Title: Data Breach Prevention and Compensation Act of 2019
Policy area: Finance and Financial Sector

Summary:
Data Breach Prevention and Compensation Act of 2019
This bill establishes an Office of Cybersecurity within the Federal Trade Commission (FTC). The office must supervise the data security of credit reporting agencies, including through annual examinations. The office must also investigate and enforce suspected violations by credit reporting agencies.
The bill also requires notification to the FTC, relevant law enforcement and intelligence agencies, consumers, and the public of a data breach affecting a credit reporting agency.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2545 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 2545

 To create an Office of Cybersecurity at the Federal Trade Commission 
  for supervision of data security at consumer reporting agencies, to 
  require the promulgation of regulations establishing standards for 
   effective cybersecurity at consumer reporting agencies, to impose 
penalties on credit reporting agencies for cybersecurity breaches that 
      put sensitive consumer data at risk, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 7, 2019

   Mr. Cummings (for himself and Mr. Krishnamoorthi) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL


 
 To create an Office of Cybersecurity at the Federal Trade Commission 
  for supervision of data security at consumer reporting agencies, to 
  require the promulgation of regulations establishing standards for 
   effective cybersecurity at consumer reporting agencies, to impose 
penalties on credit reporting agencies for cybersecurity breaches that 
      put sensitive consumer data at risk, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Data Breach Prevention and 
Compensation Act of 2019''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Affected consumer.--The term ``affected consumer'' 
        means any individual to whom personally identifying information 
        pertains that was, or that may have been, affected by a covered 
        breach.
            (2) Agency.--The term ``agency'' has the meaning given the 
        term in section 551 of title 5, United States Code.
            (3) Career appointee.--The term ``career appointee'' has 
        the meaning given the term in section 3132(a) of title 5, 
        United States Code.
            (4) Commission.--The term ``Commission'' means the Federal 
        Trade Commission.
            (5) Consumer report; consumer reporting agency.--The terms 
        ``consumer report'' and ``consumer reporting agency'' have the 
        meanings given the terms in section 603 of the Fair Credit 
        Reporting Act (15 U.S.C. 1681a).
            (6) Covered breach.--The term ``covered breach'' means any 
        instance in which not less than 1 piece of personally 
        identifying information held by a covered consumer reporting 
        agency is exposed, or is reasonably likely to have been 
        exposed, to an unauthorized party.
            (7) Covered consumer reporting agency.--The term ``covered 
        consumer reporting agency'' means--
                    (A) a consumer reporting agency described in 
                section 603(p) of the Fair Credit Reporting Act (15 
                U.S.C. 1681a(p)); or
                    (B) a consumer reporting agency that earns not less 
                than $7,000,000 in annual revenue from the sale of 
                consumer reports.
            (8) Detail.--The term ``detail'' means a temporary 
        assignment of an employee to a different position for a 
        specified period, with the employee returning to the regular 
        duties of the employee at the end of the specified period.
            (9) Director.--The term ``Director'' means the Director of 
        the Office.
            (10) Office.--The term ``Office'' means the Office of 
        Cybersecurity established under section 3(a).
            (11) Personally identifying information.--The term 
        ``personally identifying information'' means, with respect to 
        an individual--
                    (A) the social security number of the individual;
                    (B) a driver's license number of the individual;
                    (C) a passport number of the individual;
                    (D) an alien registration number or other 
                government-issued unique identification number of the 
                individual;
                    (E) unique biometric data, such as a faceprint, a 
                fingerprint, a voice print, an iris image, or any other 
                unique physical representation of the individual;
                    (F) the first and last name of the individual, or 
                the first initial of the first name and the last name 
                of the individual, in combination with any information 
                that relates to--
                            (i) the past, present, or future physical 
                        or mental health or condition of the 
                        individual; or
                            (ii) the provision of health care to, or a 
                        diagnosis of, the individual;
                    (G)(i) a financial account number, debit card 
                number, or credit card number of the individual; or
                    (ii) any passcode required to access an account 
                described in clause (i); and
                    (H) such additional information, as determined by 
                the Director.

SEC. 3. CYBERSECURITY STANDARDS AND FTC AUTHORITY.

