SB-0309, As Passed House, December 14, 2006
HOUSE SUBSTITUTE FOR
SENATE BILL NO. 309
A bill to amend 2004 PA 452, entitled
"Identity theft protection act,"
by amending the title and section 3 (MCL 445.63) and by adding
sections 12, 12a, and 12b.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
An act to prohibit certain acts and practices concerning
identity theft; to require notification of a security breach of a
database that contains certain personal information; to provide for
the powers and duties of certain state and local governmental
officers and entities; to prescribe penalties and provide remedies;
and to repeal acts and parts of acts.
Sec. 3. As used in this act:
(a) "Agency" means a department, board, commission, office,
agency, authority, or other unit of state government of this state.
Senate Bill No. 309 (H-3) as amended December 13, 2006
The term includes an institution of higher education of this state. [The
term does not include a circuit, probate, district, or municipal court.]
(b) "Breach of the security of a database" or "security
breach" means the unauthorized access and acquisition of data that
compromises the security or confidentiality of personal information
maintained by a person or agency as part of a database of personal
information regarding multiple individuals. These terms do not
include unauthorized access to data by an employee or other
individual if the access meets all of the following:
(i) The employee or other individual acted in good faith in
accessing the data.
(ii) The access was related to the activities of the agency or
(iii) The employee or other individual did not misuse any
personal information or disclose any personal information to an
"Child or spousal support" means support
for a child
or spouse, paid or provided pursuant to state or federal law under
a court order or judgment. Support includes, but is not limited to,
any of the following:
(i) Expenses for day-to-day care.
(ii) Medical, dental, or other health care.
(iii) Child care expenses.
(iv) Educational expenses.
(v) Expenses in connection with pregnancy or confinement under
the paternity act, 1956 PA 205, MCL 722.711 to 722.730.
(vi) Repayment of genetic testing expenses, under the paternity
act, 1956 PA 205, MCL 722.711 to 722.730.
(vii) A surcharge as provided by section 3a of the support and
parenting time enforcement act, 1982 PA 295, MCL 552.603a.
"Credit card" means that term as defined
157m of the Michigan penal code, 1931 PA 328, MCL 750.157m.
(e) "Data" means computerized personal information.
"Depository institution" means a state or
chartered bank or a state or federally chartered savings and loan
association, savings bank, or credit union.
(g) "Encrypted" means transformation of data through the use
of an algorithmic process into a form in which there is a low
probability of assigning meaning without use of a confidential
process or key, or securing information by another method that
renders the data elements unreadable or unusable.
"Financial institution" means a depository
institution, an affiliate of a depository institution, a licensee
under the consumer financial services act, 1988 PA 161, MCL
487.2051 to 487.2072, 1984 PA 379, MCL 493.101 to 493.114, the
motor vehicle sales finance act, 1950 (Ex Sess) PA 27, MCL 492.101
to 492.141, the secondary mortgage loan act, 1981 PA 125, MCL
493.51 to 493.81, the mortgage brokers, lenders, and servicers
licensing act, 1987 PA 173, MCL 445.1651 to 445.1684, or the
regulatory loan act, 1939 PA 21, MCL 493.1 to 493.24, a seller
under the home improvement finance act, 1965 PA 332, MCL 445.1101
to 445.1431, or the retail installment sales act, 1966 PA 224, MCL
445.851 to 445.873, or a person subject to subtitle A of title V of
the Gramm-Leach-Bliley act, 15 USC 6801 to 6809.
"Financial transaction device" means that
defined in section 157m of the Michigan penal code, 1931 PA 328,
"Identity theft" means engaging in an act
prohibited in section 5(1).
"Law enforcement agency" means that term
in section 2804 of the public health code, 1978 PA 368, MCL
"Local registrar" means that term as
section 2804 of the public health code, 1978 PA 368, MCL 333.2804.
"Medical records or information" includes,
not limited to, medical and mental health histories, reports,
summaries, diagnoses and prognoses, treatment and medication
information, notes, entries, and x-rays and other imaging records.
"Person" means an individual, partnership,
corporation, limited liability company, association, or other legal
"Personal identifying information" means a
number, or other information that is used for the purpose of
identifying a specific person or providing access to a person's
financial accounts, including, but not limited to, a person's name,
address, telephone number, driver license or state personal
identification card number, social security number, place of
employment, employee identification number, employer or taxpayer
identification number, government passport number, health insurance
identification number, mother's maiden name, demand deposit account
number, savings account number, financial transaction device
account number or the person's account password, stock or other
House Bill No. 309 (H-3) as amended December 13, 2006
security certificate or account number, credit card number, vital
record, or medical records or information.
(p) "Personal information" means the first name or first
initial and last name linked to 1 or more of the following data
elements of a resident of this state:
(i) Social security number.
(ii) Driver license number or state personal identification
(iii) Demand deposit or other financial account number, or
credit card or debit card number, in combination with any required
security code, access code, or password that would permit access to
any of the resident's financial accounts.
