S.B. No. 2105
AN ACT
relating to the registration of and certain other requirements
relating to data brokers; providing a civil penalty and authorizing
a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 11, Business & Commerce Code,
is amended by adding Chapter 509 to read as follows:
CHAPTER 509. DATA BROKERS
Sec. 509.001. DEFINITIONS. In this chapter:
(1) "Biometric data" means data generated by automatic
measurements of an individual's biological patterns or
characteristics, including fingerprint, voiceprint, retina or iris
scan, information pertaining to an individual's DNA, or another
unique biological pattern or characteristic that is used to
identify a specific individual.
(2) "Child" means an individual younger than 13 years
of age.
(3) "Collect," in the context of data, means to
obtain, receive, access, or otherwise acquire the data by any
means, including by purchasing or renting the data.
(4) "Data broker" means a business entity whose
principal source of revenue is derived from the collecting,
processing, or transferring of personal data that the entity did
not collect directly from the individual linked or linkable to the
data.
(5) "Deidentified data" means data that cannot
reasonably be linked to an identified or identifiable individual or
to a device linked to that individual.
(6) "Employee" includes an individual who is a
director, officer, staff member, trainee, volunteer, or intern of
an employer or an individual working as an independent contractor
for an employer, regardless of whether the individual is paid,
unpaid, or employed on a temporary basis. The term does not include
an individual contractor who is a service provider.
(7) "Employee data" means information collected,
processed, or transferred by an employer if the information:
(A) is related to:
(i) a job applicant and was collected
during the course of the hiring and application process;
(ii) an employee who is acting in a
professional capacity for the employer, including the employee's
business contact information such as the employee's name, position,
title, business telephone number, business address, or business
e-mail address;
(iii) an employee's emergency contact
information; or
(iv) an employee or the employee's spouse,
dependent, covered family member, or beneficiary; and
(B) was collected, processed, or transferred
solely for:
(i) a purpose relating to the status of a
person described by Paragraph (A)(i) as a current or former job
applicant of the employer;
(ii) a purpose relating to the professional
activities of an employee described by Paragraph (A)(ii) on behalf
of the employer;
(iii) the purpose of having an emergency
contact on file for an employee described by Paragraph (A)(iii) and
for transferring the information in case of an emergency; and
(iv) the purpose of administering benefits
to which an employee described by Paragraph (A)(iv) is entitled or
to which another person described by that paragraph is entitled on
the basis of the employee's position with the employer.
(8) "Genetic data" means any data, regardless of
format, concerning an individual's genetic characteristics. The
term includes:
(A) raw sequence data derived from sequencing all
or a portion of an individual's extracted DNA; and
(B) genotypic and phenotypic information
obtained from analyzing an individual's raw sequence data.
(9) "Individual" means a natural person residing in
this state.
(10) "Known child" means a child under circumstances
where a data broker has actual knowledge of, or wilfully disregards
obtaining actual knowledge of, the child's age.
(11) "Personal data" means any information, including
sensitive data, that is linked or reasonably linkable to an
identified or identifiable individual. The term includes
pseudonymous data when the information is used by a controller or
processor in conjunction with additional information that
reasonably links the information to an identified or identifiable
individual. The term does not include deidentified data, employee
data, or publicly available information.
(12) "Precise geolocation data" means information
accessed on a device or technology that shows the past or present
physical location of an individual or the individual's device with
sufficient precision to identify street-level location information
of the individual or device in a range of not more than 1,850 feet.
The term does not include location information regarding an
individual or device identifiable or derived solely from the visual
content of a legally obtained image, including the location of a
device that captured the image.
(13) "Process," in the context of data, means an
operation or set of operations performed, whether by manual or
automated means, on personal data or on sets of personal data, such
as the collection, use, storage, disclosure, analysis, deletion, or
modification of personal data.
(14) "Publicly available information" means
information that:
(A) is lawfully made available through
government records;
(B) a business has a reasonable basis to believe
is lawfully available to the general public through widely
distributed media; or
(C) is lawfully made available by a consumer, or
by a person to whom a consumer has disclosed the information, unless
the consumer has restricted access to the information to a specific
audience.
