'' means 
                a sole proprietorship, partnership, corporation, trust, 
                estate, cooperative, association, or other commercial 
                entity that acquires, maintains, stores, or utilizes 
                personal information.
                    (B) Exemptions.--The term ``covered entity'' does 
                not include the following:
                            (i) Financial institutions subject to title 
                        V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 
                        et seq.).
                            (ii) An entity covered by the regulations 
                        issued under section 264(c) of the Health 
                        Insurance Portability and Accountability Act of 
                        1996 (Public Law 104-191) to the extent that 
                        such entity is subject to the requirements of 
                        such regulations with respect to protected 
                        health information.
            (4) Data in electronic form.--The term ``data in electronic 
        form'' means any data stored electronically or digitally on any 
        computer system or other database and includes recordable tapes 
        and other mass storage devices.
            (5) Personal information.--
                    (A) In general.--The term ``personal information'' 
                means an individual's first name or first initial and 
                last name in combination with any one or more of the 
                following data elements for that individual:
                            (i) Social Security number.
                            (ii) Driver's license number, passport 
                        number, military identification number, or 
                        other similar number issued on a government 
                        document used to verify identity.
                            (iii) Financial account number, or credit 
                        or debit card number, and any required security 
                        code, access code, or password that is 
                        necessary to permit access to an individual's 
                        financial account.
                    (B) Exclusions.--
                            (i) Public record information.--Personal 
                        information does not include information 
                        obtained about an individual which has been 
                        lawfully made publicly available by a Federal, 
                        State, or local government entity or widely 
                        distributed by media.
                            (ii) Encrypted, redacted, or secured 
                        data.--Personal information does not include 
                        information that is encrypted, redacted, or 
                        secured by any other method or technology that 
                        renders the data elements unusable.
            (6) Service provider.--The term ``service provider'' means 
        an entity that provides electronic data transmission, routing, 
        intermediate, and transient storage, or connections to its 
        system or network, where such entity providing such services 
        does not select or modify the content of the electronic data, 
        is not the sender or the intended recipient of the data, and 
        does not differentiate personal information from other 
        information that such entity transmits, routes, stores, or for 
        which such entity provides connections. Any such entity shall 
        be treated as a service provider under this Act only to the 
        extent that it is engaged in the provision of such 
        transmission, routing, intermediate and transient storage, or 
        connections.

SEC. 6. EFFECT ON OTHER LAWS.

    This Act preempts any law, rule, regulation, requirement, standard, 
or other provision having the force and effect of law of any State, or 
political subdivision of a State, relating to the protection or 
security of data in electronic form containing personal information or 
the notification of a breach of security.

SEC. 7. EFFECTIVE DATE.

    This Act shall take effect on the date that is 1 year after the 
date of enactment of this Act.

Summary: Data Security and Breach Notification Act of 2012 - Requires commercial entities that acquire, maintain, store, or utilize personal information to take reasonable measures to protect and secure data in electronic form containing personal information. Directs a covered entity that owns or licenses such data to give notice of any breach of the security of the system that the entity reasonably believes has caused or will cause identity theft or other financial harm to each individual: (1) who is a US citizen or resident. And (2) whose personal information was, or that the covered entity reasonably believes has been, accessed and acquired by an unauthorized person. Requires a covered entity to notify the Secret Service or the Federal Bureau of Investigation (FBI) of a security breach of personal information involving more than 10,000 individuals. Requires a third-party entity contracted to maintain, store, or process data containing personal information to notify the covered entity of a breach of security of a system. Requires a service provider to notify the covered entity if it becomes aware of a breach of security involving personal information owned or possessed by a covered entity and if such covered entity can be reasonably identified. Allows delays of notifications to avoid impeding a civil or criminal investigation or threatening national or homeland security. Sets forth the methods for notification under this Act. Preempts information security practices of the Communications Act applicable to telecommunication carriers, satellite operators, and cable operators. Sets forth civil monetary penalties for violations of this Act. Exempts financial institutions and entities subject to the Health Insurance Portability and Accountability Act of 1996 (HIPAA).