(q) "Public utility" means that term as defined in section 1
of 1972 PA 299, MCL 460.111.
(r) "Redact" means to alter or truncate data so that no more
than [ ] 4 sequential digits of a driver license number, state
personal identification card number, or account number, or no more
than 5 sequential digits of a social security number, are
accessible as part of personal information.
( l ) "State registrar" means that term as
section 2805 of the public health code, 1978 PA 368, MCL 333.2805.
"Trade or commerce" means that term as
section 2 of the Michigan consumer protection act, 1971 PA 331, MCL
"Vital record" means that term as defined
2805 of the public health code, 1978 PA 368, MCL 333.2805.
Sec. 12. (1) Unless the person or agency determines that the
security breach has not or is not likely to cause substantial loss
or injury to, or result in identity theft with respect to, 1 or
more residents of this state, a person or agency that owns or
licenses data that are included in a database that discovers a
security breach, or receives notice of a security breach under
subsection (2), shall provide a notice of the security breach to
each resident of this state who meets 1 or more of the following:
(a) That resident's unencrypted and unredacted personal
information was accessed and acquired by an unauthorized person.
(b) That resident's personal information was accessed and
acquired in encrypted form by a person with unauthorized access to
the encryption key.
(2) Unless the person or agency determines that the security
breach has not or is not likely to cause substantial loss or injury
to, or result in identity theft with respect to, 1 or more
residents of this state, a person or agency that maintains a
database that includes data that the person or agency does not own
or license that discovers a breach of the security of the database
shall provide a notice to the owner or licensor of the information
of the security breach.
(3) In determining whether a security breach is not likely to
cause substantial loss or injury to, or result in identity theft
with respect to, 1 or more residents of this state under subsection
(1) or (2), a person or agency shall act with the care an
ordinarily prudent person or agency in like position would exercise
under similar circumstances.
(4) A person or agency shall provide any notice required under
this section without unreasonable delay. A person or agency may
delay providing notice without violating this subsection if either
of the following is met:
(a) A delay is necessary in order for the person or agency to
take any measures necessary to determine the scope of the security
breach and restore the reasonable integrity of the database.
However, the agency or person shall provide the notice required
under this subsection without unreasonable delay after the person
or agency completes the measures necessary to determine the scope
of the security breach and restore the reasonable integrity of the
(b) A law enforcement agency determines and advises the agency
or person that providing a notice will impede a criminal or civil
investigation or jeopardize homeland or national security. However,
the agency or person shall provide the notice required under this
section without unreasonable delay after the law enforcement agency
determines that providing the notice will no longer impede the
investigation or jeopardize homeland or national security.
(5) Except as provided in subsection (11), an agency or person
shall provide any notice required under this section by providing 1
or more of the following to the recipient:
(a) Written notice sent to the recipient at the recipient's
postal address in the records of the agency or person.
(b) Written notice sent electronically to the recipient if any
of the following are met:
(i) The recipient has expressly consented to receive electronic
(ii) The person or agency has an existing business relationship
with the recipient that includes periodic electronic mail
communications and based on those communications the person or
agency reasonably believes that it has the recipient's current
electronic mail address.
(iii) The person or agency conducts its business primarily
through internet account transactions or on the internet.
(c) If not otherwise prohibited by state or federal law,
notice given by telephone by an individual who represents the
person or agency if all of the following are met:
(i) The notice is not given in whole or in part by use of a
(ii) The recipient has expressly consented to receive notice by
telephone, or if the recipient has not expressly consented to
receive notice by telephone, the person or agency also provides
notice under subdivision (a) or (b) if the notice by telephone does
not result in a live conversation between the individual
representing the person or agency and the recipient within 3
business days after the initial attempt to provide telephonic
(d) Substitute notice, if the person or agency demonstrates
that the cost of providing notice under subdivision (a), (b), or
(c) will exceed $250,000.00 or that the person or agency has to
provide notice to more than 500,000 residents of this state. A
person or agency provides substitute notice under this subdivision
by doing all of the following:
(i) If the person or agency has electronic mail addresses for
any of the residents of this state who are entitled to receive the
notice, providing electronic notice to those residents.
(ii) If the person or agency maintains a website, conspicuously
posting the notice on that website.
(iii) Notifying major statewide media. A notification under this
subparagraph shall include a telephone number or a website address
that a person may use to obtain additional assistance and
(6) A notice under this section shall meet all of the
(a) For a notice provided under subsection (5)(a) or (b), be
written in a clear and conspicuous manner and contain the content
required under subdivisions (c) to (g).
(b) For a notice provided under subsection (5)(c), clearly
communicate the content required under subdivisions (c) to (g) to
the recipient of the telephone call.
(c) Describe the security breach in general terms.
(d) Describe the type of personal information that is the
subject of the unauthorized access or use.
(e) If applicable, generally describe what the agency or
person providing the notice has done to protect data from further
(f) Include a telephone number where a notice recipient may
obtain assistance or additional information.
(g) Remind notice recipients of the need to remain vigilant
for incidents of fraud and identity theft.
