The decision to appeal a regulatory finding is never taken lightly. By the time a regulator has completed its investigation and notified a company of its intention to fine, the company will have invested significant time and money in responding to the regulatory investigation. As such, there is a real temptation to accept the fine and the accompanying statement from the regulator and move on.
However, in the case of recent regulatory findings, fines and intentions to fine issued by the UK’s Information Commissioner’s Office (the “ICO”) against British Airways, Marriott and Dixons Carphone, all three companies have appealed or indicated an intention to appeal despite the significant difference in the levels of the fines/intentions to fine. In our view, this is related to the spectre of an emerging class action litigation culture in the UK that increases the stakes for any company facing negative regulatory findings.
In this UK-focused blog we explore the potential motivation behind these decisions to appeal, why we expect to see more companies taking this approach in the future, and the steps to be taken in order to appeal decisions by the ICO and we also consider whether the companies that have failed to appeal and are now facing class actions made the right decision when they elected not to appeal.
A recent skirmish about standing in data breach class actions (this time in the Eighth Circuit), involving securities and brokerage firm Scottrade, suggests that, even if plaintiffs win that limited question, there are other key battles that can win the war for defendants. As we reported with Neiman Marcus, P.F. Chang’s, Nationwide, and Barnes & Noble, the Eighth Circuit’s decision in Kuhn v. Scottrade offers important proactive steps that organizations should consider taking that can mitigate post-breach litigation exposure. READ MORE
In this Corporate Counsel article, Orrick attorneys Renee Phillips and Shea Leitch discuss the emerging issue of cybersecurity whistleblowing. The authors discuss scenarios in which cybersecurity whistleblowers may step forward and how a company can best address complaints internally and mitigate the potential of regulatory scrutiny. Click here to read the full article.
What should companies do when ransomware hits? The FBI says: (a) report it to law enforcement and (b) do not pay the ransom. Given the recent onslaught in ransomware attacks—such as a 2016 variant that compromised an estimated 100,000 computers a day—companies should consider how their incident response plans account for decision-making in response to ransomware, and include this scenario in their next (or an interim) tabletop simulation.
FBI Public Service Announcement
In a September 15 announcement, the FBI urged companies to come forward and report ransomware attacks to law enforcement. The FBI acknowledged that companies may hesitate to contact law enforcement for a variety of reasons: uncertainly as to whether a specific attack warrants law enforcement attention, fear of adverse reputational impact or even embarrassment, or a belief that reporting is unnecessary where a ransom has been paid or data back-ups have restored services.
Notwithstanding these dynamics, the FBI is calling on companies to help in the fight: “Victim reporting provides law enforcement with a greater understanding of the threat, provides justification for ransomware investigations, and contributes relevant information to ongoing ransomware cases.”
The FBI also offered some best practices that companies should consider incorporating into their cybersecurity program and/or their disaster recovery and business continuity plans. These recommendations include: regular backups that are verified, securing backups, implementation of anti-virus and anti-malware solutions, increased employee awareness training, institution of principle of least privilege policies, and more. READ MORE
This month, the Federal Communications Commission (FCC) will consider issuing a Notice of Proposed Rulemaking (NPRM) for privacy regulations that will apply to broadband providers. The goals and objectives of the proposed regulations, which will be offered by FCC Chairman Wheeler, are outlined in a short document that the FCC released. The proposed regulations will likely contain strict privacy requirements that broadband providers have never before been subject to under federal law.
After nearly 4 years of negotiations, yesterday evening the EU reached agreement on the final provisions of its new data protection laws. With it, a new era of data protection has been ushered in that will have far reaching consequences for organisations both inside and outside of the EU.
In January 2012, the European Commission put forward its proposals for data protection reform, which included text for a new General Data Protection Regulation. Following negotiations this year with the European Parliament and the Council (the so-called ‘trilogues’ meetings), the three institutions reached final agreement on the Regulation’s provisions late last night.
The shockwaves continue from the October 6, 2015 ruling of the Court of Justice of the European Union (CJEU), the European Union’s highest court, invalidating the U.S.-EU “Safe Harbor” data transfer regime in a controversy arising out of Maximillian Schrems’ complaint to the Irish Data Protection Commissioner. The Schrems decision obviously has huge privacy implications for companies that transferred data under the Safe Harbor regime, but it may also impact such companies’ cyber insurance.
October ordinarily brings the return of crisp air, fall foliage, and Halloween. This year, for the first time, it also brings National Cyber Security Awareness Month. Yet designating a month to increase cybersecurity awareness seems redundant. We are reminded almost daily of the importance of cybersecurity, as media reports of cyber breaches have become commonplace. Of course, the most widely reported cyber incidents have been data privacy breaches that have affected tens of millions of consumers nationwide. These are the sorts of incidents that have spawned a growing market for so-called “cyber policies” (although as we wrote recently, the CEO of one of the largest insurers has acknowledged that cyber insurance capacity remains relatively small).
There has been no recent shortage of high-profile cyberattacks and data breaches leaving businesses with millions of dollars in losses. Verizon’s 2015 Data Breach Investigations Report counted 79,790 security incidents (including 2,122 confirmed data breaches) in the last year alone. If you’re a business that stores information electronically—that is, if you’re any business at all—you’re probably sufficiently worried about cyber threats just by reading the news. But if you haven’t fully appreciated the seriousness of the problem yet, the insurance industry is happy to help. As one insurer warns in its marketing materials, “many companies don’t realize that whether they experience a data security breach isn’t as much a matter of if it will happen as when.” Sufficiently terrified of cyber threats? Don’t worry—these same insurers will let you know they offer coverage that will help mitigate your risk. As one insurer puts it, “when a security breach happens, you’ll need comprehensive protection from an insurer that specializes in handling cyber risks, offers a full suite of integrated insurance solutions to help minimize gaps in coverage, and understands how to tailor coverage to your business.” READ MORE