SB1790 - 572R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 44, Arizona Revised Statutes, is amended by adding chapter 42, to read:

CHAPTER 42

DATA BROKERS

ARTICLE 1. GENERAL PROVISIONS

START_STATUTE44-8041. Definitions

In this chapter, unless the context otherwise requires:

1. "Biometric data" means data generated by automatic measurements of an individual's biological patterns or characteristics, including fingerprint, voiceprint, retina or iris scan, information pertaining to an individual's Deoxyribonucleic acid or other unique biological pattern or characteristic that is used to identify a specific individual.

2. "Child" means an individual who is less than sixteen years of age.

3. "Collect" in the context of data, means to obtain, receive, access or otherwise acquire the data by any means, including by purchasing or renting the data.

4. "Data broker" means a business entity that collects, processes or transfers personal data that the business entity did not collect directly from the individual who is linked or linkable to the data.

5. "Deidentified data" means data that cannot reasonably be linked to an identified or identifiable individual or to a device linked to that individual.

6. "Employee":

(a) Includes an individual who is a director, officer, staff member, trainee, volunteer or intern of an employer or an individual who is working as an independent contractor for an employer, regardless of whether the individual is paid, unpaid or employed on a temporary basis.

(b) Does not include an individual contractor who is a service provider.

7. "Employee data" means information collected, processed or transferred by an employer if the information is related to any of the following:

(a) A job applicant and is collected during the course of the hiring and application process and is collected, processed or transferred solely relating to the status of the employee as a current or former job applicant of the employer.

(b) An employee who is acting in a professional capacity for the employer, including the employee's business contact information such as the employee's name, position, title, business telephone number, business address or business email address, and is collected, processed or transferred solely relating to the professional activities of the employee on behalf of the employer.

(c) An employee's emergency contact information and is collected, processed or transferred solely for the purpose of having an emergency contact on file for the purpose of transferring the information in case of an emergency.

(d) An employee or the employee's spouse, dependent, covered family member or beneficiary and is collected, processed or transferred solely for The purpose of administering benefits to which the employee described is entitled or to which another person described by this subdivision is entitled on the basis of the employee's position with the employer.

8. "Genetic data":

(a) Means any data, regardless of format, concerning an individual's genetic characteristics.

(b) Includes both:

(i) Raw sequence data derived from sequencing all or a portion of an individual's extracted DNA.

(ii) Genotypic and phenotypic information obtained from analyzing an individual's raw sequence data.

9. "Individual" means a natural person who resides in this state.

10. "known child" means a child under circumstances in which a data broker has knowledge of, or wilfully disregards obtaining knowledge of, or should know, or reasonably should haVE known of, the child's age.

11."Personal data":

(a) Means any information, including sensitive data, that is linked or reasonably linkable to an identified or identifiable individual.

(b) Includes pseudonymous data if the information is used by a controller or processor in conjunction with additional information that reasonably links the information to an identified or identifiable individual.

12. "Precise geolocation data":

(a) Means information accessed on a device or technology that shows the past or present physical location of an individual or the individual's device with sufficient precision to identify ground level location information of the individual or device in a range of not more than one thousand eight hundred fifty feet.

(b) Does not include location information regarding an individual or device that is identifiable or derived solely from the visual content of a legally obtained image, including the location of a device that captured the image.

13. "Process" in the context of data, means an operation or set of operations that are performed, whether by manual or automated means, on personal data or on sets of personal data, such as the collection, use, storage, disclosure, analysis, deletion or modification of personal data.

14. "Publicly available information" means information that is any of the following:

(a) Is lawfully made available through government records.

(b) a business has a reasonable basis to believe is lawfully available to the general public through widely distributed media.

(c) Is lawfully made available by a consumer, or by a person to whom a consumer has disclosed the information, unless the consumer has restricted access to the information for a specific audience.

15. "Sensitive data" means:

(a) a government-issued identifier that is not required by law to be publicly available, including:

(i) a social security number.

(ii) a passport number.

(iii) a driver license number.