    (a) Establishment.--There is established in the Commission an 
Office of Cybersecurity, which shall be headed by a Director, who shall 
be a career appointee.
    (b) Duties.--The Office--
            (1) shall--
                    (A) supervise covered consumer reporting agencies 
                with respect to data security;
                    (B) promulgate regulations, through notice and 
                comment rulemaking that complies with section 553 of 
                title 5, United States Code, for effective data 
                security for covered consumer reporting agencies, 
                including requirements for a covered consumer reporting 
                agency to--
                            (i) provide the Commission with 
                        descriptions of technical and organizational 
                        security measures of the consumer reporting 
                        agency, including--
                                    (I) system and network security 
                                measures, including--
                                            (aa) asset management, 
                                        including--

                                                    (AA) an inventory 
                                                of devices of the 
                                                covered consumer 
                                                reporting agency that 
                                                are authorized to 
                                                access data maintained 
                                                by the covered consumer 
                                                reporting agency;

                                                    (BB) an inventory 
                                                of software that is 
                                                authorized by the 
                                                covered consumer 
                                                reporting agency to 
                                                access data maintained 
                                                by the covered consumer 
                                                reporting agency, 
                                                including application 
                                                whitelisting; and

                                                    (CC) secure 
                                                configurations for 
                                                hardware and software 
                                                of the covered consumer 
                                                reporting agency;

                                            (bb) network management and 
                                        monitoring, including--

                                                    (AA) mapped data 
                                                flows, including 
                                                functional mission 
                                                mapping;

                                                    (BB) maintenance, 
                                                monitoring, and 
                                                analysis of audit logs;

                                                    (CC) network 
                                                segmentation; and

                                                    (DD) local and 
                                                remote access 
                                                privileges, defined and 
                                                managed; and

                                            (cc) application 
                                        management, including--

                                                    (AA) continuous 
                                                vulnerability 
                                                assessment and 
                                                remediation;

                                                    (BB) server 
                                                application hardening;

                                                    (CC) vulnerability 
                                                handling, such as 
                                                coordinated 
                                                vulnerability 
                                                disclosure policy; and

                                                    (DD) patch 
                                                management, including 
                                                at, or near, real-time 
                                                dashboards of patch 
                                                implementation across 
                                                network hosts; and

                                    (II) data security measures, 
                                including--
                                            (aa) data-centric security 
                                        mechanisms such as format-
                                        preserving encryption, 
                                        cryptographic data-splitting, 
                                        and data-tagging and lineage;
                                            (bb) encryption for data at 
                                        rest;
                                            (cc) encryption for data in 
                                        transit;
                                            (dd) systemwide data 
                                        minimization evaluations and 
                                        policies; and
                                            (ee) data recovery 
                                        capability;
                            (ii) employ reasonable technical measures 
                        and corporate governance processes for 
                        continuous monitoring of data, intrusion 
                        detection, and continuous evaluation and timely 
                        patching of vulnerabilities;
                            (iii) employ reasonable technical measures 
                        and corporate governance processes that satisfy 
                        and exceed all relevant data security policy 
                        recommendations contained in the framework of 
                        the National Institute of Standards and 
                        Technology entitled ``Framework for Improving 
                        Critical Infrastructure Cybersecurity'', dated 
                        February 12, 2014, or any successor thereto, as 
                        determined appropriate by the Office; and
                            (iv) create and maintain documentation 
                        demonstrating that the covered consumer 
                        reporting agency is employing the technical 
                        measures and corporate governance processes 
                        described in clauses (ii) and (iii);
                    (C) annually examine the data security measures of 
                covered consumer reporting agencies for compliance with 
                the requirements described in clauses (ii) and (iii) of 
                subparagraph (B);
                    (D) investigate any covered consumer reporting 
                agency if the Office has reason to suspect--
                            (i) a covered breach has occurred and the 
                        covered consumer reporting agency was subject 
                        to the covered breach; or
                            (ii) the covered consumer reporting agency 
                        is not in compliance with the requirements 
                        described in clauses (ii) and (iii) of 
                        subparagraph (B);
                    (E) after consultation with members of the 
                technical and academic communities, develop a rigorous, 
                repeatable methodology--
                            (i) for evaluating, testing, and measuring 
                        effective data security practices of covered 
                        consumer reporting agencies; and
                            (ii) that employs forms of static and 
                        dynamic software analysis and penetration 
                        testing;
                    (F) submit to Congress an annual report on the 
                findings of each investigation carried out under 
                subparagraph (D) during the year covered by the report 
                that includes a statement of how Congress could enhance 
                the authorities of the Office in order to assist the 
                Office in carrying out the duties of the Office under 
                this Act;
                    (G) determine whether covered consumer reporting 
                agencies are complying with the requirements described 
                in clauses (ii) and (iii) of subparagraph (B); and
                    (H) coordinate with the National Institute of 
                Standards and Technology and the National Cybersecurity 
                and Communications Integration Center of the Department 
                of Homeland Security; and
            (2) may--
                    (A) investigate any covered breach to determine if 
                the covered consumer reporting agency that was subject 
                to the covered breach was in compliance with the 
                requirements described in clauses (ii) and (iii) of 
                paragraph (1)(B) as of the date on which the covered 
                breach occurred; and
                    (B) if the Director has reason to believe that any 
                covered consumer reporting agency is violating, or in 
                the immediate future will violate, a requirement 
                described in clause (ii) or (iii) of paragraph (1), 
                bring a suit in an appropriate district court of the 
                United States to enjoin any such act or practice.
    (c) Staff.--
            (1) In general.--The Director shall, without regard to the 
        civil service laws and regulations, appoint such personnel, 
        including computer security researchers and practitioners with 
        technical expertise in computer science, engineering, and 
        cybersecurity, as the Director determines are necessary to 
        carry out the duties of the Office.
            (2) Details.--
                    (A) In general.--An employee of the National 
                Institute of Standards and Technology, the Bureau of 
                Consumer Financial Protection, or the National 
                Cybersecurity and Communications Integration Center of 
                the Department of Homeland Security may be detailed to 
                the Office, without reimbursement.
                    (B) Civil service status and privilege.--Detail 
                under subparagraph (A) shall be without interruption or 
                loss of the civil service status or privilege of the 
                employee who is detailed to the Office.

