Nevada Businesses Now Required To Encrypt Electronic Transmissions

While other states have previously passed laws that recommended that businesses consider the protection of a customer's data, Nevada has now become the first state to require all businesses in the state to encrypt the electronic transmission of a customer's personal information, effective October 1, 2008. Despite the novelty of this new law, it raises many questions and uncertainties in its practical application by businesses.

Briefly, NRS 597.970 ("Restrictions on transfer of personal information through electronic transmission") states that a "business in this state shall not transfer any personal information of a customer through an electronic transmission other than a facsimile to a person outside of the secure system of the business unless the business uses encryption to ensure the security of electronic transmission." Though the law is succinct and specific in its language and obligation, it provides little guidance or definition by which a business can