This is the second post in our two-part series about DOJ’s revised guidance on its “Best Practices for Victim Response and Reporting Cyber Incidents.” In the first installment, we looked at DOJ’s recommendations for preparedness. Today, we turn to the basics of data breach incident response and a list of DOJ’s “don’ts” when dealing with a hacker.
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The U.S. Department of Justice is increasing its outreach to the private sector on all things cyber.
Last week, the DOJ’s Criminal Division held a cybersecurity roundtable to discuss challenges in handling data breach investigations. As part of the roundtable discussion, the DOJ issued revised guidance on its “Best Practices for Victim Response and Reporting Cyber Incidents.” The Best Practices guidance, summarized below, is the result of the DOJ’s outreach efforts concerning ways in which the government can work more effectively with the private sector to address cybersecurity challenges. The goal of the roundtable discussion, which started in 2015, is to foster and enhance cooperation between law enforcement and data breach victims, and to also encourage information sharing.
Is legalized sports betting the next big thing in cybercrime?
When the U.S. Supreme Court last spring struck the Professional and Amateur Sports Protection Act – the law that barred most states from allowing sports betting – the floodgates opened and everyone seeking to profit from legalized sports gaming staked out their turf. Five states have already passed laws to allow sports betting and 18 others will soon follow suit. The most recent state to open its doors to legalized sports wagering, West Virginia, even plans to allow online sports wagering.
Should a public company’s cyber and breach disclosure practices matter to Wall Street and socially-responsible investment funds?
Socially-responsible investment funds – called ESG funds that focus on environmental, social and governance practices – rely on sustainable, socially conscious investing principles. ESG portfolio managers consider issues beyond a company’s financial standing before jumping into an investment position such as environmental compliance, working conditions, executive pay and diversity efforts. Audit Analytics asks whether cybersecurity should be added to this list of investment criteria.
Student data is a treasure trove for hackers.
In a recent FBI Alert, the agency warned that the rapid growth of educational technologies combined with the increased collection of student information is the proverbial disaster waiting to happen.
Many big data and technology companies consider “bug bounty” programs – incentive-based initiatives that reward “ethical” hackers who report data security bugs or vulnerabilities – attractive and cost-effective tools for weeding out security flaws.
The healthcare industry has been in the sights of hackers for some time. But a recent survey found that the biggest threat in the sector comes from within.
Verizon has just released its Protected Health Information Data Breach Report and found that 58% of the data security incidents in the industry came from insiders, a number higher than in any other industry. The study is based on an analysis of almost 1400 incidents during 2016-2017 in 27 countries. Almost 75% of the incidents occurred in the U.S.
As California’s legislative session came to a close late last month, the state’s lawmakers passed SB-1121, approving a series of tweaks to the California Consumer Privacy Act of 2018 or CCPA, the far-ranging data privacy law enacted earlier this summer. The new bill now heads to the governor for consideration.
Memories of the massacre of dozens of concertgoers at a Las Vegas music festival last year are unlikely to fade soon. In the deadliest shooting in U.S. history, Stephen Paddock killed 58 people and wounded hundreds from his perch within the Mandalay Bay hotel, owned by MGM Resorts International.
A legal battle is now underway over liability for the shooting and the first ever legal test of a little known federal law – the Support Antiterrorism by Fostering Effective Technologies Act of 2002 or SAFETY Act – will start later this month in a San Francisco courtroom. The SAFETY Act was enacted after the Sept. 11th terrorist attacks to provide different levels of legal protection for companies that developed antiterrorism technologies – including cybersecurity technologies and programs – and then passed a rigorous process administered by the U.S. Department of Homeland Security.
By today, financial institutions are required to meet their next deadline for compliance with New York’s cybersecurity law. The regulation – enacted in March 2017 –includes a series of rolling deadlines that require banks and insurance companies covered by the law to meet varying data security requirements.
It seems like a victimless crime. Toss out an old computer or post it for sale on the Internet for a few bucks. Not a big deal, right?