SEC. 4. NOTIFICATION AND ENFORCEMENT.

    (a) Notification.--
            (1) Notification to the commission and relevant federal law 
        enforcement and intelligence agencies.--
                    (A) Notification to the commission.--Except as 
                provided in paragraph (3), not later than 10 days after 
                the date on which a covered breach occurs, any covered 
                consumer reporting agency that was subject to the 
                covered breach shall notify the Commission of the 
                covered breach.
                    (B) Notification to relevant federal law 
                enforcement and intelligence agencies.--Not later than 
                10 days after the date on which the Commission receives 
                a notification under subparagraph (A) that a covered 
                breach has occurred, the Commission shall--
                            (i) notify the relevant Federal law 
                        enforcement agencies and intelligence agencies 
                        that the covered breach has occurred; and
                            (ii) with respect to the covered breach, 
                        consult with the relevant Federal law 
                        enforcement agencies and intelligence agencies, 
                        as appropriate.
            (2) Notification to affected consumers and the public.--
                    (A) In general.--Except as provided in paragraph 
                (3), on an expeditious and practical timeline, as 
                determined appropriate by the Commission, a covered 
                consumer reporting agency that is subject to a covered 
                breach shall--
                            (i) submit to each affected consumer with 
                        respect to whom the covered consumer reporting 
                        agency holds a piece of personally identifying 
                        information a notification regarding the 
                        covered breach that complies with subparagraph 
                        (B); and
                            (ii) publish on the internet website of the 
                        covered consumer reporting agency a notice that 
                        contains a statement of--
                                    (I) the information described in 
                                clauses (i) and (ii) of subparagraph 
                                (B) and subclauses (I) and (II) of 
                                clause (iii) of that subparagraph; and
                                    (II) the steps that the covered 
                                consumer reporting agency is taking to 
                                notify the affected consumers described 
                                in clause (i) regarding the covered 
                                breach.
                    (B) Notification to affected consumers.--In a 
                notification to affected consumers under subparagraph 
                (A)(i), the covered consumer reporting agency 
                submitting the notification shall include a statement 
                of--
                            (i) the fact that the covered breach 
                        occurred;
                            (ii) the approximate date on which the 
                        covered breach occurred; and
                            (iii) with respect to the covered breach--
                                    (I) the number of affected 
                                consumers;
                                    (II) the measures that the covered 
                                consumer reporting agency is taking to 
                                remedy the covered breach; and
                                    (III) the potential risks created 
                                by the covered breach, a list of which 
                                the covered consumer reporting agency 
                                shall develop in consultation with the 
                                Office.
            (3) Delay of notification authorized for law enforcement or 
        national security purposes.--
                    (A) Notification by law enforcement agency or 
                intelligence agency.--If a Federal law enforcement 
                agency or intelligence agency to which the Commission 
                has provided notice under paragraph (1)(B)(i) 
                determines that the notification required under 
                paragraph (2) may impede a criminal investigation or 
                national security activity--
                            (i) the Federal law enforcement agency or 
                        intelligence agency shall provide written 
                        notice to the Commission and the covered 
                        consumer reporting agency that was subject to 
                        the covered breach that is the subject of the 
                        notification that states--
                                    (I) that the notification required 
                                under paragraph (2) shall be delayed 
                                for law enforcement or national 
                                security purposes; and
                                    (II) the date on which the delay 
                                imposed under subclause (I) shall end; 
                                and
                            (ii) subject to subparagraph (B), the 
                        covered consumer reporting agency that was 
                        subject to the covered breach shall delay 
                        notification under paragraph (2) until the date 
                        described in clause (i)(II) of this 
                        subparagraph.
                    (B) Extended delay of notification.--If the 
                notification required under paragraph (2) is delayed 
                under subparagraph (A) of this paragraph, a covered 
                consumer reporting agency that is required to provide 
                notice under paragraph (2) shall provide that notice on 
                an expeditious and practical timeline, as determined 
                appropriate by the Commission, after the date on which 
                the law enforcement or national security delay under 
                subparagraph (A) of this paragraph ends, unless a 
                Federal law enforcement or intelligence agency to which 
