Senate Panel Clears Major
Database Security Bill

As Congress rushed to adjourn for its August recess, the Senate Commerce Committee last week approved major database security and identity theft legislation, making it the first congressional panel to take action on the issue. The Senate Judiciary Committee did not act on three bills it was scheduled to consider. That panel and two other Senate committees are expected to weigh in this fall on areas under their jurisdictions before the full Senate can act on the legislation.

The measure passed unanimously Thursday is a modified version of the bipartisan legislation introduced by Senators Smith (R-OR) and Nelson (D-FL), which sets national standards for notifying consumers of data breaches, requires companies and nonprofits to improve their safeguards for sensitive consumer information, and enable consumers to put a freeze on their credit reports. 

The bill should not have a significant impact, if any, on most Kids in the Know members, because it defines “sensitive personal information” covered by the bill as a combination of name and address with one or more of other elements, such as social security or taxpayer identification numbers and financial or credit card numbers.  The legislation would, however, have a significant impact on colleges and universities.

One point of concern is that it allows the Federal Trade Commission (FTC) to expand the definition of “sensitive personal information.”  An amendment to prohibit the FTC from changing what type of information is covered was defeated.

While most aspects of the legislation remained the same, the panel did make several substantive and technical changes to the Smith-Nelson bill. An amendment by Senators Nelson and Dorgan (D-ND) was added to prohibit the sale, purchase and display of Social Security numbers.  Additionally, a few new methods for notifying consumers about possible security breaches were added, and the timeframe in which notification must take place was shortened.

September Action Expected

When Congress reconvenes after Labor Day, the Senate Judiciary, Banking, and Finance Committees will all consider parts of the bill.  The Banking Committee will need to consider provisions related to financial institutions and credit reports, and the Finance Committee may assert some authority over Social Security numbers.  The work of these four panels will then be combined prior to consideration by the full Senate. 

Meanwhile, the House Subcommittee on Commerce, Trade and Consumer Protection announced last week that its leaders intend to introduce bipartisan legislation in September, and move it through both the Subcommittee and full Energy and Commerce Committee next month.