With about half a year to go until the California Consumer Privacy Act (CCPA)’s effective date, and with significant amendments still percolating to define the scope and impact of the CCPA come 2020, other states continue to consider whether to adopt new and broader privacy laws of their own, with Nevada recently taking the distinction of being the first to follow the CCPA trend. While the scope and obligations of the Nevada law is significantly narrower than the CCPA and thus largely will align with current CCPA implementation projects, the new Nevada law does expand upon the CCPA in one particularly notable way—it moves the deadline to facilitate opt-outs of sales of personal information up to October 2019. (more…)
The SEC’s Office of Compliance Inspections and Examinations (OCIE) released two Risk Alerts, on April 16, 2019 and May 23, 2019, highlighting the importance of privacy and cybersecurity compliance for SEC-registered investment advisors and broker-dealers under Regulation S-P. As previously covered on Data Matters, OCIE has consistently identified cybersecurity as one of its main areas of focus for examinations.
Indeed, cybersecurity was once again identified by OCIE in its 2019 National Exam Program Examination Priorities (2019 Exam Priorities), which placed a particular emphasis on proper configuration of network storage devices, information security governance, and policies and procedures related to retail trading information security. With the issuance of the April 16 and May 23 Risk Alerts, OCIE has provided additional detail regarding specific issues that SEC-registered entities should focus on to mitigate privacy and cybersecurity risk, as well as to prepare for examinations.
As the legislative session drew to a close, what once seemed like an inevitability suddenly looked unlikely. The Washington Privacy Act, SB 5376/HB1854, failed to make its way through the legislative process. The Bill’s sponsor, Sen. Reuven Carlyle, called the game on April 17, tweeting that despite the “unprecedented 46-1 vote” in the Senate, “[u]nfortunately, House failed to pass privacy legislation this year. We’re committed to 2020.” Nevertheless, the State of Washington did pass notable privacy legislation, albeit on a more narrow topic.
On February 27, 2019, the Federal Trade Commission (“FTC”) announced a record-setting $5.7 million civil penalty against makers of the popular free video creation and sharing app, Musical.ly (now known as TikTok), for violations of U.S. children’s privacy rules. This is the largest civil penalty the FTC has issued concerning violations of the Children’s Online Privacy Protection Act (“COPPA”).
On January 25, 2019, the North American Electric Reliability Corporation (“NERC”) asked the Federal Energy Regulatory Commission (“FERC”) to approve a settlement issuing a record $10 million fine against an unidentified utility resulting from violations of critical infrastructure protection standards (“CIP”) occurring mostly between 2015 and 2018 (referred to hereafter as the “Settlement Agreement”). Although none of the violations resulted in any reported outages, NERC concluded that the cumulative effect of the violations posed a serious risk to the reliability of the bulk U.S. power grid because “many of the violations involved long durations, multiple instances of noncompliance, and repeated failures to implement physical and cyber security protections.” Settlement Agreement at 12.
On December 3, 2018, twelve attorneys general (“AGs”) jointly filed a data breach lawsuit against Medical Informatics Engineering and its subsidiary, NoMoreClipboard LLC (collectively “the Company”), an electronic health records company, in federal district court in Indiana. See Indiana v. Med. Informatics Eng’g, Inc., No. 3:18-cv-00969 (N.D. Ind. filed Dec. 3, 2018). The suit—led by Indiana Attorney General Curtis Hill—is joined by AGs from Arizona, Arkansas, Florida, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Nebraska, North Carolina and Wisconsin. While state AGs have previously exercised their civil enforcement authorities under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), this is the first multi-state data breach lawsuit alleging HIPAA violations in federal court and may signal increased interest on the part of state officials in exercising their data protection authorities to address cybersecurity incidents.
When the GDPR came into effect on May 25, 2018, several European Member States had yet to put in place further implementing legislation. And while the data protection world watches and eagerly digests each new interpretive guidance from data protection authorities, Member State legislation provides additional interpretive tones of harmony or discord in data protection across Europe. After much delay and almost seven months after the EU’s General Data Protection Regulation (“GDPR”) came into force, the Organic Law 3/2018 on the Protection of Personal Data and Guarantee of Digital Rights (“LOPDGDD”) – which implements the GDPR in Spain – entered into force on 7 December 2018. (more…)
With the midterm election out of the way, legislators on Capitol Hill and in state capitols are getting ready to consider the future of data privacy regulation in 2019 and consumer and industry groups continue to weigh in on the ongoing debate. The debate has begun to move from principles and frameworks to drafting of legislative language.
On November 23, 2018, the European Data Protection Board (“EDPB”) published draft guidelines seeking to clarify the territorial scope of the GDPR (“Guidelines”). The Guidelines have been eagerly awaited, particularly by controllers and processors outside of the EU looking for confirmation as to whether or not the EU data protection rules apply to them. The Guidelines largely reaffirm prior interpretations of the GDPR’s territorial application under Article (3)(1), and offer essential guidance with respect to the GDPR’s – heavily debated – extraterritorial application under Article (3)(2). The GDPR applies to companies established in the EU as well as companies outside of the EU that are “targeting” individuals in the EU (by offering them products or services) or monitoring their behavior (as far as that behavior takes place in the EU).
The proposed Guidelines are open for public consultation until January 18, 2019. It remains to be seen whether and how any outstanding issues will have been addressed upon conclusion of the consultation. (more…)
Rapid advances in automation have the potential to disrupt a number of sectors, perhaps none more so than the automobile industry. The U.S. Department of Transportation (DOT) has accordingly announced its intention to take “active steps to prepare for the future by engaging with new technologies to ensure safety without hampering innovation.” Most recently, on October 4, 2018, DOT issued Preparing for the Future of Transportation: Automated Vehicles 3.0 (AV 3.0), its third round of guidance on the topic. Like its 2017 predecessor, “Automated Driving Systems 2.0: A Vision for Safety,” AV 3.0 emphasizes the development of voluntary, consensus-based technical standards and approaches while noting that there are cross-cutting policy issues where federal leadership may be necessary. AV 3.0 also builds on its predecessors by emphasizing that it reflects the view of all of DOT’s operating administrations; by providing much more detailed guidance on the development and testing of automated vehicle technologies; and by announcing some specific regulatory steps DOT plans to take in the near future. (more…)