(15) "Sensitive data" means:
(A) a government-issued identifier not required
by law to be available publicly, including:
(i) a social security number;
(ii) a passport number; or
(iii) a driver's license number;
(B) information that describes or reveals an
individual's mental or physical health diagnosis, condition, or
treatment;
(C) an individual's financial information,
except the last four digits of a debit or credit card number,
including:
(i) a financial account number;
(ii) a credit or debit card number; or
(iii) information that describes or reveals
the income level or bank account balances of the individual;
(D) biometric data;
(E) genetic data;
(F) precise geolocation data;
(G) an individual's private communication that:
(i) if made using a device, is not made
using a device provided by the individual's employer that provides
conspicuous notice to the individual that the employer may access
communication made using the device; and
(ii) includes, unless the data broker is
the sender or an intended recipient of the communication:
(a) the individual's voicemails,
e-mails, texts, direct messages, or mail;
(b) information that identifies the
parties involved in the communications; and
(c) information that relates to the
transmission of the communications, including telephone numbers
called, telephone numbers from which calls were placed, the time
calls were made, call duration, and location information of the
parties to the call;
(H) a log-in credential, security code, or access
code for an account or device;
(I) information identifying the sexual behavior
of the individual in a manner inconsistent with the individual's
reasonable expectation regarding the collection, processing, or
transfer of the information;
(J) calendar information, address book
information, phone or text logs, photos, audio recordings, or
videos:
(i) maintained for private use by an
individual and stored on the individual's device or in another
location; and
(ii) not communicated using a device
provided by the individual's employer unless the employee was
provided conspicuous notice that the employer may access
communication made using the device;
(K) a photograph, film, video recording, or other
similar medium that shows the individual or a part of the individual
nude or wearing undergarments;
(L) information revealing the video content
requested or selected by an individual that is not:
(i) collected by a provider of broadcast
television service, cable service, satellite service, streaming
media service, or other video programming, as that term is defined
by 47 U.S.C. Section 613(h)(2); or
(ii) used solely for transfers for
independent video measurement;
(M) information regarding a known child;
(N) information revealing an individual's racial
or ethnic origin, color, religious beliefs, or union membership;
(O) information identifying an individual's
online activities over time accessing multiple Internet websites or
online services; or
(P) information collected, processed, or
transferred for the purpose of identifying information described by
this subdivision.
(16) "Service provider" means a person that receives,
collects, processes, or transfers personal data on behalf of, and
at the direction of, a business or governmental entity, including a
business or governmental entity that is another service provider,
in order for the person to perform a service or function with or on
behalf of the business or governmental entity.
(17) "Transfer," in the context of data, means to
disclose, release, share, disseminate, make available, sell, or
license the data by any means or medium.
Sec. 509.002. APPLICABILITY TO CERTAIN DATA. (a) Except as
provided by Subsection (b), this chapter applies to personal data
from an individual that is collected, transferred, or processed by
a data broker.
(b) This chapter does not apply to the following data:
(1) deidentified data, if the data broker:
(A) takes reasonable technical measures to
ensure that the data is not able to be used to identify an
individual with whom the data is associated;
(B) publicly commits in a clear and conspicuous
manner:
(i) to process and transfer the data solely
in a deidentified form without any reasonable means for
reidentification; and
(ii) to not attempt to identify the
information to an individual with whom the data is associated; and
(C) contractually obligates a person that
receives the information from the provider:
(i) to comply with this subsection with
respect to the information; and
(ii) to require that those contractual
obligations be included in any subsequent transfer of the data to
another person;
(2) employee data;
(3) publicly available information;
(4) inferences made exclusively from multiple
independent sources of publicly available information that do not
reveal sensitive data with respect to an individual; or
(5) data subject to Title V, Gramm-Leach-Bliley Act
(15 U.S.C. Section 6801 et seq.).
Sec. 509.003. APPLICABILITY OF CHAPTER TO CERTAIN ENTITIES.
(a) Except as provided by Subsection (b), this chapter applies only
to a data broker that, in a 12-month period, derives:
(1) more than 50 percent of the data broker's revenue
from processing or transferring personal data that the data broker
did not collect directly from the individuals to whom the data
pertains; or
(2) revenue from processing or transferring the
personal data of more than 50,000 individuals that the data broker
did not collect directly from the individuals to whom the data
pertains.
(b) This chapter does not apply to:
(1) a service provider, including a service provider
that engages in the business of processing employee data for a
third-party employer for the sole purpose of providing benefits to
the third-party employer's employees;
(2) a person or entity that collects personal data
from another person or entity to which the person or entity is
related by common ownership or corporate control, provided a
reasonable consumer would expect the persons or entities to share
data;
(3) a federal, state, tribal, territorial, or local
governmental entity, including a body, authority, board, bureau,
commission, district, agency, or political subdivision of a
governmental entity;
(4) an entity that serves as a congressionally
designated nonprofit, national resource center, or clearinghouse
to provide assistance to victims, families, child-serving
professionals, and the general public on missing and exploited
children issues;
(5) a consumer reporting agency or other person or
entity that furnishes information for inclusion in a consumer
credit report or obtains a consumer credit report, but only to the
extent the person or entity engages in activity regulated or
authorized by the Fair Credit Reporting Act (15 U.S.C. Section 1681
et seq.), including the collection, maintenance, disclosure, sale,
communication, or use of any personal information bearing on a
consumer's creditworthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode
of living; or
(6) a financial institution subject to Title V,
Gramm-Leach-Bliley Act (15 U.S.C. Section 6801 et seq.).
