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House Financial Services Members Circulate Draft Data Security Legislation
Wednesday, February 21, 2018 6:40 AM

Two members of the House Financial Services Committee, Financial Institutions Subcommittee Chairman Blaine Luetkemeyer (R-Mo.) and Rep. Carolyn Maloney (D-N.Y.), are circulating bipartisan draft legislation that would set a national data security standard and require prompt notification when a data breach occurs.

Cornerstone and CUNA have been pushing for this type of legislation, firm in the stance that merchants should be held to the same standards credit unions are and should therefore pay the costs of any data breaches that occur at those merchants' businesses.

The legislation would require anyone handling sensitive information to “develop, implement, and maintain administrative, technical, and physical safeguards that are reasonably designed to protect information from unauthorized acquisition that is reasonably likely to result in identity theft, fraud, or economic loss.” 

The bill builds on a 2015 piece of legislation put forward by former Reps. Randy Neugebauer (R-Texas) and John Carney (D-Del.) requiring businesses to have a breach notification program, designate a person to be in charge of data security, and have boards review a company's data security program annually.

The new draft bill would establish a new breach notification regime and federal security standards on the handling of personal information and states that any federal law supersedes state laws and gives the Federal Trade Commission enforcement powers.

Financial institutions and healthcare companies that already have data security requirements would be considered in compliance.

Competing interests have stalled data security legislation in the past. The Financial Services Committee has been considered more favorable to financial institutions, while the House Energy and Commerce Committee has favored merchants.