A Novel Data Security Law Proposed in Colorado

David Navetta discusses a proposed law in Colorado, HB 11-1225:

Regulation is achieved via the “carrot” or the “stick” (and sometimes both). This is true in the information security context as well. For example, to incentivize encryption of personal information, breach notice laws use a stick: those that fail to encrypt may have to provide notice to affected individuals in the event of a security breach. In the credit card breach context, a Washington state law provides banks with a stick (e.g. the right to seek fraud and reissuance expenses from breached merchants), but also provides those merchants with a shield to block that stick (e.g. validation of PCI compliance blocks a bank’s ability to recover). In HB 11-1225, Colorado state legislator, Dan Pabon, apparently wants to give the carrot a chance. In the process, I am told that part of the goal is to make Colorado the “Delaware” of data storage. Here is how it works.