(b) information that describes or reveals an individual's mental or physical health diagnosis, condition or treatment.

(i) a financial account number.

(ii) a credit or debit card number.

(iii) Information that describes or reveals the income level or bank account balances of the individual.

(iv) transaction history.

(v) electronic payment numbers or histories.

(vi) accounts related to digital payment networks.

(vii) mobile payment SERVICES or similar types of services or networks.

(viii) payment of health care services or related debt collection.

(d) Biometric data.

(e) Genetic data.

(f) Precise geolocation data.

(g) An individual's private communication that:

(i) If made using a device, the device is not provided by the individual's employer and does not provide conspicuous notice to the individual that the employer may access communication made using the device.

(ii) Includes, unless the data broker is the sender or an intended recipient of the communication, any form of messages sent from a communication system and the individual's voicemails, emails, texts, direct messages or mail, information that identifies the parties involved in the communications and information that relates to the transmission of the communications, including telephone numbers called, telephone numbers from which calls are placed, the time calls are made, call duration and location information of the parties to the call.

(h) a log-in credential, security code or access code for an account or device.

(i) information identifying the sexual behavior of the individual.

(j) Calendar information, address book information, phone or text logs, photos, audio recordings or videos that both:

(i) Are maintained for private use by an individual and stored on the individual's device or in another location.

(ii) are not communicated using a device provided by the individual's employer. This item does not apply if the employee communicates on a device provided by the employer and the employer notifies the employee that the employer may access communication made using the device.

(k) a photograph, film, video recording or other similar medium that shows the individual or a part of the individual nude or wearing undergarments.

(l) information revealing the video content requested or selected by an individual.

(m) Information regarding a known child.

(n) Information revealing an individual's racial or ethnic origin, color, sex, gender, citizenship, immigration status, religious beliefs or union membership.

(o) Information identifying an individual's online activities accessing multiple Internet websites or online services.

(p) Information collected, processed or transferred for the purpose of identifying information described by this paragraph.

16. "Service provider" means a person that is bound by contractual obligations or an agreement receives, collects, processes or transfers personal data on behalf of and only at the direction of a business or governmental entity, including a business or governmental entity that is another service provider, so the person may perform a service or function with or on behalf of the business or governmental entity and to the extent a person processes personal data for the person's own purposes, the person is not acting as a service provider.

17. "Transfer" means to disclose, release, share, disseminate, make available, sell or license data by any means or medium. END_STATUTE

START_STATUTE44-8042. Applicability to data

A. Except as provided in Subsection b of this section, this chapter applies to personal data that is collected, transferred or processed from an individual by a data broker.

b. This chapter does not apply to the following data:

1. Deidentified data, if the data broker:

(a) Takes reasonable technical measures to ensure that the data is not able to be used to identify an individual with whom the data is associated.

(b) Publicly commits in a clear and conspicuous manner to both:

(i) Process and transfer the data solely in a deidentified form without any reasonable means for reidentification.

(ii) Not attempt to identify the information to an individual with whom the data is associated.

(i) Comply with this paragraph with respect to the information.

(ii) Require that the contractual obligations be included in any subsequent transfer of the data to another person.

2. Employee data.

3. Publicly available information.

4. Inferences made exclusively from multiple independent sources of publicly available information that do not reveal sensitive data with respect to an individual. END_STATUTE

START_STATUTE44-8043. Applicability to entities

A. Except as provided in Subsection b of this section, this chapter applies only to a data broker that, in a twelve-month period, makes either:

1. More than fifty percent of the data broker's revenue directly from processing or transferring personal data that is not collected by the data broker directly from the individuals to whom the data pertains.

2. Revenue directly from processing or transferring the personal data of more than fifty thousand individuals if the data broker does not collect the data directly from the individuals to whom the data pertains.

B. This chapter does not apply to:

1. A service provider, including a service provider that engages in the business of processing employee data for an employer for the sole purpose of providing benefits to the employer's employees.

2. A federal, state, tribal, territorial or local governmental entity, including a body, authority, board, bureau, commission, district, agency or political subdivision of a governmental entity.

