encryption

Will I Get Sued After a Data Breach? D.C. Circuit Broadens Scope of Data That Gives Rise to Identity Theft in CareFirst

In the latest sign that data breach class actions are here to stay—and, indeed, growing—the D.C. Circuit resuscitated claims against health insurer CareFirst BlueCross and Blue Shield, following a 2015 breach that compromised member names, dates of birth, email addresses, and subscriber identification numbers of approximately 1.1 million individuals.  The decision aligns the second most powerful federal appellate court in the nation with pre-Spokeo decisions in Neiman Marcus and P.F. Chang and post-Spokeo decisions in other circuits (Third, Seventh, and Eleventh).  In short, an increased risk of identity theft constitutes an imminent injury-in-fact, and the risk of future injury is substantial enough to support Article III standing.

The D.C. Circuit’s holding is an important development.  First, the D.C. Circuit went beyond credit card numbers and social security numbers to expand the scope of data types that create a risk to individuals (i.e., names, birthdates, emails, and health insurance subscriber ID numbers).  Second, the decision makes clear that organizations should carefully consider the interplay between encryption (plus other technical data protection measures) and “risk of harm” exceptions to notification, including exceptions that may be available under HIPAA and GLBA statutory regimes. READ MORE

New York DFS Cyber Rules Go Live: Here’s Your Roadmap

August 28, 2017 marks the end of the initial 180-day grace period for compliance under the New York Department of Financial Services’ “first-in-the-nation” cybersecurity regulations (the “Rules”).  The initial regulations were proposed last year, but NY DFS received robust public comments that led to significant amendments.  While the proposed regulations set out proscriptive, one-size-fits-all requirements, the final Rules align more closely to flexible federal, financial sector guidance, captured in the NIST cybersecurity framework and the FFIEC cybersecurity assessment tool.  Accordingly, the final Rules require that cybersecurity programs be calibrated to periodic “risk assessments” that give entities discretion to specify the criteria used to identify, evaluate, and remediate risks, in the context of technological developments and corporate controls.

While covered entities are technically required to be in compliance with the Rules as of Monday, there are additional transitional periods for certain items (see below), and entities have until February 15, 2018 to submit their first certifications to NY DFS.  For organizations still working through compliance requirements, the below steps may help to prioritize and implement a work plan. READ MORE

Financial Institutions Going First? New York Proposes Mandatory Minimum Cybersecurity Compliance Standards

Cybersecurity Standards Financial Services Institutions

Just as it promised a year ago, New York State proposed new proscriptive, minimum cybersecurity requirements for regulated financial services institutions.  The regulations go final after a 45-day notice and public comment period.  At that point, entities regulated by the NYDFS will be subject to the nation’s first proscriptive set of cybersecurity requirements in contrast to the usual risk-based cybersecurity programs mandated by other financial regulators to date.  Thus, unlike previous guidance and reports issued by financial regulators such as FINRA and the SEC, New York’s rules are specific requirements that all regulated financial institutions must adopt..  In this Part I, we review the proposed requirements, and offer some specific steps that regulated financial services institutions should begin to consider for compliance readiness.

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Tennessee Amends Breach Notice Statute and Sets Notice Deadline

data encryption

Tennessee recently amended its data breach notification law, and in doing so, it has joined the ranks of states like Florida, Ohio, and Wisconsin that require notification to residents of a data breach within a defined time period. When the law becomes effective on July 1, 2016, the statute will require notice to Tennessee residents within forty-five (45) days after discovery that personal information has been acquired by an “unauthorized person.” The original amendment required notice within fourteen (14) days, but the bill was subsequently amended  to expand the deadline to 45 days.

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FTC Enforcement in Schein: Misleading Statements about Encryption and Cybersecurity

encryption

On January 5, 2015, the Federal Trade Commission (FTC) entered into a consent order with dental software manufacturer Henry Schein Practice Solutions, Inc. (“Schein”) in connection with allegations that Schein had made misleading security-related representations about its software.  The consent order underscores that while security-enhanced product features are in high demand, companies must be careful to avoid unfair or deceptive marketing of such features.

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