Not so fast.
Public companies worried about cybersecurity risk would be well served to pay attention to a recent crackdown by the U.S. Securities and Exchanges Commission on the use of automated technology to detect investment advisor fraud.
A recent settlement with Ameriprise Financial Services Inc., a registered investment adviser and broker dealer, suggests that the Commission isn’t inclined to look the other way when a technology failure goes undetected. In the world of cybersecurity, does this mean that a company’s blind faith in technology to safeguard its network and sensitive information might open it up to liability?
A federal appeals court is giving Google and the Justice Department more time to work out their differences in a standoff over whether the tech giant must hand over customer emails stored outside of the United States.
It’s that time again. The third compliance deadline for New York’s sweeping new cybersecurity regulation is less than three weeks away.
That means five new requirements must be in place by September 4, 2018.
Did LabMD, the now-defunct cancer testing company, expose sensitive patient information with shoddy data security practices as U.S. regulations have charged, or was the company victimized by a private forensics firm extorting it for business? This raises the troubling question of whether the entire case against LabMD was built on a false premise.
As the home of Facebook and other tech giants, California recently found itself in the center of a data privacy firestorm. In response to this and other controversies emanating from Silicon Valley’s technology community, California enacted a far-ranging data privacy law, the California Consumer Privacy Act of 2018. Despite its California origins, however, the law could have significant effects on New York-based businesses as well.
It is not enough for companies to establish policies and procedures designed to prevent the misuse of material nonpublic information. Companies must also enforce those policies and procedures.
That’s the lesson from the U.S. Securities and Exchange Commission's recent settlement with Mizuho Securities USA LLC (“Mizuho”), a broker-dealer, for the firm’s failure to safeguard customer information.
Did LabMD, the now-defunct cancer testing company, expose sensitive patient information with shoddy data security practices as U.S. regulations have charged, or was the company victimized by a private forensics firm extorting it for business – raising the troubling question of whether the entire case against LabMD was built on a false premise.
Last week, MGM Resorts International filed nine pre-emptive lawsuits against the victims of last year’s mass shooting at the Mandalay Bay Hotel in Las Vegas. MGM, owner of the Mandalay, is asking federal courts around the country to declare that the company is not liable “for any claim for injuries arising out of or related to” the mass attack.
For $80 Million, Yahoo! Settles Shareholder Class Action Claiming Stock Price Losses from Data Breaches
It’s become almost routine. A public company suffers a data breach at the hands of hackers, its stock price slides and the securities fraud class action lawsuits pile on.
As we recently reported, it’s a new trend in securities fraud class actions. Shareholders claim that public companies have improperly inflated their stock value either by failing to timely disclose data security incidents or latent vulnerabilities that rendered the company’s systems susceptible to a cyberattack.
California’s landmark digital privacy law – signed into law late last week – is the most sweeping consumer data protection law in the U.S. The California Consumer Privacy Act of 2018 or CCPA promises to give consumers unprecedented control over their personal information including the right to know what information companies are collecting about them and how it is used.
California threw down the proverbial gauntlet last night and enacted a sweeping new digital privacy law aimed at giving the state’s consumers more control over their personal information.
In a consent order with financial regulators from eight states, Equifax Inc. yesterday agreed to put in place a number of basic data security safeguards – apparently lacking until now – to prevent another massive breach. The order lists specific actions that Equifax must take to improve its data security environment including conducting a comprehensive risk assessment that considers “foreseeable threats and vulnerabilities” to sensitive information and the way the company plans on defending against those threats.
Healthcare organizations take note: not following your own data security rules can be costly, very costly. And the more time it takes to comply, the faster the fines stack up.
Patterson Belknap lawyers Craig A. Newman and George S. Soussou edited and contributed to the first Bloomberg Law Domestic Privacy Profile: New York. This comprehensive guide provides an overview of applicable laws and regulations, regulatory authorities and enforcement, risk management, and emerging issues and outlook for privacy and data security in New York state. Newman is a litigation partner and chairs the firm’s privacy and data security practice. Soussou is an associate in the firm’s litigation group.
