Category: In the News
The New York Department of Financial Services (“DFS”) recently initiated its first enforcement action against a company for violating DFS’s first-in-the-nation cybersecurity regulation. As our readers know, we have written quite a few posts and articles about the regulation. And as we’ve warned, with the regulation now in full effect, covered companies should expect DFS’s Cybersecurity Division to start cracking down on companies that haven’t complied.
Last week, a magistrate judge in the Eastern District of Virginia held that a breach report prepared by Mandiant (a digital forensics investigator, among other things) in response to the Capital One data breach was not protected by the attorney work product doctrine.
As we previously detailed, the coronavirus pandemic has expanded opportunities for nefarious actors to exploit the digital vulnerabilities of individuals, local governments, industries, organizations, and essential services as they rapidly adapt to the public health crisis. Recent reports have confirmed that attacks and cyber scams associated with the pandemic are in fact on the rise.
Over the past month, many have discovered video chat and conferencing apps such as Zoom and Houseparty, using them for both business and to keep connected to friends and family during this period of global social distancing. Increased usage of these apps has also resulted in close scrutiny of their privacy practices by the public and government authorities. Indeed, Zoom has been hit with eight class actions that were recently consolidated, while separate plaintiffs sued the owners of Houseparty. A core allegation among those suits is that, without notice or consent, these apps provided user data to third parties (e.g., Facebook). Both the Houseparty complaint and a majority of the Zoom complaints allege violations of the California Consumer Privacy Act (CCPA), making these cases among the first with the potential to test the contours of the nascent but expansive privacy law. If the CCPA claims in these suits survive, it could signal the beginning of a substantial increase in class actions claiming CCPA violations.
Governmental Organizations Across the Globe Warn of Enhanced Cyber Threat Environment Related to COVID-19
In recent weeks, we have seen growing threats to cybersecurity and privacy from malicious actors seeking to exploit the COVID-19 pandemic. As companies transition their employees to remote working and focus their efforts on core business continuity, hackers are actively targeting companies’ cloud-based remote connectivity, lack of multi-factor authentication, and potentially insecure digital infrastructure to exploit vulnerabilities. The need for robust cybersecurity measures is more pressing than ever, and governmental organizations are issuing calls to action.
The aftermath from one of the largest data breaches in U.S. history is nearing the end, as the presiding judge approved a proposed class action settlement resolving claims arising from Equifax’s September 2017 data breach. As previously reported, approximately 147.9 million U.S. consumers’ personal information was compromised by that breach.
As readers of the Data Security Blog will know, the California Consumer Privacy Act (“CCPA”) becomes operative on January 1, 2020. The CCPA is the most sweeping consumer privacy law in the United States, covering most for-profit businesses that do business in California and collect the personal information of “consumers,” meaning California residents.
This past week, The Home Depot, Inc. became the latest business hit with a class action lawsuit for their use of facial recognition security cameras allegedly in violation of the Illinois Biometric Information Privacy Act. If successful, Home Depot faces statutory damages of up to $5,000 for each time a shopper’s information was collected in violation of BIPA.
Last Thursday, Slack Technologies, Inc. (Slack) announced that it would reset passwords for a number of accounts compromised by a security breach that occurred more than four years ago, in March 2015. Slack—a fast-growing messaging service that launched in 2014 and went public last month—provided little explanation for its delay in action and minimized the scope of the incident, claiming that it only affected a small percentage of current Slack users. The narrow scope and timing of Slack’s disclosure raise interesting questions about the heightened scrutiny public companies now face when dealing with cybersecurity incidents.
The New York State Senate recently passed The Stop Hacks and Improve Electronic Data Security Act, or SHIELD Act, leaving only the Governor’s signature as the final step to the SHIELD Act becoming the country’s newest—and one of the most stringent—breach notification laws. Given Governor Cuomo’s previous support for robust cybersecurity protection, New York may soon join a growing number of states beefing up their notification statutes.
It’s been a tough week for the healthcare industry.
Just days after Quest Diagnostics reported a breach at a third-party vendor affecting approximately 11.9 million of its patients, LabCorp disclosed that a breach at the same vendor exposed the personal and financial data of 7.7 million of its customers.
The federal government’s record for effective cyber defenses of its own websites has not been stellar over the past few years. Federal government agencies ranging from the Office of Personnel Management to the National Archives have suffered data breaches, as have nearly a dozen other agencies.
It’s been almost two years since New York’s top banking regulator implemented one of the nation’s most stringent cybersecurity regulations. Since then, thousands of financial institutions have recruited chief information security officers, implemented cybersecurity programs, performed penetration testing, and imposed encryption requirements on their most sensitive information.
The New York Times Features Op-Ed by Craig Newman: "Lessons for Corporate Boardrooms From Yahoo’s Cybersecurity Settlement"
The New York Times featured an op-ed last week written by Craig A. Newman, Chair of Patterson Belknap’s Privacy and Data Security Practice, entitled “Lessons for Corporate Boardrooms From Yahoo’s Cybersecurity Settlement.” In the op-ed, Mr. Newman discusses how the January 2019 settlement “marked the first time that shareholders have been awarded monetary damages in a derivative lawsuit related to a data breach.” Mr. Newman notes, “the settlement signals that director and officer liability for cybersecurity oversight is entering new and potentially perilous territory.”
