California law requires credit reporting agencies to address security vulnerabilities

State Issues State Legislation Credit Reporting Agency Privacy/Cyber Risk & Data Security Data Breach

On September 19, the California governor signed AB 1859, which requires a credit reporting agency “that owns, licenses, or maintains personal information about a California resident” or a third party that maintains such personal information on behalf of a credit reporting agency to implement available software updates to address security vulnerabilities. Specifically, a credit reporting agency, or applicable third party that knows, or reasonably should know, that a system maintaining personal information is subject to a security vulnerability must, within three days, begin testing for implementation of an available software update, and complete the update no later than 90 days after becoming aware of the vulnerability. The law requires the credit reporting agency to employ “reasonable compensating controls” to reduce the risk of breach until the software update is complete. Additionally, whether or not a software update is available, the law requires the credit reporting agency to keep with industry best practices, including by (i) identifying, prioritizing, and addressing the highest risk security vulnerabilities most quickly; (ii) testing and evaluating compensating controls and how they affect security vulnerabilities; and (iii) requiring, by contract, that third parties implement and maintain appropriate security measures for personal information. The legislation is expected to take effect January 1, 2019.