Sec. 509.004. NOTICE ON WEBSITE OR MOBILE APPLICATION. A
data broker that maintains an Internet website or mobile
application shall post a conspicuous notice on the website or
application that:
(1) states that the entity maintaining the website or
application is a data broker;
(2) is clear, not misleading, and readily accessible
by the general public, including individuals with a disability; and
(3) contains language provided by rule of the
secretary of state for inclusion in the notice.
Sec. 509.005. REGISTRATION. (a) To conduct business in
this state, a data broker to which this chapter applies shall
register with the secretary of state by filing a registration
statement and paying a registration fee of $300.
(b) The registration statement must include:
(1) the legal name of the data broker;
(2) a contact person and the primary physical address,
e-mail address, telephone number, and Internet website address for
the data broker;
(3) a description of the categories of data the data
broker processes and transfers;
(4) a statement of whether or not the data broker
implements a purchaser credentialing process;
(5) if the data broker has actual knowledge that the
data broker possesses personal data of a known child:
(A) a statement detailing the data collection
practices, databases, sales activities, and opt-out policies that
are applicable to the personal data of a known child; and
(B) a statement on how the data broker complies
with applicable federal and state law regarding the collection,
use, or disclosure of personal data from and about a child on the
Internet; and
(6) the number of security breaches the data broker
has experienced during the year immediately preceding the year in
which the registration is filed, and if known, the total number of
consumers affected by each breach.
(c) A registration of a data broker may include any
additional information or explanation the data broker chooses to
provide to the secretary of state concerning the data broker's data
collection practices.
(d) A registration certificate expires on the first
anniversary of its date of issuance. A data broker may renew a
registration certificate by filing a renewal application, in the
form prescribed by the secretary of state, and paying a renewal fee
in the amount of $300.
Sec. 509.006. REGISTRY OF DATA BROKERS. (a) The secretary
of state shall establish and maintain, on its Internet website, a
searchable, central registry of data brokers registered under
Section 509.005.
(b) The registry must include:
(1) a search feature that allows a person searching
the registry to identify a specific data broker; and
(2) for each data broker, the information filed under
Section 509.005(b).
Sec. 509.007. PROTECTION OF PERSONAL DATA: COMPREHENSIVE
INFORMATION SECURITY PROGRAM. (a) A data broker conducting
business in this state has a duty to protect personal data held by
that data broker as provided by this section.
(b) A data broker shall develop, implement, and maintain a
comprehensive information security program that is written in one
or more readily accessible parts and contains administrative,
technical, and physical safeguards that are appropriate for:
(1) the data broker's size, scope, and type of
business;
(2) the amount of resources available to the data
broker;
(3) the amount of data stored by the data broker; and
(4) the need for security and confidentiality of
personal data stored by the data broker.