To read the full article, click here.
In a ruling with wide-spread implications, the Illinois Supreme Court on Friday upheld a consumer’s right to sue companies for collecting biometric data – such as finger prints and iris scans – without disclosing how such information will be used.
With full implementation of New York’s groundbreaking cybersecurity regulation only six weeks away, the state’s top banking regulator took the opportunity to praise the many financial institutions that have adopted systems to better protect consumers from cybercrime.
Yesterday, by e-mail and on its website, the California Department of Justice (DOJ) announced that it would hold “six statewide forums to collect feedback” in advance of the rulemaking process for the California Consumer Privacy Act (CCPA). The announcement did not include proposed rules or regulations, which must be adopted by July 1, 2020.
Investment advisers may want to think twice before texting clients any advice in the New Year.
In a recently issued Risk Alert, the U.S. Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) reminded investment advisers of their obligations under the Investment Advisers Act of 1940 (Advisers Act) when they or their personnel use electronic messaging for business-related communications.
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.
The Food and Drug Administration is stepping up its game with respect to the cybersecurity of medical devices.
On Monday, the agency announced its launch of a preparedness and response “playbook” to address threats to medical device cybersecurity. The move cited an uptick in cyber-attacks and the potential for bad actors to exploit medical devices.
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.
In Accenture’s 2018 State of Cyber Resilience for Banking & Capital Markets study, the consulting firm reported the rate at which cyber-attacks on banking and capital markets firms are successful dropped from 36 percent in 2017 to 15 percent in 2018. Despite the improvement, one in seven cyber-attacks remain successful – begging the broader question of what else, if anything, banks and capital market firms could be doing to protect themselves from attack?
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.
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.
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.
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.
Last week, the U.S. Court of Appeals for the Eighth Circuit affirmed the district court’s approval of a $17 million settlement between Target Corp. and consumers whose credit card data was compromised in the 2013 data breach. In one of the largest data breaches to hit U.S. retailers, hackers stole information from 40 million credit and debit cards during the 2013 holiday season.
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 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.”
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.
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).
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.
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.
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.
On February 27, 2018, The New York Times featured an op-ed written by Craig A. Newman, Chair of Patterson Belknap’s Privacy and Data Security Practice, entitled “Can the United States Search Data Overseas?” Mr. Newman discusses the critical question in United States v Microsoft, which is pending before the Supreme Court: should the U.S. law enforcement have access to emails stored outside the country? He argues that the fundamental problem of storing data across borders will not be solved by this case, and that legislative action is necessary to properly govern “the vast stores of electronic data that move seamlessly across international borders.”
Today, financial institutions with ties to New York are spending their Valentine’s Day learning how to use the New York State Department of Financial Services (DFS) web portal.
Almost a year ago, the DFS unveiled one of the most aggressive efforts in the nation to crack down on cybercrime in the banking and insurance industries. And by tomorrow, more than 3,000 firms are required to file through the agency’s online portal their first ever compliance certificate, swearing that their organization has satisfied the first phase of requirements under the state’s new cybersecurity regulation.
Recently-issued guidance from the U.S. Department of Education (ED) threatens to “yank” Title IV funding for post-secondary institutions lacking appropriate data security safeguards. The guidance comes as the risk of educational data breaches has intensified, as we have previously reported. The stakes are even higher now that ED has put Title IV recipients on notice that, beginning in fiscal year 2018, they may be subject to compliance audits regarding their data security programs.
On Tuesday, a Senate subcommittee grilled Uber’s Chief Information Security Officer, John Flynn, over a 2016 data breach that affected nearly 57 million drivers and riders. At the hearing, Uber faced backlash from lawmakers for its “morally wrong and legally reprehensible” conduct that “violated not only the law but the norm of what should be expected.”
On January 18, 2018, the New York State Education Department (“NYSED”) announced that one of its vendors, Questar Assessment, experienced a data breach resulting in the unauthorized disclosure of personal information from students in five different New York schools. While the data breach reportedly affected only a small number of students that had registered for online testing in spring 2017, it nonetheless exposed sensitive personally identifiable information from those students. And despite its narrow scope, this breach potentially threatens public (and parent) confidence in the security of sensitive student information at a time when New York schools are moving more and more of their activities online.
At its first conference this month, the U.S. Supreme Court will consider whether to weigh in on a Circuit split over standing to sue in the aftermath of a data breach.
For the several thousand financial institutions and insurance companies covered by New York’s landmark data security regulation, the first certification of compliance must be filed with the State’s Department of Financial Services in less than a month.
It’s unusual for victims of ransomware to publicly acknowledge that they have paid hackers to go away. But a regional hospital in Indiana has made public its experience last week with a “sophisticated criminal group” as a teachable moment for other institutions faced with the vexing choice of whether to give in to the ransom demands of cybercriminals.
In the most recent object lesson in a data breach privilege case, a federal appeals court has ordered a Michigan-based mortgage lender to turn over privileged forensic investigatory documents after the investigator’s conclusions were revealed in discovery.
New York State regulators won’t be letting Equifax, Inc. off-the-hook any time soon for last year’s massive data breach that affected more than 145 million Americans.
Cybersecurity will remain at the top of New York State’s regulatory agenda this year.
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