3. An entity that serves as a congressionally designated nonprofit, national resource center or clearinghouse to provide assistance to victims, families, child-serving professionals and the general public on missing and exploited children issues.

4. A consumer reporting agency or other person that furnishes information for inclusion in a consumer credit report or obtains a consumer credit report, but only to the extent that the consumer reporting agency or the person engages in activity regulated or authorized by the Fair Credit Reporting Act (15 United States Code Sections 1681 through 1681x), including the collection, maintenance, disclosure, sale, communication or use of any personal information bearing on a consumer's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living.END_STATUTE

START_STATUTE44-8044. Notice on website or mobile application

A data broker that maintains an Internet website or mobile application shall post a conspicuous notice on the website or application that:

1. States that the entity maintaining the website or application is a data broker.

2. Is clear, not misleading and readily accessible by the general public, including individuals with a disability.

3. Contains language as prescribed by the secretary of state in rule for inclusion in the notice.

4. Informs a consumer how to exercise any consumer rights the consumer may have under this chapter, which is KNOWN AS the arizona consumer data protection act, or Chapter 10, article 7 of this title. END_STATUTE

START_STATUTE44-8045. Registration; fees; renewal

A. To conduct business in this state, a data broker must register with the secretary of state by filing a registration statement and paying a registration fee in an amount to be determined by the secretary of state.

b. The registration statement must include:

1. The legal name of the data broker.

2. A contact person and the primary physical address, email address, telephone number and website address for the data broker.

3. A description of the categories of data that the data broker processes and transfers.

4. A statement of whether the data broker implements a purchaser credentialing process.

5. If the data broker has knowledge, should have knowledge or reasonably should have knowledge, that the data broker possesses sensitive data, including personal data of a known child:

(a) A statement detailing the data collection practices, databases, sales activities and opt out policies that are applicable to the personal data.

(b) A statement on how the data broker complies with applicable federal and state laws regarding the collection, use or disclosure of sensitive data, including personal data from and about a child on the Internet.

6. The number of security breaches the data broker has experienced during the year immediately preceding the year in which the registration is filed, and if known, the total number of consumers affected by each breach.

C. A registration of a data broker may include any additional information or explanation the data broker chooses to provide to the secretary of state concerning the data broker's data collection practices.

D. A registration certificate expires on the first anniversary of the registration certificate's date of issuance. A data broker may renew a registration certificate by filing a renewal application, in the form prescribed by the secretary of state, and paying a renewal fee in an amount determined by the secretary of state. END_STATUTE

START_STATUTE44-8046. Registry of data brokers

The secretary of state shall establish and maintain on the secretary of state's website a searchable, central registry of data brokers registered under Section 44-8045. The registry must include:

1. A search feature that allows a person that is searching the registry to identify a specific data broker.

2. For each data broker, the information prescribed in Section 44-8045, subsection b. END_STATUTE

START_STATUTE44-8047. Protection of personal data

A. A data broker that is conducting business in this state shall protect personal data that the data broker holds.

b. A data broker shall develop, implement and maintain a comprehensive information security plan that is written in one or more readily accessible parts and contains administrative, technical and physical safeguards that are appropriate for all of the following:

1. the data broker's size, scope and type of business.

2. the amount of resources available to the data broker.

3. the amount of data stored by the data broker.

4. the need for security and confidentiality of personal data stored by the data broker.

c. The comprehensive information security plan required by this section must:

1. Incorporate safeguards that are consistent with the safeguards for protection of personal data and information of a similar character under state or federal laws applicable to the data broker.

2. include the designation of one or more employees of the data broker to maintain the plan.

3. require the identification and assessment of reasonably foreseeable internal and external risks to the security, confidentiality and integrity of any electronic, paper or other record containing personal data and the establishment of a process for evaluating and improving, as necessary, the effectiveness of the current safeguards for limiting those risks, including by:

(a) requiring ongoing employee and contractor education and training, including education and training for temporary employees and contractors of the data broker, on the proper use of security procedures and protocols and the importance of personal data security.

