EU Proposes Overhaul to Privacy and Electronic Communications

NIS Directive

January 10, 2017 marked another important step towards reform of the EU data protection framework, with the release of the EU Commission’s proposals for a new Regulation governing privacy and electronic communications.

The draft Regulation, which goes beyond the scope of the current e-Privacy Directive in significant ways, would apply directly without the need for Member States to implement local law in the same way as the General Data Protection Regulation (“GDPR”). Like the e-Privacy Directive, the Regulation sets out rules on, among others, the use and confidentiality of electronic communications and metadata, use of cookies and direct marketing by electronic means.

The main aims of the draft Regulation are to update the ePrivacy Directive to reflect new technologies and to better align it with GDPR. In addition to taking effect on the same day as the GDPR (25th May, 2018), penalties for non-compliance envisaged by the draft Regulation are the same as the GDPR, (i.e. potentially fines of €20m or 4% of annual global turnover, whichever is higher).

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Data Protection Officer and IT Manager – Two Jobs That Do Not Match

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Companies required to appoint a data protection officer (“DPO” ) in Europe should carefully consider which candidate is best to select for the job. A company established in Bavaria, Germany, was recently fined by the Bavarian data protection authority (Bayerisches Landesamt für Datenschutzaufsicht, “BayLDA“) for appointing a DPO who at the same time held an operational position as an IT manager. The appointment was deemed to create a conflict of interests between the two functions. This decision could potentially influence the interpretation of the upcoming EU General Data Protection Regulation (“GDPR“) and thus influence the appointment of DPOs by international companies.

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DFARS and DIB: Compliance Steps for DoD’s Newly Finalized Cybersecurity Rules for Contractors

Department of Defense Finalized Cybersecurity Rules for Contractors and Other Awardees. The First rule amends the Defense Federal Acquisition Regulation Supplement and went into effect on October 21, 2016 (“DFARS Rule”). The other rule modifies the previously voluntary DoD cybersecurity information sharing program (“DIB Rule”) and is set to come into effect on November 3, 2016. Aerial view of the Pentagon, the Department of Defense headquarters in Arlington, Virginia

For businesses that work with the U.S. Department of Defense (“DoD”), two important rules for safeguarding certain categories of sensitive information and reporting cyber incidents were recently finalized, updating the interim rules promulgated in late 2015. The first rule amends the Defense Federal Acquisition Regulation Supplement (“DFARS Rule”) and went into effect on October 21, 2016.  The second rule modifies the previously voluntary DoD cybersecurity information-sharing program in connection with the Defense Industrial Base (“DIB Rule”) and went into effect on November 3, 2016.

We previously explained the changes brought about by the interim rules. Here, we explain what changed after the rules’ comment periods, and provide suggestions for compliance.

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Keep Reading: Standing Affirmed, but Barnes & Noble Data Breach Class Action Halted

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It was about time for data breach defendants to get a win. The District Court for the Northern District of Illinois delivered one to Barnes & Noble in its long-running class action that stems from a breach suffered in 2012. Plaintiffs’ case was dismissed in its entirety on a motion to dismiss under Rule 12(b)(6). This development—just days after the Sixth Circuit in Nationwide had aligned itself with the Seventh Circuit’s Neiman Marcus and P.F. Chang’s decisions that found standing to sue for breach plaintiffs—shows that the legal battle over “harm” may start with standing, but goes nowhere absent alleged damages that tightly match the substantive elements of each claim.

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10 German Data Privacy Supervisory Authorities Investigating Potential Unlawful International Data Transfers

German Data Privacy Supervisory Authorities Investigating Potential Unalwful International Data Transfers Global Data Transfer Map

According to a press release of the Data Protection Supervisory Authority in the Land Mecklenburg Vorpommern of November 3, German supervisory authorities have randomly selected 500 companies in Germany and sent them requests for information on their international data transfers. The German supervisory authorities are undertaking this coordinated action in order to increase awareness among companies of the need to ensure data privacy compliance of international data transfers.