To view the publication, please click here.
More and more companies are paying up – and paying more – to so-called “ethical” hackers who report data security bugs or vulnerabilities for a bounty.
A report released last week by Bugcrowd, a crowdsourced cybersecurity firm, says that companies are now dolling out more than ever in bug bounties. But what are bug bounty programs, and why should companies care?
In a closely watched test of the Federal Trade Commission’s authority as a data security regulator, the U.S. Court of Appeals for the Eleventh Circuit late yesterday sided with LabMD and threw out the agency’s long-running case against the defunct cancer testing lab, finding the agency’s use of a vague and broad-brush consent decree was unenforceable.
It didn’t take long for New York’s interim Attorney General to send a strong message to the business community about the importance of data security.
In a press release yesterday, interim New York Attorney General Barbara Underwood threw her support behind New York’s proposed SHIELD Act – Stop Hacks and Improve Electronic Data Security – which was introduced late last year and imposes data security safeguard requirements on businesses that hold sensitive information of New York residents.
The concert and event ticketing company, Ticketfly, is working to get its systems back online after a cyber-attack last week. Ticketfly has confirmed the hack but has released little information.
A federal judge in New York has dismissed LabMD’s lawsuit against a former United States Attorney – which charged her with ethics violations and engaging in a cover-up over her role in an U.S. Federal Trade Commission data security enforcement action – on jurisdictional grounds.
For thousands of financial institutions and insurance companies covered by New York DFS’s sweeping data security regulation, the countdown to yet another deadline has begun. Those companies will remember last August, when DFS’s first transition period ended, and the same companies know that they had to first certify their compliance with the regulation to DFS only months ago, in February.
In one of the first major tests of the Illinois biometric data privacy law, Facebook is headed to trial this summer over allegations that the social media giant unlawfully collects user data with its photo tagging function. Last week, U.S. District Judge James Donato denied cross motions for summary judgment in a class action pending in Northern California, noting the “multitude of fact disputes in the case.”
The insurance industries in South Carolina and Rhode Island may soon be required to adopt formal data security safeguards, a movement sparked by the National Association of Insurance Commissioners’ (NAIC) Insurance Data Security Model Law. The model law, which NAIC adopted in October 2017, establishes minimum standards for data security applicable to insurance providers. It is part of a growing body of state-level cybersecurity legislation, including the New York State Department of Financial Services regulation issued in March 2017. We blogged about the model law back in January.
Legendary investor Warren Buffett’s portfolio won’t be scooping up shares of insurers that underwrite cyber insurance.
At Berkshire Hathaway’s 2018 Annual Shareholders Meeting over the weekend, Buffett called cyber “unchartered territory” and said the fall-out and business risks from cyber-attacks are “going to get worse, not better.”
The LabMD data security case is anything but dull. An 8-year (and counting) fight with the U.S. Federal Trade Commission, a U.S. House of Representatives Oversight and Government Reform Committee investigation into allegations of government overreach and collusion, a key witness granted governmental immunity and multiple related civil lawsuits scattered around the country.
The U.S. Securities and Exchange Commission’s $35 million settlement announced this week over the Yahoo! data breach provides an object lesson in the consequences of failing to publicly disclose a major cyber-attack.
The nation’s top securities regulator imposed the fine on Altaba Inc. — formerly Yahoo! — for not disclosing in a timely manner one of the largest reported hacks in U.S. history, the first action by the Commission for a cybersecurity disclosure violation. Yahoo! was charged with misleading investors by waiting for almost two years to disclose the fact that hackers associated with the Russian Federation stole the personal information of hundreds of millions of Yahoo! users.
An expanded settlement by the Federal Trade Commission with ride-sharing giant Uber Technologies should serve as a lesson to other businesses about what happens when a company fails to disclose a data breach during an ongoing agency investigation.