(c) The comprehensive information security program required
by this section must:
(1) incorporate safeguards that are consistent with
the safeguards for protection of personal data and information of a
similar character under state or federal laws and regulations
applicable to the data broker;
(2) include the designation of one or more employees
of the data broker to maintain the program;
(3) require the identification and assessment of
reasonably foreseeable internal and external risks to the security,
confidentiality, and integrity of any electronic, paper, or other
record containing personal data, and the establishment of a process
for evaluating and improving, as necessary, the effectiveness of
the current safeguards for limiting those risks, including by:
(A) requiring ongoing employee and contractor
education and training, including education and training for
temporary employees and contractors of the data broker, on the
proper use of security procedures and protocols and the importance
of personal data security;
(B) mandating employee compliance with policies
and procedures established under the program; and
(C) providing a means for detecting and
preventing security system failures;
(4) include security policies for the data broker's
employees relating to the storage, access, and transportation of
records containing personal data outside of the broker's physical
business premises;
(5) provide disciplinary measures for violations of a
policy or procedure established under the program;
(6) include measures for preventing a terminated
employee from accessing records containing personal data;
(7) provide policies for the supervision of
third-party service providers that include:
(A) taking reasonable steps to select and retain
third-party service providers that are capable of maintaining
appropriate security measures to protect personal data consistent
with applicable law; and
(B) requiring third-party service providers by
contract to implement and maintain appropriate security measures
for personal data;
(8) provide reasonable restrictions on physical
access to records containing personal data, including by requiring
the records containing the data to be stored in a locked facility,
storage area, or container;
(9) include regular monitoring to ensure that the
program is operating in a manner reasonably calculated to prevent
unauthorized access to or unauthorized use of personal data and, as
necessary, upgrading information safeguards to limit the risk of
unauthorized access to or unauthorized use of personal data;
(10) require the regular review of the scope of the
program's security measures that must occur:
(A) at least annually; and
(B) whenever there is a material change in the
data broker's business practices that may reasonably affect the
security or integrity of records containing personal data;
(11) require the documentation of responsive actions
taken in connection with any incident involving a breach of
security, including a mandatory post-incident review of each event
and the actions taken, if any, to make changes in business practices
relating to protection of personal data in response to that event;
and
(12) to the extent technically feasible, include the
following procedures and protocols with respect to computer system
security requirements or procedures and protocols providing a
higher degree of security, for the protection of personal data:
(A) the use of secure user authentication
protocols that include each of the following features:
(i) controlling user log-in credentials and
other identifiers;
(ii) using a reasonably secure method of
assigning and selecting passwords or using unique identifier
technologies, which may include biometrics or token devices;
(iii) controlling data security passwords
to ensure that the passwords are kept in a location and format that
do not compromise the security of the data the passwords protect;
(iv) restricting access to only active
users and active user accounts; and
(v) blocking access to user credentials or
identification after multiple unsuccessful attempts to gain
access;
(B) the use of secure access control measures
that include:
(i) restricting access to records and files
containing personal data to only employees or contractors who need
access to that personal data to perform the job duties of the
employees or contractors; and
(ii) assigning to each employee or
contractor with access to a computer containing personal data
unique identification and a password, which may not be a
vendor-supplied default password, or using another protocol
reasonably designed to maintain the integrity of the security of
the access controls to personal data;
(C) encryption of:
(i) transmitted records and files
containing personal data that will travel across public networks;
and
(ii) data containing personal data that is
transmitted wirelessly;
(D) reasonable monitoring of systems for
unauthorized use of or access to personal data;
(E) encryption of all personal data stored on
laptop computers or other portable devices;
(F) for files containing personal data on a
system that is connected to the Internet, the use of reasonably
current firewall protection and operating system security patches
that are reasonably designed to maintain the integrity of the
personal data; and
(G) the use of:
(i) a reasonably current version of system
security agent software that must include malware protection and
reasonably current patches and virus definitions; or
(ii) a version of system security agent
software that is supportable with current patches and virus
definitions and is set to receive the most current security updates
on a regular basis.
Sec. 509.008. CIVIL PENALTY. (a) A data broker that
violates Section 509.004 or 509.005 is liable to this state for a
civil penalty as prescribed by this section.
(b) A civil penalty imposed against a data broker under this
section:
(1) subject to Subdivision (2), may not be in an amount
less than the total of:
(A) $100 for each day the entity is in violation
of Section 509.004 or 509.005; and
(B) the amount of unpaid registration fees for
each year the entity failed to register in violation of Section
509.005; and
(2) may not exceed $10,000 assessed against the same
data broker in a 12-month period.
(c) The attorney general may bring an action to recover a
civil penalty imposed under this section. The attorney general may
recover reasonable attorney's fees and court costs incurred in
bringing the action.
Sec. 509.009. DECEPTIVE TRADE PRACTICE. A violation of
Section 509.007 by a data broker constitutes a deceptive trade
practice in addition to the practices described by Subchapter E,
Chapter 17, and is actionable under that subchapter.
Sec. 509.010. RULES. The secretary of state shall adopt
rules as necessary to implement this chapter.
SECTION 2. Not later than December 1, 2023, the secretary of
state shall adopt rules necessary to facilitate registration by a
data broker under Section 509.005, Business & Commerce Code, as
added by this Act, including by incorporating into the rules
adequate time for a data broker to comply with Chapter 509, Business &
Commerce Code, as added by this Act, following the adoption of the
rules.
SECTION 3. Chapter 509, Business & Commerce Code, as added
by this Act, applies only to the collection, processing, or
transfer of personal data by a data broker on or after December 1,
2023.
SECTION 4. This Act takes effect September 1, 2023.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 2105 passed the Senate on
May 3, 2023, by the following vote: Yeas 29, Nays 2.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 2105 passed the House on
May 24, 2023, by the following vote: Yeas 117, Nays 21,
one present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor