Failure to Report Unauthorized Access of Customers or Employee Information Could Lead to Liability Under New California Identity Theft Law - California's Law Could Become Model for National Law

Identity theft is now the fastest growing crime in the United States. As a consequence, measures to address it are the subject of parts of the Homeland Security Act and several bills recently introduced in Congress. California, however, has already enacted a soon-to-be effective statute that is intended to combat the crime by requiring businesses to notify individuals that their confidential information has been compromised. The statute is predicated on the theory that, when armed with notice that information sufficient to steal their identity has been compromised, individuals can take steps to avoid the consequences of full-fledged identity theft. Regardless of the merit of that premise, all agencies, persons or companies that store confidential information of California residents will have a new statutory hurdle to face this summer, and other states are considering similar measures.