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New Cybersecurity Reporting Requirements? FinCEN Advisory Identifies Cybersecurity Events for Financial Institutions to Report

FinCEN Advisory Identifies Cybersecurity Events for Financial Institutions to Report Financial Building Facade

Last week, FinCEN (Financial Crimes Enforcement Network) issued a formal Advisory to Financial Institutions and published FAQs outlining specific cybersecurity events that should be reported through Suspicious Activity Reports (SARs).  This Advisory follows former FinCEN Director Jennifer Shasky Calvery’s recent statements reminding “financial institutions to include cyber-derived information (such as IP addresses or bitcoin wallet addresses) in suspicious activity reports.”  It also follows the launch of the Federal Financial Institutions Examination Council (FFIEC) Cybersecurity Assessment Tool (CAT).  Although the Advisory does not change existing Bank Secrecy Act (BSA) requirements or other regulatory obligations, the Advisory highlights a series of cybersecurity events–such as Distributed Denial of Service (DDoS) attacks and ransomware incidents–that should be reported on SARs filed with FinCEN, even though they often (but not always) fall outside the traditional notion of a data breach or a compromise of personal information.

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Does Your Insurance Cover Phishing Attacks and Business Email Compromise? The Uncertainty Continues…

Vendor-Impersonation E-mail Scam Illustration of Two Computers Facilitating Online Money Transfer

The coverage landscape for “Business E-mail Compromise” (BEC) scams remains somewhat tenuous, as organizations and carriers continue to battle in court over the extent of coverage. Although recent positive, policyholder-friendly trends in the Eighth Circuit (hacker who took over a bank’s computer system) and federal district court in Georgia (scheme based on spoofing a CEO’s e-mail) found insurance coverage for fraudulently transferred funds, a recent unpublished Fifth Circuit opinion moves in the other direction.  Unfortunately, this new ruling—and the uncertainty it creates—may embolden insurers in fighting coverage for these scams under crime insurance policies.

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A New Chapter in Cybersecurity? Is There a Role for Active Deterrence?

A new chapter in cybersecurity? Is there a role for active deterrence? Butch Cassidy Wanted Dead or Alive Poster

In the 1969 film Butch Cassidy and the Sundance Kid, after Butch and Sundance rob Union Pacific Railroad (“Union Pacific”) the first time, Union Pacific employs a stronger safe.  After Butch and Sundance rob Union Pacific a second time, Union Pacific forgoes the safe and hires a posse of unrelenting gunmen, hell bent on capturing and/or killing the duo.  The posse ultimately forces Butch and Sundance to flee to Bolivia—where they resume their bank-robbing antics.  Ultimately, it takes the Bolivian army to stop them. In their case, albeit fictional, the active deterrent (the posse) was more effective at protecting Union Pacific’s money than the passive deterrent (the safe), in part, because Butch and Sundance were highly-motivated actors.

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What is the FTC Doing About Privacy and Drones?

4 Major Takeaways from Federal Trade Commission FTC October 2016 panel on drones & privacy

Last week, as part of its Fall Technology Series, the Federal Trade Commission (“FTC”) hosted a much-anticipated workshop to explore the privacy concerns associated with drones. Although many in the audience hoped that this workshop would provide some insight into the FTC’s perspective and position on regulation of drones and privacy, the workshop left attendees with more questions than answers. We were there, and provide you with some of the key takeaways.

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EU Breach Notification Requirements Under the GDPR and NIS Directive: Are You Ready?

EU General Data Protection Regulation data breach notification requirements Network and Information Security (NIS) Directive security incident notification requirements

Data breach notification requirements are going global. By spring 2018, companies operating in the European Union must comply with the new General Data Protection Regulation’s (GDPR) data breach notification requirements and the Network and Information Security (NIS) Directive’s security incident notification requirements. Stricter and more far-reaching notification obligations underscore the importance of establishing a proactive Security Incident Response Policy to analyze potential legal obligations and prepare to respond to incidents long before they occur.

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