This morning, the long-running dispute between Microsoft Corp. and the U.S. government regarding data stored abroad was resolved by the United States Supreme Court. As we’ve previously discussed, the case posed the question: must U.S. companies comply with warrants issued under the Stored Communications Act (“SCA”) that demand data stored in a foreign country? Today, the Supreme Court concluded that newly enacted legislation had effectively ended the case, making the Court’s involvement unnecessary.
Over the last year, U.S. companies have been hit with a wave of new data security regulations and agency guidance, ranging from the SEC’s Guidance on Public Company Cybersecurity Disclosures to the European Union’s General Data Protection Regulation (GDPR).
Yesterday, we reported that the Department of Justice has asked the U.S. Supreme Court to remand its dispute with Microsoft Corp. concerning access to customer emails stored abroad to the U.S. Court of Appeals for the Second Circuit with instructions to dismiss it as moot. The government argued that the newly enacted “CLOUD” Act clarifies prior law and makes clear that information stored abroad can, under certain circumstances, be subject to a domestic warrant. The government added that it obtained a new warrant for Microsoft to turn over the requested information in the days following the CLOUD Act’s passage.
We’ve written several times about the landmark dispute between the U.S. government and Microsoft Corp. over access to a customer’s emails stored in Ireland. Now, a month after the U.S. Supreme Court heard oral argument on the government’s appeal, the Justice Department has asked the Court to remand the case to the U.S. Court of Appeals for the Second Circuit with instructions to dismiss it as moot.
On its face, last week’s report that the number of data breaches reported last year to New York’s Attorney General spiked to an all-time high of 1,583 – up 23 percent from 2016 – was not good news.
But behind the numbers are even more disturbing trends. Start with the fact that hacking – the handy work of outside intruders – was the leading cause of reported breaches last year, accounting for 44 percent of reported breaches. Hacking also accounted for nearly 95 percent of all personal information exposed. In second place was employee error or negligence, which represented 25 percent of last year’s reported breaches.
Is the risk of future harm enough to satisfy Article III standing in a data breach suit? That’s the question courts of appeals around the country are wrestling with now – and reaching opposing results. The U.S. Court of Appeals for the Ninth Circuit is the latest to wade into this debate on data breach standing in its recent opinion, In re Zappos.Com, Inc., Customer Data Security Breach Litigation.
The Equifax hack has taken another twist – one that raises questions that every public company should consider.
Last week, federal prosecutors charged Equifax’s former Chief Information Officer, Jun Ying, with insider trading for allegedly dumping nearly $1 million in stock before the massive Equifax breach went public. He also faces civil charges filed by the U.S. Security and Exchange Commission (SEC).
Last week, the New York Department of Financial Services (DFS) sent notices to companies that had not yet certified their compliance with the DFS Cybersecurity Regulation. DFS not-so-gently reminds companies to submit a Notice of Exemption or a Certificate of Compliance. A copy of that notice is now available online.
With the U.S. Securities and Exchange Commission’s updated cybersecurity guidance hot off the press, let’s start the week by taking a look at public company cyberattack reporting statistics.
Six months after a massive data breach at credit reporting company Equifax, Inc. handed hackers the personal information of nearly 150 million Americans, the fallout continues. Equifax first disclosed in September that hackers used a flaw in its website software to extract the personal information of as many as 145.5 million people. The stolen data included names, Social Security numbers, birth dates, addresses, and driver’s license numbers. In just the first two months following the breach, Equifax incurred $87.5 million of expenses, and that number is now expected to grow to $439 million by the end of 2018, making this, potentially, the most expensive reported data breach to date.
Last week, a federal district judge in California shot down Facebook, Inc.’s second attempt to dismiss a putative class action alleging that its facial recognition software violates the Illinois Biometric Privacy Act (BIPA). The court found that plaintiffs had standing to proceed under the U.S. Supreme Court’s ruling in Spokeo, Inc. v. Robbins because the alleged BIPA violation was sufficient to give rise to a “concrete injury” for purposes of bringing suit.
Shareholders may have found a new hook for data security lawsuits.