Data Breaches

On December 15, 2020, the Irish Data Protection Commission (“DPC”) fined Twitter International Company (“TIC”) EUR 450,000 (USD 500,000) following a narrow investigation into TIC’s compliance with obligations to (a) notify a personal data breach within 72 hours under Article 33(1) GDPR; and (b) document the facts of the breach under Article 33(5) GDPR. The process to investigate these points took a little under two years, and resulted in a decision of nearly 200 pages.

This is the first time that the DPC has issued a GDPR fine as a lead supervisory authority (“LSA”) after going through the “cooperation” and “consistency” mechanisms that enable other authorities to raise objections and the EDPB to resolve disagreements. The delay in the process and details in the EDPB binding resolution suggest that this was a somewhat arduous process. Several authorities raised objections in response to the DPC’s draft report – regarding the identity of the controller (Irish entity and/or U.S. parent), the competence of the DPC to be LSA, the scope of the investigation, the size of the fine, and other matters. Following some back and forth — most authorities maintained their objections despite the DPC’s explanations — the DPC referred the matter to the EDPB under the GDPR’s dispute resolution procedure. The EDPB considered the objections and dismissed nearly all of them as not being “relevant and reasoned”, but did require the DPC to reassess the level of the proposed fine.

Process aside, the DPC’s decision contains some interesting points on when a controller is deemed to be “aware” of a personal data breach for the purpose of notifying a breach to a supervisory authority. This may be particularly relevant for companies based in Europe that rely on parent companies in the US and elsewhere to process data on their behalf. The decision also underlines the importance of documenting breaches and what details organizations should include in these internal reports.
Continue Reading Twitter Fine: a View into the Consistency Mechanism, and “Constructive Awareness” of Breaches

On February 1, 2019, China’s National Information Security Standardization Technical Committee (“TC260”) released a set of amendments to GB/T 35273-2017 Information Technology – Personal Information Security Specification (“the Standard”) for public comment.  The comment period ends on March 3.

Although not legally binding, the Standard has been highly influential since becoming effective in May 2018, as it set out the best practices expected by Chinese regulators (see our previous blogpost on the Standard here).  The Standard has been widely used by companies to benchmark their compliance efforts in China.

The draft amendments reflect Chinese regulators’ evolved thinking on a number of important topics that are hotly debated around the world, such as enhanced notice and consent requirements and requirements for target advertising.  The draft amendments would also introduce new requirements for third party access to data and revise notification requirements for data beaches, among other proposed changes.
Continue Reading China Releases Draft Amendments to the Personal Information Protection Standard

This spring has seen significant legislative activity with regards to state data breach notification laws, ranging from new laws in Alabama and South Dakota to amendments to existing laws in Oregon, Arizona, and elsewhere.  Continuing this trend, three states recently passed legislation to amend their existing data breach notification laws.  Legislation recently passed in Colorado will require notification of affected individuals and the state Attorney General within 30 days, while recent amendments to Louisiana’s data breach notification law will expand the scope of personally identifiable information (“PII”) covered by the law.  In addition, Vermont recently passed legislation that will create specific data breach notification requirements for “data brokers.”  This post examines each state’s amendments in greater detail below.

Colorado

Through the passage of H.B. 1128, which takes effect on September 1, 2018, Colorado has broadened the definition of PII under its existing data breach notification law, in addition to requiring notification of the state Attorney General and imposing strict notification timelines.  Once the new provisions enter into force, covered entities will be required to notify affected individuals within 30 days of the determination that a breach has occurred.  Colorado joins Florida as the only states that have imposed a 30-day notification deadline for notice to individuals, although Colorado’s law, unlike Florida’s, will not include a provision that allows for an extension of this deadline under certain limited conditions.  In addition, Colorado’s amendments will require notification of the state Attorney General if a covered entity believes that more than 500 state residents have been affected by a breach.  As with individual notifications, the notification to the state Attorney General must be provided within 30 days  after the date of determination of a breach.Continue Reading Colorado, Louisiana, and Vermont Add to Recent Trend of Changes to State Data Breach Notification Laws

In a speech delivered at the United States Naval Academy on October 10, Deputy Attorney General Rod Rosenstein waded into the public debate between data privacy and law enforcement interests.  As part of a discussion moderated by former Covington cybersecurity attorney Jeff Kosseff, Rosenstein’s remarks discussed cyber issues facing law enforcement with a particular focus on the advent of “warrant-proof” encryption.  In his view, warrant-proof encrypted data and devices are unable to be intercepted or unlocked by law enforcement, even with a court order.

