House Passes Data Accountability Bill

Legislation, which now moves to the Senate, requires data brokers to provide nationwide notice for certain data breaches and allows consumers to verify and to correct information held on them by data brokers.

The U.S. House of Representatives approved legislation Dec. 8 requiring data brokers to establish procedures to verify the accuracy of information that identifies individuals in their databases and to allow consumers to access and request correction of incorrect information. The Data Accountability and Trust Act, approved on a voice vote, would also require data brokers to provide nationwide notice in the event of certain security breaches.

The legislation now moves to the U.S. Senate.

The bill also authorizes the Federal Trade Commission to establish a standard method or methods for destroying obsolete non-electronic data in addition to requiring data brokers to submit their security policies to the FTC in conjunction with a security breach notification or on FTC request. If a breach occurs, the legislation mandates the FTC to conduct a security audit of the data broker.

Data brokers would be exempt from a nationwide notice in the case of a breach if the broker determines that there is no reasonable risk of identity theft, fraud or other unlawful conduct. According to the legislation, data encryption establishes a presumption that no reasonable risk of identity theft, fraud or other unlawful conduct exists following a data breach.

The FTC is also required to establish additional rules to identify any other security methodology or technology, other than encryption, that renders data in electronic form unreadable or indecipherable that could be used for a basis for no reasonable risk to consumers in the case of a breach.

For consumers seeking verification of individual data held by data brokers, the bill requires the brokers to provide to each individual personal information it maintains-other than information that merely identifies an individual's name or address-at the individual's request at least one time per year and at no cost to the individual. The legislation also requires the broker to post a conspicuous notice on its Website on how to obtain the information the broker holds on an individual.

The House bill was sponsored by Rep. Bobby Rush, D-Ill., and co-sponsored by Reps. Joe Barton, R-Texas; George Radanovich, R-Calif.; Jan Schakowsky, D-Ill.; and Cliff Stearns, R-Fla.