(7) A person or agency may provide any notice required under
this section pursuant to an agreement between that person or agency
and another person or agency, if the notice provided pursuant to
the agreement does not conflict with any provision of this section.
(8) Except as provided in this subsection, after a person or
agency provides a notice under this section, the person or agency
shall notify each consumer reporting agency that compiles and
maintains files on consumers on a nationwide basis, as defined in
15 USC 1681a(p), of the security breach without unreasonable delay.
A notification under this subsection shall include the number of
notices that the person or agency provided to residents of this
state and the timing of those notices. This subsection does not
apply if either of the following is met:
(a) The person or agency is required under this section to
provide notice of a security breach to 1,000 or fewer residents of
(b) The person or agency is subject to title V of the Gramm-
Leach-Bliley act, 15 USC 6801 to 6809.
(9) A financial institution that is subject to, and has
notification procedures in place that are subject to examination by
the financial institution's appropriate regulator for compliance
with, the interagency guidance on response programs for
unauthorized access to customer information and customer notice
prescribed by the board of governors of the federal reserve system
and the other federal bank and thrift regulatory agencies, or
similar guidance prescribed and adopted by the national credit
union administration, and its affiliates, is considered to be in
compliance with this section.
(10) A person or agency that is subject to and complies with
the health insurance portability and accountability act of 1996,
Public Law 104-191, and with regulations promulgated under that
act, 45 CFR parts 160 and 164, for the prevention of unauthorized
access to customer information and customer notice is considered to
be in compliance with this section.
(11) A public utility that sends monthly billing or account
statements to the postal address of its customers may provide
notice of a security breach to its customers in the manner
described in subsection (5), or alternatively by providing all of
(a) As applicable, notice as described in subsection (5)(b).
(b) Notification to the media reasonably calculated to inform
the customers of the public utility of the security breach.
(c) Conspicuous posting of the notice of the security breach
on the website of the public utility.
(d) Written notice sent in conjunction with the monthly
billing or account statement to the customer at the customer's
postal address in the records of the public utility.
(12) A person that provides notice of a security breach in the
manner described in this section when a security breach has not
occurred, with the intent to defraud, is guilty of a misdemeanor
punishable by imprisonment for not more than 30 days or a fine of
not more than $250.00 for each violation, or both.
(13) Subject to subsection (14), a person that knowingly fails
to provide any notice of a security breach required under this
section may be ordered to pay a civil fine of not more than $250.00
for each failure to provide notice. The attorney general or a
prosecuting attorney may bring an action to recover a civil fine
under this section.
(14) The aggregate liability of a person for civil fines under
subsection (13) for multiple violations of subsection (13) that
arise from the same security breach shall not exceed $750,000.00.
(15) Subsections (12) and (13) do not affect the availability
of any civil remedy for a violation of state or federal law.
(16) This section applies to the discovery or notification of
a breach of the security of a database that occurs on or after the
effective date of the amendatory act that added this section.
(17) This section does not apply to the access or acquisition
by a person or agency of federal, state, or local government
records or documents lawfully made available to the general public.
(18) This section deals with subject matter that is of
statewide concern, and any charter, ordinance, resolution,
regulation, rule, or other action by a municipal corporation or
other political subdivision of this state to regulate, directly or
indirectly, any matter expressly set forth in this section is
Sec. 12a. (1) Subject to subsection (3), a person or agency
that maintains a database that includes personal information
regarding multiple individuals shall destroy any data that contain
personal information concerning an individual when that data is
removed from the database and the person or agency is not retaining
the data elsewhere for another purpose not prohibited by state or
federal law. This subsection does not prohibit a person or agency
from retaining data that contain personal information for purposes
of an investigation, audit, or internal review.
(2) A person who knowingly violates this section is guilty of
a misdemeanor punishable by a fine of not more than $250.00 for
each violation. This subsection does not affect the availability of
any civil remedy for a violation of state or federal law.
(3) A person or agency is considered to be in compliance with
this section if the person or agency is subject to federal law
concerning the disposal of records containing personal identifying
information and the person or agency is in compliance with that
(4) As used in this section, "destroy" means to destroy or
arrange for the destruction of data by shredding, erasing, or
otherwise modifying the data so that they cannot be read,
deciphered, or reconstructed through generally available means.
Sec. 12b. (1) A person shall not distribute an advertisement
or make any other solicitation that misrepresents to the recipient
that a security breach has occurred that may affect the recipient.
(2) A person shall not distribute an advertisement or make any
other solicitation that is substantially similar to a notice
required under section 12(5) or by federal law, if the form of that
notice is prescribed by state or federal law, rule, or regulation.
(3) A person who knowingly or intentionally violates this
section is guilty of a misdemeanor punishable by imprisonment for
not more than 30 days or a fine of not more than $1,000.00 for each
violation, or both. This subsection does not affect the
availability of any civil remedy for a violation of this section or
any other state or federal law.
Enacting section 1. This amendatory act takes effect 180 days
after the date it is enacted.