Delaware Requires Data Security in New Law

Delaware has become the latest state to enact legislation on computer security, joining at least 13 other states in setting specific requirements for companies doing business within their borders. Delaware's law is notable in two regards, the first involving the nature of Delaware and the second a critical provision within the law itself.

The bill itself requires that "...any person who conducts business in Delaware and maintains personal information must safeguard that information." It goes on to define what "breach" means and prescribes certain actions to be taken if private information -- like a Social Security number -- is disclosed.

The interesting provision within the law is that it defines "encryption" and then carves out a safe-harbor provision for companies that suffer a breach if the information exposed is encrypted. This safe harbor for encrypted data is likely to have a significant impact on the increase in enterprise encryption because of Delaware's status as a favored state for business incorporation in the US.

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As of 2014, more than two thirds of the companies in the Fortune 500 are incorporated in Delaware. This means that at least two thirds of the United States' largest companies must now look at how they will respond in case of a data breach and whether greater encryption deployment for customer and employee records will be a worthwhile investment in order to provide a safe harbor.

States that have enacted data security laws for private entities have done so in a wide variety of ways, ranging from broad statements about providing reasonable protection for private information to very prescriptive laws dealing with the nature of protection and requirements for disclosure.

With Delaware joining the data protection and security fold, eyes will be on many more states in the upcoming legislative season to see whether the number of governments requiring specific data security steps will grow.

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— Curtis Franklin is the editor of SecurityNow.com. Follow him on Twitter @kg4gwa.