(b) mandating employee compliance with policies and procedures established under the plan.

4. include security policies for the data broker's employees relating to the storage, access and transportation of records containing personal data outside of the broker's physical business premises.

5. provide disciplinary measures for violations of a policy or procedure established under the plan.

6. include measures for preventing a terminated employee from accessing records containing personal data.

7. provide policies for the supervision of third-party service providers that include:

(a) taking reasonable steps to select and retain third-party service providers that are capable of maintaining appropriate security measures to protect personal data consistent with applicable law.

(b) requiring third-party service providers by contract to implement and maintain appropriate security and privacy measures for personal data.

8. provide reasonable restrictions on physical access to records containing personal data, including by requiring the records containing the data to be stored in a locked facility, storage area or container.

9. include regular monitoring to ensure that the plan is operating in a manner reasonably calculated to prevent unauthorized access to or unauthorized use of personal data and, as necessary, upgrading information safeguards to limit the risk of unauthorized access to or unauthorized use of personal data.

10. require the regular review of the scope of the plan's security measures that must occur both:

(a) at least annually.

(b) whenever there is a material change in the data broker's business practices that may reasonably affect the security and privacy or integrity of records containing personal data.

11. require the documentation of responsive actions taken in connection with any incident involving a breach of security, including a mandatory post-incident review of each event and the actions taken, if any, to make changes in business practices relating to protection of personal data in response to that event.

12. to the extent technically feasible, include the following procedures and protocols with respect to computer system security requirements or procedures and protocols providing a higher degree of security for the protection of personal data:

(a) the use of secure user authentication protocols that include each of the following features:

(i) controlling user login credentials and other identifiers.

(ii) using a reasonably secure method of assigning and selecting passwords or using unique identifier technologies, including biometrics or token devices.

(iii) controlling data security passwords to ensure that the passwords are kept in a location and format that do not compromise the security of the data that the passwords protect.

(iv) restricting access to only active users and active user accounts.

(v) blocking access to user credentials or identification after multiple unsuccessful attempts to gain access.

(b) the use of secure access control measures, including:

(i) restricting access to records and files containing personal data to only employees or contractors who need access to that personal data to perform the job duties of the employees or contractors.

(ii) assigning to each employee or contractor who has access to a computer containing personal data a unique identification and a password that may not be a vendor-supplied default password or using another protocol reasonably designed to maintain the integrity of the security of the access controls to personal data.

(i) transmitted records and files containing personal data that travels across public networks.

(ii) data containing personal data that is transmitted wirelessly.

(d) reasonable monitoring of systems for unauthorized use of or access to personal data.

(e) encryption of all personal data stored on laptop computers or other portable devices.

(f) for files containing personal data on a system that is connected to the Internet, the use of reasonably current firewall protection and operating system security patches that are reasonably designed to maintain the integrity of the personal data.

(g) the use of either:

(i) a reasonably current version of system security agent software that must include malware protection and reasonably current patches and virus definitions.

(ii) a version of system security agent software that is supportable with current patches and virus definitions and is set to receive the most current security updates on a regular basis. END_STATUTE

START_STATUTE44-8048. Violation; civil penalty; attorney general action

A. A data broker that violates Section 44-8044 or 44-8045 is subject to a civil penalty as follows:

1. $100 for each day that the violation continues.

2. An amount equal to the amount of unpaid registration fees for each year that the entity fails to register in violation of Section 44-8045.

3. An amount not to exceed $10,000 in a twelve-month period.

B. The attorney general may bring an action to recover a civil penalty imposed under this section. The attorney general may recover reasonable attorney fees and court costs incurred in bringing the action. END_STATUTE

START_STATUTE44-8049. Unfair trade practice

A violation of Section 44-8047 constitutes an unfair trade practice pursuant to section 44-1522. END_STATUTE

START_STATUTE44-8050. Rulemaking

THe secretary of state may adopt rules pursuant to title 41, chapter 6 to carry out this chapter. END_STATUTE

Sec. 2. Short title

This act may be cited as the "Arizona Consumer Data Protection Act".