                the Commission has provided notice under paragraph 
                (1)(B)(i) provides written notification to the 
                Commission and the covered consumer reporting agency 
                that states--
                            (i) that further delay is necessary; and
                            (ii) the date on which the further delay 
                        shall end.
                    (C) Law enforcement immunity.--No nonconstitutional 
                cause of action shall lie in any court against any 
                agency for acts relating to the delay of notification 
                under subparagraph (A), or the extended delay of 
                notification under subparagraph (B), for law 
                enforcement or national security purposes.
    (b) Penalty.--
            (1) In general.--In the event of a covered breach, the 
        Commission shall, not later than 30 days after the date on 
        which the Commission receives notification of the covered 
        breach under subsection (a)(1)(A), commence a civil action to 
        recover a civil penalty in an appropriate district court of the 
        United States against the covered consumer reporting agency 
        that was subject to the covered breach.
            (2) Determining penalty amount.--
                    (A) In general.--Except as provided in subparagraph 
                (B), in determining the amount of a civil penalty under 
                paragraph (1), the court shall impose a civil penalty 
                on a covered consumer reporting agency of--
                            (i) $100 for each consumer for whom the 
                        first and last name, or the first initial of 
                        the first name and last name, and 1 other item 
                        of personally identifying information were 
                        exposed to an unauthorized party; and
                            (ii) in addition to the penalty imposed 
                        under clause (i), an additional $50 for each 
                        item of personally identifying information of 
                        the consumer, other than an item described in 
                        that clause, that was exposed to an 
                        unauthorized party.
                    (B) Exception.--
                            (i) In general.--Except as provided in 
                        clause (ii), in an action commenced under this 
                        subsection, a court may not impose a civil 
                        penalty in an amount that is more than 50 
                        percent of the gross revenue of the covered 
                        consumer reporting agency against which the 
                        action is brought for the fiscal year before 
                        the fiscal year in which the covered consumer 
                        reporting agency became aware of the covered 
                        breach that is the subject of the action.
                            (ii) Penalty doubled.--In an action 
                        commenced under this subsection, the court 
                        shall impose a civil penalty on a covered 
                        consumer reporting agency in an amount that is 
                        2 times the amount of the penalty described in 
                        subparagraph (A), but not greater than 75 
                        percent of the gross revenue of the covered 
                        consumer reporting agency for the fiscal year 
                        before the fiscal year in which the covered 
                        consumer reporting agency became aware of the 
                        covered breach that is subject to the action, 
                        if--
                                    (I) the covered consumer reporting 
                                agency fails to notify the Commission 
                                of the covered breach before the 
                                deadline established under subsection 
                                (a)(1)(A); or
                                    (II) the covered consumer reporting 
                                agency violates any requirement 
                                described in clause (ii) or (iii) of 
                                section 3(b)(1)(B).
            (3) Proceeds of the penalties.--Of the penalties imposed 
        under this subsection--
                    (A) 50 percent shall be used for cybersecurity 
                research and inspections by the Office; and
                    (B) 50 percent shall be used by the Office to be 
                divided fairly among consumers affected by the covered 
                breach.
            (4) No preemption.--Nothing in this subsection shall 
        preclude an action by a consumer under State or other Federal 
        law.
    (c) Injunctive Relief.--The Commission, acting through the Office, 
may bring suit in an appropriate district court of the United States or 
in the United States court of any territory to require a covered 
consumer reporting agency to implement or correct a particular security 
measure in order to promote effective security in accordance with the 
requirements described in clauses (ii) and (iii) of section 3(b)(1)(B).

SEC. 5. AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT.

    (a) Enforcement Relating to Disclosure of Nonpublic Personal 
Information.--Section 505(a)(7) of the Gramm-Leach-Bliley Act (15 
U.S.C. 6805(a)(7)) is amended by inserting ``, including any consumer 
reporting agency that compiles and maintains files on consumers on a 
nationwide basis (as defined in section 603(p) of the Fair Credit 
Reporting Act (15 U.S.C. 1681a(p)))'' before the period at the end.
    (b) Definitions Relating to Disclosure of Nonpublic Personal 
Information.--Section 509(3) of the Gramm-Leach-Bliley Act (15 U.S.C. 
6809(3)) is amended by adding at the end the following:
                    ``(E) Consumer reporting agencies specifically 
                included.--The term `financial institution' includes 
                any consumer reporting agency that compiles and 
                maintains files on consumers on a nationwide basis (as 
                defined in section 603(p) of the Fair Credit Reporting 
                Act (15 U.S.C. 1681a(p))).''.

SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated $100,000,000 to carry out 
this Act, to remain available until expended.
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