In this two-part article, the authors provide an overview of government cybersecurity resources, and encourage companies to consider whether and when it makes sense to take advantage of this assistance. The first part, which appeared in the October 2015 issue of Pratt’s Privacy & Cybersecurity Law Report, introduces the jurisdictional landscape and cybersecurity resources available from the Department of Justice and the Department of Homeland Security. This second part of the article discusses the cybersecurity resources available from the Federal Bureau of Investigation, the United States Secret Service, and regulators.
On December 18, President Obama signed into law an omnibus spending package for 2016 that included the Cybersecurity Act of 2015 (known in former versions as the Cybersecurity Information Sharing Act). After years of debate, the Cybersecurity Act establishes a framework to facilitate and encourage confidential two-way private sector sharing of cyberthreat information with the federal government and provides liability shields for cyberthreat information sharing, as well as for specific actions undertaken to defend or monitor corporate networks. The Cybersecurity Act also designates the Department of Homeland Security (DHS) to coordinate cyberthreat information sharing.
The Cybersecurity Act has important implications for cooperation among industry participants and with regulatory agencies in development of effective cybersecurity programs. Public-private cyberthreat information sharing is an important step to improve companies’ defenses and responses to the changing cyberthreat landscape. Though the Act is effective immediately, the attorney general and DHS secretary must release guidelines within 90 days.
After almost four years of intense negotiations, on 15 December 2015, an informal agreement on the proposed EU Data Protection Regulation was reached between the Council of Ministers and the European Parliament. An extraordinary meeting of the LIBE Committee is scheduled for 17 December 2015 for the 28 EU Member States to vote on the text. Final adoption of the Regulation is likely to be in early 2016.
The Federal Trade Commission (FTC) and Federal Communications Commission (FCC) have been active in recent years in bringing consumer protection enforcement actions, with a particular focus on privacy and data security issues. Recent regulatory action from the FCC associated with “net neutrality,” however, has blurred the line as to where each agency’s jurisdiction begins and ends, particularly for companies offering broadband Internet access service. Recognizing this uncertainty, on November 16, 2015, the FTC and FCC announced that the agencies had signed a “Memorandum of Understanding on Consumer Protection.” The MoU set out that the agencies will work together to “coordinate on agency initiatives where one agency’s action will have a significant effect on the other agency’s authority or programs.”
On Friday, December 4, President Obama signed the Fixing America’s Surface Transportation (“FAST”) Act, a $300 billion-plus highway and transportation law and the first comprehensive transportation spending law in a decade. Despite its title, the bill impacts a number of regulated sectors. Nestled within this 490-page law are 13 pages that pertain to cybersecurity and other protections for the electric grid. As detailed below, the FAST Act also includes a number of privacy and cybersecurity provisions relating to privacy notices by financial institutions as required by the Gramm Leach Bliley Act, event data records in vehicles, Internet of Things technologies, and connected cars.
A recent ALJ Initial Decision may prove significant in data breach litigation and provide further aid to companies battling class actions with claims of future injury through identity theft. On November 13, 2015, the administrative law judge hearing the FTC’s action against medical testing laboratory LabMD dismissed the FTC’s case in its entirety. See In re LabMD, Inc., F.T.C. ALJ, No. 9357 (Nov. 13, 2015). The action had its genesis in an investigation of LabMD’s security practices. The investigation began after a report that information from LabMD may have been disclosed on a file-sharing website. The FTC asserted that LabMD had failed to properly protect sensitive data and that information gleaned from its records was being used for identity theft purposes.
Last week, the New Zealand Ministry of Foreign Affairs & Trade has made public the text of the Trans-Pacific Partnership (TPP) Agreement. While the text of the TPP has been negotiated over the past seven years, several provisions relating to electronic commerce are remarkably timely and address key considerations for companies doing business abroad. Highlighted below are key initial takeaways from Article 14 of the TPP, on “Electronic Commerce:”
In a November 9, 2015 letter to members of the Financial and Banking Information Infrastructure Committee (“FBIIC”), the Acting Superintendent of the New York Department of Financial Services (“NY DFS”) outlined key elements of potential new regulations by the NY DFS addressing cybersecurity risk (“Cybersecurity Proposal”) and encouraged FBIIC members to work with the NY DFS in developing a comprehensive cybersecurity framework for all regulated financial institutions. The NY DFS regulates entities and products that are subject to New York insurance, banking and financial services laws. The FBIIC is composed of state and federal agencies that regulate companies and products in the financial services sector, including the U.S. Securities and Exchange Commission (“SEC”), the Office of the Comptroller of the Currency (“OCC”) and the National Association of Insurance Commissioners (“NAIC”). The stated goal of the NY DFS is to stimulate dialogue among federal and state financial regulators to promote collaboration and, ultimately, regulatory convergence.
On November 5, 2015, the Federal Communications Commission (“FCC” or “Commission”) issued its first ever privacy or data security enforcement order against a cable provider, Cox Communications, Inc. (“Cox”). The order adopted a consent decree entered into with the company, fining the company $595,000 for the breach. The order sets out that in August 2014, a hacker used social engineering tactics, or “pretexting,” to impersonate someone from Cox’s information technology department in a phishing scheme to successfully convince a Cox contractor to enter an account ID and password into a fake website which the hackers controlled. Without multi-factor authentication in place for the targeted systems, the hacker and an accomplice were able to use those captured credentials to obtain the personal information and /or Customer Proprietary Network Information (“CPNI”) of 54 current and seven former customers. Cox notified the FBI of the breach, but did not notify the FCC through the Commission’s breach-reporting portal.
On October 27, 2015, the Senate passed S. 754, the Cybersecurity Information Sharing Act (“CISA”), with bi-partisan support. Although some raised privacy concerns, CISA received backing from the Administration and support from many industry participants. The Senate bill must be reconciled with similar bills in the House (H.R. 1560 and H.R. 1731) before a conference version is produced. This process may be contentious as privacy advocates seek to strengthen protections for personal information, and Senator Richard Burr, Chairman of the Senate Intelligence Committee and co-sponsor of CISA, indicated that the conferencing process is unlikely to produce a resolution before January 2016.