Noting that “[p]rivate sector entities are crucial partners” in the fight against cyber threats, Rosenstein expressed concerns about the role played by tech companies in advancing warrant-proof encryption.  While recognizing the need to balance important privacy interests against law enforcement priorities, Rosenstein argued that “[w]arrant-proof encryption defeats the constitutional balance by elevating privacy above public safety.”  He emphasized the threat posed to public safety when technology developers deprive law enforcement of “crucial investigative tools.”  Rosenstein advocated for “responsible encryption,” recognizing that this approach would not be one-size-fits-all and that solutions would likely look different depending on the company and technology at issue. 
Continue Reading Deputy Attorney General Rod Rosenstein Warns Against Warrant-Proof Encryption

Customers’ allegations that they face a substantial risk of identity theft as a result of a 2014 data breach are sufficiently plausible to allow their suit against health insurer CareFirst to proceed, the U.S. Court of Appeals for the D.C. Circuit held in an August 1 decision.

CareFirst discovered in April 2015 — and announced a month later — that an unknown intruder had gained access in June 2014 to a database containing personal information about CareFirst’s customers.  Seven customers then brought a class-action lawsuit against CareFirst in the federal district court in Washington, D.C., alleging among other things that CareFirst was negligent in protecting customer data, and that customers as a result faced an increased risk of identity theft.

The district court dismissed the suit, finding that the plaintiffs had not alleged that hackers had accessed the plaintiffs’ social security numbers or credit card information, and that the risk of hackers stealing the plaintiffs’ identities without such information was too speculative to satisfy the requirements of Article III of the U.S. Constitution, which requires that federal courts hear only actual “cases or controversies.”  The Supreme Court has held that this requirement bars lawsuits where the plaintiffs have not alleged that they have suffered or imminently will suffer a concrete injury.
Continue Reading D.C. Circuit: Data Breach Plaintiffs Plausibly Allege ‘Substantial Risk’ of ID Theft Sufficient to Support Standing

The FTC announced today a new “Stick With Security” Initiative, building on its prior “Start With Security” guide as “part of its ongoing efforts to help businesses ensure that they are taking reasonable steps to protect and secure consumer data.”  Stick With Security constitutes a series of blog…
Continue Reading FTC Announces “Stick With Security” Initiative

On April 24th, the Electronic Privacy Information Center (“EPIC”) and a coalition of 37 other civil society groups sent a letter urging the Federal Communications Commission (“FCC”) to act on an August 2015 petition to repeal the FCC’s data retention mandate under 47 C.F.R. §42.6 (“Retention of Telephone Toll Records”).

The mandate requires communications carriers that “offer[] or bill[] toll telephone service” to retain the following customer billing records for a period of 18 months: (1) the “name, address, and telephone number of the caller,” (2) the “telephone number called,” and (3) the “date, time, and length of the call.”  Carriers are required to retain such information regardless of whether they are billing their own toll service customers or billing customers for another carrier.
Continue Reading Advocacy Groups Urge FCC to End Data Retention Mandate

By Denitsa Marinova

On April 11, 2017, the Data Protection Commissioner of Ireland (DPC) published her annual report for 2016, highlighting key developments and activities for the past year and outlining priorities for 2017 and beyond.  The report will be of interest to Irish entities and multinational organizations with a base in Ireland, including companies active in the technology and healthcare sectors.

In 2016, the DPC investigated a record number of complaints (1,479 in total, the majority involving data access requests); received 2,224 notifications of valid data security breaches (a decrease from 2015); carried out over 50 privacy audits and inspections; acted as lead reviewer in seven Binding Corporate Rules (BCR) applications; and held over 100 face-to-face meetings with multinational companies.
Continue Reading Irish Data Protection Commissioner Releases 2016 Annual Report

New York Attorney General Eric T. Schneiderman announced this week that there were a record number of data breach notices in New York in 2016, with nearly 1,300 reported data breaches exposing the personal records of 1.6 million New Yorkers.  These numbers represented a 60 percent year-over-year increase in the number of data breaches reported, and a threefold increase in the number of records exposed.

According to an analysis conducted by the Attorney General’s office, which builds on a 2014 report, most of the exposed records consisted of social security numbers and financial account information, and the leading causes of data security breaches in New York were hacking and inadvertent disclosures.  Schneiderman’s statement cautioned that these record numbers make it “all the more important for companies and citizens alike to take precaution when sharing and storing personal data” as “these breaches too often jeopardize the financial health of New Yorkers and cost the public and private sectors billions of dollars.”
Continue Reading NY Data Breaches Reached Record Levels in 2016

By Ciarra Chavarria

On June 8, 2016, the Securities and Exchange Commission announced that Morgan Stanley Smith Barney LLC (“Morgan Stanley”) had agreed to pay $1 million as a penalty for charges relating to its “failures to protect customer information.”

Morgan Stanley’s settlement with the SEC came several months after a federal court found one of Morgan Stanley’s former financial advisers, Galen Marsh, guilty of illegally uploading confidential information from approximately 730,000 of Morgan Stanley’s clients to his personal computer. Marsh’s server was later hacked by third parties and confidential information of at least 900 clients appeared online for sale.  Marsh was sentenced to thirty-six months of probation and a $600,000 fine.
Continue Reading Morgan Stanley to Pay $1 Million Penalty in SEC Cybersecurity Settlement