Data Privacy Violations under New York Law

Personal data can range from basic contact details to highly sensitive information. According to New York’s data protection laws, businesses must obtain explicit consent from individuals before collecting or processing their personal data. The following are common types of personal data collected by businesses:

• Personal Identifiers: Name, date of birth, gender, and other identifiers.
• Contact Information: Email addresses, phone numbers, and home addresses.
• Financial Data: Credit card numbers, bank account information, and transaction history.
• Health and Medical Information: Medical records, insurance details, and other health-related data.
• Online Identifiers: GPS location, IP addresses, and cookies tracking online behavior.
• Sensitive Data: Religious beliefs, racial or ethnic origin, and other personal details requiring explicit consent.

Under the New York State Privacy Law, businesses are required to inform individuals about the type of data they are collecting and the purpose for which it will be used. Moreover, explicit consent must be obtained, especially when collecting sensitive information. Failing to provide clear information about data collection purposes and processing activities may expose businesses to legal challenges.

Numerous companies have been fined or penalized due to violations of the Personal Privacy Protection Law. The following examples highlight the consequences of non-compliance:

Case 1: Company C (Online Learning Service Provider)

Incident: A breach of security led to the exposure of personal information of 1.6 million users due to inadequate protection of administrative account credentials.

Violation: The company failed to implement necessary security measures, such as IP restrictions and encryption of sensitive data.

Penalties: The company was fined $5,360 and faced an administrative fine of $720.

Case 2: Company K (Home Shopping and TV Content Provider)

Incident: 98,000 users' personal data was leaked due to a cyber attack.

Violation: The company neglected to take adequate steps to prevent hacking attempts, including failing to block repetitive login attempts.

Penalties: A fine of $491 and an administrative penalty of $690  were imposed.

These cases illustrate the risks associated with mishandling personal data and the importance of complying with data protection laws. In New York, violations can result in substantial fines and penalties, as well as reputational damage to the business.

One of the most important steps in data protection is obtaining explicit consent from individuals before collecting, storing, or processing their personal data. The consent process must be transparent, and individuals should be fully informed about what data is being collected and how it will be used.

• Clear Disclosure: Businesses must clearly state the purpose for which the data is being collected, the types of data being collected, and the duration for which the data will be retained.
• Explicit Consent: Consent must be obtained through an affirmative action, such as checking a box or signing an electronic agreement. This ensures that individuals are fully aware of their rights and are willingly providing their information.
• Sensitive Data: For sensitive data such as health records or religious beliefs, explicit consent must be obtained before collection. Businesses should also ensure that the data is protected with strong security measures.

Marketing and advertising are vital components of many businesses, but they must be conducted in compliance with data protection laws. Under New York law, businesses must obtain prior consent from individuals before sending any promotional materials, such as marketing emails or text messages.

• Opt-In Consent: Ensure that individuals have agreed to receive marketing communications, and keep records of when and how consent was obtained.
• Opt-Out Mechanism: Provide individuals with a clear and simple way to opt-out of receiving further marketing communications. This can be done through unsubscribe links in emails or instructions on how to stop receiving messages.

Businesses must also be aware that failing to comply with marketing consent requirements can result in hefty fines. The Information Security and Privacy Protection Act in New York mandates that businesses must establish procedures to obtain and record consent for marketing activities.

Data breaches are one of the most significant risks for businesses handling personal data. In the event of a data breach, businesses may face civil liabilities, including compensation to affected individuals, and criminal penalties for failing to secure personal data properly.

• Timely Response: If a data breach occurs, businesses must act promptly to secure the data and prevent further harm. Affected individuals must be notified as soon as possible, and steps must be taken to prevent similar breaches in the future.
• Data Protection Measures: Businesses must implement technical and organizational measures to safeguard personal data, including encryption, access control, and secure storage practices. Regular audits should be conducted to ensure the data protection system is robust and up-to-date.
• Regulatory Reporting: New York law requires businesses to report certain data breaches to regulators. Depending on the severity of the breach, businesses may be required to report the incident to the New York State Attorney General and the Department of Financial Services.

New York’s data protection laws are frequently updated, and businesses must stay informed about regulatory changes. Executives should arrange regular legal audits to ensure that data collection practices, privacy policies, and security measures are in line with current laws.

• Compliance with Changes in Law: Ensure that privacy policies and procedures are updated regularly to reflect any changes in data protection laws.
• Data Handling Procedures: Review data collection, processing, and storage practices periodically to identify any gaps in compliance.

In addition to legal audits, businesses should implement internal security checks to assess how personal data is handled within the organization. This includes reviewing data storage systems, access control protocols, and the security measures implemented to prevent unauthorized access.

• Data Encryption: Ensure that all sensitive data is encrypted both in transit and at rest.
• Employee Training: Regularly train employees on best practices for handling personal data and ensure that they are aware of the company’s policies and procedures related to data protection.