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Florida’s New Law is Strong “Sunshine” for Data Breaches

By: Aaron Krowne

On June 20, 2014, the Florida legislature passed SB 1524, the Florida Information Protection Act of 2014 (“FIPA”). The law updates Florida’s existing data breach law, creating one of the strongest laws in the nation protecting consumer personal data through the use of strict transparency requirements. FIPA applies to any entity with customers (or users) in Florida – so businesses with a national reach should take heed.

Overview of FIPA

FIPA requires any covered business to make notification of a data breach within 30 days of when the personal information of Florida residents is implicated in the breach. Additionally, FIPA requires the implementation of “reasonable measures” to protect and secure electronic data containing personal information (such as e-mail address/password combinations and medical information), including a data destruction requirement upon disposal of the data.

Be forewarned: The penalties provided under FIPA pack a strong punch. Failure to make the required notification can result in a fine of up to $1,000 a day for up to 30 days; a $50,000 fine for each 30-day period (or fraction thereof) afterwards; and beyond 180 days, $500,000 per breach. Violations are to be treated as “unfair or deceptive trade practices” under Florida law. Of note for businesses that utilize third party data centers and data processors, covered entities may be held liable for these third party agents’ violations of FIPA.

While the potential fines for not following the breach notification protocols are steep, no private right of action exists under FIPA.

The Notification Requirement

Any covered business that discovers a breach must, generally, notify the affected individuals within 30 days of the discovery of the breach. The business must also notify the Florida Attorney General within 30 days if more than 500 Florida residents are affected.

However, if the cost of sending individual breach notifications is estimated to be over $250,000, or where over 500,000 customers are affected, businesses may satisfy their obligations under FIPA by notifying customers via a conspicuous web site posting and by running ads in the affected areas (as well as filing a report with the Florida AG’s office).

Where a covered business reasonably self-determines that there has been no harm to Florida residents, and therefore notifications are not required, it must document this determination in writing, and must provide such written determination to the Florida AG’s office within 30 days.

Finally, FIPA provides a strong incentive for businesses to encrypt their consumer data, as notification to affected individuals is not required if the personal information was encrypted.

Implications and Responsibilities

 One major take-away of the FIPA responsibilities outlined above is the importance of formulating and writing a data security policy. FIPA requires the implementation of “reasonable measures” to protect and secure personal information, implying that companies should already have such measures formulated. Having a carefully crafted data security policy will also help covered businesses to determine what, if any, harm has occurred after a breach and whether individual reporting is ultimately required.

For all of the above-cited reasons, FIPA adds urgency to a business formulating a privacy and data security policy if it does not have one – and if it already has one, making sure that it meets the FIPA requirements. Should you have any questions do not hesitate to contact one of OlenderFeldman’s certified privacy attorneys to make sure your data security policy adequately responds to breaches as prescribed under FIPA.