By

Edward R. McNicholas

16 August 2017

SEC’s OCIE Cybersecurity Risk Alert Announces Cybersecurity 2 Observations

On August 7, 2017, the SEC’s Office of Compliance Inspections and Examinations (OCIE) issued a cybersecurity Risk Alert summarizing its observations from its second cybersecurity survey of financial services firms.  Overall, OCIE observed increased cybersecurity preparedness since its first 2014 “Cybersecurity 1” Initiative, but also the SEC noted a number of areas where compliance and oversight merit attention.  Perhaps the most general observation from the “Cybersecurity 2” risk alert is that, while the OCIE noted that most firms now have written policies and procedures, the message was clear that simply having a generic policy is not adequate.  Firms must instead have policies that are adapted to their actual operations as well as procedures that demonstrate the implementation of these policies and documented results of compliance with those procedures.  (more…)

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08 August 2017

D.C. Circuit Widens the Split on Standing in Data Breach Cases After Spokeo

The D.C. Circuit recently widened a significant circuit split regarding standing in data breach cases by overturning a district court’s dismissal of a complaint for lack of standing. See Attias v. CareFirst, Inc., D.C. Cir. No. 16-7108.

Courts have long been occupied by the question of whether the mere fact of having personal information subject to unauthorized acquisition is, in itself, an injury sufficient for standing. Hopes were high that the Supreme Court would resolve the issue in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016).  In that case, the Supreme Court held that plaintiffs who allege violations of statutes that contain a private right of action and statutory damages must establish not only “invasion of a legally protected interest,” but also that they suffered a “concrete and particularized” harm, in order to satisfy Article III’s standing requirement.  Defense counsel were cheered by the restatement of the law of standing, but plaintiffs have argued that Spokeo opened the door for even the most minor of statutory violations even in the absence of quantifiable damage.  The Spokeo ruling has had substantial but unpredictable implications for data breach litigation. Federal courts of appeals have subsequently reached different conclusions about how Spokeo applies to allegations of an increased risk of identity theft following a data breach with several circuits overtly splitting over the issue. (more…)

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05 July 2017

Illinois Becomes the First State to Pass a Geolocation Privacy Protection Bill

On June 27, 2017, the Illinois General Assembly passed a bill seeking to limit the collection, use, retention, or disclosure of precise geolocation data from a mobile device without a person’s prior express and written consent.  This notable bill, the Geolocation Privacy Protection Act (“GPPA”), is on its way to Illinois Governor Bruce Rauner’s desk – although it is unclear if it will be signed or vetoed.  If signed, this bill would mark the first state geolocation privacy protection bill in the country—and represent the most stringent requirements related to geolocation data in the nation, potentially creating complex issues for the rapidly proliferating variety of mobile Internet of Things devices.  (more…)

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26 June 2017

NYDFS Issues FAQs for Recently Issued Cybersecurity Regulations

On June 20, 2017, the New York State Department of Financial Services (“NYDFS”) expanded its set of frequently asked questions (“FAQs”) and answers concerning its recently finalized Cybersecurity Regulations (23 NYCRR 500.01), which set forth minimum requirements for NYDFS-regulated entities to address cybersecurity risk.  The now 17 questions included in the release address the types of entities that fall within the scope of the Regulations, the notice requirements attending a Cybersecurity Event (as defined in the Regulations), the annual certification requirement, and additional specific elements of the rules. (more…)

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15 May 2017

President Trump Signs Executive Order on Cybersecurity at Federal Agencies

On Thursday, May 11, President Trump signed an executive order aimed at strengthening the cybersecurity of federal networks and critical infrastructure.  The order is expected to prompt a broad examination of cybersecurity vulnerabilities at federal agencies and re-orient federal cybersecurity efforts toward modernization and shared services.  The order also reaffirms the previous administration’s approach to cybersecurity protections for critical infrastructure – with increased emphasis on the power grid – and seeks to promote the growth and sustainment of the nation’s cybersecurity workforce in the public and private sectors.  (more…)

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24 April 2017

Federal Judge Finds No General Obligation for Companies To Protect Employee Data

In a ruling on March 31, Enslin v. The Coca-Cola Co. (E.D. Pa. Mar. 31, 2017), Hon. Joseph F. Leeson, Jr., of the United States District Court for the Eastern District of Pennsylvania, dismissed a proposed class action on behalf of 74,000 Coca-Cola employees. The proposed suit was brought by a former Coca-Cola technician who claimed that his identity was stolen after a laptop with his unsecured sensitive employee information fell into the public’s hands. (more…)

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06 April 2017

The Widening Data Breach Standing Split: Fourth Circuit Finds No Standing From Increased Risk of Future Identity Theft

The U.S. Court of Appeals for the Fourth Circuit has added to the growing circuit split on standing in data breach cases in Beck v. McDonald, No. 15-1395 (Feb. 6, 2017). The circuit split now divides at least six federal courts of appeal regarding what data-breach victims must show to establish an “injury-in-fact” under Article III. The Fourth Circuit held that merely having your personal data stolen — and the alleged corresponding increased risk of future theft—is insufficient to satisfy Article III’s injury-in-fact requirement. (more…)

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04 April 2017

A Farewell to the FCC Broadband Privacy Rules

On April 3, 2017, President Trump signed the bill repealing the Federal Communications Commission’s much-debated broadband privacy rules. The House of Representatives voted 215–205 to disapprove the rules, after a party-line Senate vote of 50–48. The result is that the FCC’s key rules governing internet service providers’ collection and use of consumer data, as well as data security, will not go into effect as scheduled. Moreover, the FCC will be precluded from promulgating any regulation in “substantially the same” form until a future Congress allows such action.

(more…)

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15 February 2017

Chronicles from the Standing Wars: Third Circuit Rules Disclosures of Personal Data in Violation of FCRA De Facto Injury

The Third Circuit recently overturned a district court’s ruling on In re Horizon Healthcare Services Inc. Data Breach Litigation and gave new life to a putative class action over a data breach.  No. 15-2309 (Jan. 20, 2017).  The Third Circuit panel held that allegations of unauthorized disclosure of personal information in violation of the Fair Credit Reporting Act (“FCRA”) constituted a de facto injury sufficient to establish Article III standing.  Plaintiffs did not allege identity theft, any other misuse of the compromised data, or even any mitigation costs.

(more…)

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25 January 2017

Fate Unclear for Obama Administration Cyber Sanctions

On December 28, 2016, former President Obama issued Executive Order 13757, Taking Additional Steps to Address the National Emergency with Respect to Significant Malicious Cyber-Enabled Activities (E.O. 13757). E.O. 13757 amends an earlier Executive Order 13694 (E.O. 13694) of April 1, 2015[1], under which the President declared a “national emergency” to deal with the “unusual and extraordinary threat” to U.S. national security, foreign policy and the economy posed by malicious cyber-enabled activities conducted by persons outside the United States in relation to the November 2016 election. Through the December 2016 amendment, President Obama took “additional steps” to deal with such malicious cyber activities in view of their increasing use “to undermine democratic processes or institutions.”

(more…)

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