United States: Massachusetts Law Regarding Security Breaches - How It Will Affect Your Business

Now is the time for businesses to focus on their data security measures to ensure compliance with the law and regulations and to develop an action plan in the event of a breach

Almost daily, the news headlines include security breaches at major companies. The issue of secure data protection should be a top priority for companies in every industry. Businesses regularly receive and store personal information about their employees and customers, and an inadvertent breach in the security of this personal information can lead to significant liability under one or more of the state laws designed to deal with this exact problem.

Massachusetts became the 39th state to enact comprehensive legislation targeted at protecting its residents' personal information from identity fraud when Governor Patrick signed into law "An Act Relative to Security Freezes and Notification of Data Breaches" on August 2, 2007. For more information, visit http://www.mass.gov/legis/laws/seslaw07/sl070082.htm. Final regulations promulgated under the act were released this month and will go into effect on January 1, 2009. In the 10 months since the act took effect, the Office of Consumer Affairs and Business Regulation reports that there have been 320 security breaches affecting more than 600,000 residents of the Commonwealth. The majority involved criminal acts, with thefts of laptops and hard drives topping the list. Now is the time for businesses to focus on their data security measures to ensure compliance with the law and regulations and to develop an action plan in the event of a breach.

Massachusetts Law

The Massachusetts law focuses on three main areas: (1) consumer rights and procedures for placing a "security freeze" on a credit report, (2) mandatory notice requirements following a security breach and (3) data disposal requirements. This article focuses on the latter two components and their impact on business operations. In brief, the law requires that businesses owning or storing personal information follow certain procedures for the storage and disposal of this information and provide notice of any potential breach of the security of this information.

To Whom Does the Act Apply?

The act applies to any person or business that owns, licenses, stores or maintains "personal information about a resident of the Commonwealth." This covers virtually every workplace, because even the smallest of businesses likely maintains personnel records with "personal information" pertaining to one or more residents of the Commonwealth. The act's effect is not limited to Massachusetts-based businesses—it provides that any business storing personal information about one or more Massachusetts residents must abide by the new legal requirements. In other words, even wholly out-of-state businesses are potentially subject to this law if they store or maintain personal information about Massachusetts residents, such as customers or employees who live and work in the Commonwealth.

What Is "Personal Information"?

The Massachusetts law uses a slightly more inclusive definition of "personal information" than found in other states. Under the act, "personal information" includes a person's first and last name or first initial and last name in combination with one or more of the following:

  • Social security number
  • Driver's license number or state-issued identification card number
  • Bank or other financial account number, including a credit or debit card number, with or without any required security code or password

The law covers data stored in either paper or electronic format. With such a liberal definition of personal information, the law affects a broad spectrum of public and private businesses. Businesses regularly keep this type of information about their employees (for example, in I-9 documentation or direct deposit systems), and companies doing business with consumers handle their customers' credit or debit card information every day.

What Does the Law Require?

The purpose of the act is to safeguard the security and confidentiality of personal information and to protect against unauthorized use of this information through identity fraud or theft. The obligations imposed by the act are designed to achieve that purpose.


First and foremost, the act requires that owners or holders of a resident's personal information must provide timely notice any time they know or have reason to know of a security breach. A security breach is any unauthorized access to or use of the personal information, and would encompass such situations as the theft of an employee's laptop that contains personal information or a hacker's infiltration of a company's computer files containing personal information. The specific content and procedures for the notice vary for holders of data versus owners or licensors of the data. Generally, the entity must provide notice to the Attorney General and the Director of Consumer Affairs and Business Regulation that describes the nature of the breach, the number of Massachusetts residents affected, and any steps planned or taken relating to the incident. Additionally, the company must provide all residents who are affected by the breach with notice of the existence of a possible breach, the right to obtain a police report, directions as to how to request a security freeze and any fees to be paid for the security freeze. The notice to residents should not include the nature of the breach or the number of residents affected by the breach. Notice should be made as soon as possible, but may be delayed if it might impede an ongoing criminal investigation. Alternate notice provisions are available in the event the cost of providing written notice will exceed $250,000, the number of Massachusetts residents affected exceeds 500,000 or the organization lacks sufficient information to provide notice.


Additionally, the law details minimum standards for the proper disposal of paper documents and electronic media containing personal information. Fundamentally, the documents or media should be destroyed in such a way that personal data cannot be read or reconstructed prior to disposal. Generally, this means shredding or burning paper documents and completely erasing or otherwise destroying electronic media so that the information cannot be reconstructed.

Security Program

The Office of Consumer Affairs and Business Regulation proposed "Standards for the Protection of Personal Information of Residents of the Commonwealth," which were approved on September 22, 2008, and will take effect on January 1, 2009. The regulations impose significant additional obligations on persons or businesses holding or owning personal information.

Under these new standards, businesses are required to develop and implement a "comprehensive, written information security program" applicable to any records that contain personal information. This written program should contain administrative, technical and physical safeguards to ensure the security and confidentiality of such records. The standards delineate 12 features that must be included in every information security program. Among others, some of the key features include: (1) upgrading information systems; (2) implementing regular training programs for employees; (3) developing security policies and written procedures that account for employee access to records; (4) imposing discipline for violation of the security program rules; (5) monitoring and auditing employee access to personal information, including foreclosing access to records by terminated employees by deactivating their passwords; and (6) conducting annual reviews of data security measures. Furthermore, for computer systems that store or transmit personal information, the standards establish certain minimum requirements, including secure user authentication protocols, secure access controls, encryption of data containing personal information, firewall and virus protections, monitoring programs and employee training.

What Are the Penalties for Non-Compliance?

The penalties for non-compliance with this law can be significant. The Attorney General is authorized to pursue violations of its provisions under Chapter 93A, the Massachusetts Unfair and Deceptive Acts and Practices statute. In certain circumstances, Chapter 93A authorizes consumers to seek up to three times the amount of actual damages, plus costs and attorneys' fees. In addition, under the portion of the law concerning data disposal, businesses can be subject to a fine of up to $50,000 for each instance of improper disposal.


In short, the act and associated standards impose a multitude of new data security obligations upon businesses and individuals alike. In light of this legislation, companies must establish programs before a breach occurs in order to be ready to act quickly in the event of a data breach. Companies can prepare by taking inventory of the personal information they currently store and evaluating how best to maintain, protect and dispose of the information.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions