Building upon its 2012 Consumer Protection Report, its 2014 report on Data Brokers, and a public workshop held on September 15, 2014, the FTC issued a new report on January 6, 2016, with recommendations to businesses on the growing use of big data: Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues (“2016 Big Data Report”). Rather than focusing on prior themes of notice, choice, and security, the 2016 Big Data Report addresses only the commercial use of big data consisting of consumer information, and focuses on impacts of such big data uses on low-income and underserved populations.
When the California legislature closed out their 2015 session on September 11 of 2015, they sent three bills to Governor Jerry Brown proposing amendments to the state’s data breach laws which were all signed into law on October 6 and took effect January 1, 2016. The new laws address what license plate data automated readers may collect, defined encryption, and critically, made significant changes to the details of the required content and format of data breach notifications. S.B. 570 specified that data breach notices must be titled “Notice of Data Breach” and be broken into sections titled “What Happened,” “What Information Was Involved,” “What We Are Doing,” “What You Can Do” and “For More Information.” Notice formatting must be in at least 10-point font and call attention to the notice’s “nature and significance.” A model notification, which companies may use to comply with these content amendments, is also provided in the bill (see below). These formatting requirements would not be prohibited under other state breach notification laws, and so we will likely soon see this format become a de facto national standard for efficiency’s sake.
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.
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.
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 29, 2015, the European Parliament adopted a resolution on the electronic mass surveillance of EU citizens (the “Resolution”). Positioned as a follow-up to its resolution of 12 March 2014 in which the Parliament called for the immediate suspension of Safe Harbor and put forward a number of recommendations to limit access to personal data of European citizens as part of mass surveillance, the Resolution calls on the European Commission to “reflect immediately on alternatives to Safe Harbor and on the impact of the judgment [from the Court of Justice of the European Union in the Schrems case] on any other instruments for the transfer of personal data to the U.S.” It also calls for the European Commission to “report on the matter by the end of 2015.” In addition, the European Parliament demanded that the Commission urgently provide an update on the ongoing negotiations between US authorities and the Commission.
Cybersecurity attacks have increasingly garnered significant attention this summer—and financial regulators are taking notice and taking action. Earlier in August, the Securities and Exchange Commission (“SEC”) announced the indictment of nine players in a major hacking ring. The ring was designed to obtain corporate announcements prior to their public release, to give purchasers of the illegally obtained information an edge in securities trading. The attack combined old-school securities fraud with new-school cybercrime, and served as a reminder of financial markets’ potential vulnerabilities from the ingenuity of cybercriminals.
In an effort to address growing concerns about security vulnerabilities in both the public and private sectors, the National Institute of Standards and Technology (NIST) has released a flurry of new and updated information security recommendations. The latest recommendations address protections for sensitive data held by federal contractors, encryption standards, and security for federal Smart ID cards.
An already active TCPA class action bar is sure to become even more active after a significant Declaratory Ruling and Order from the FCC that, among other points, broadened what technologies may be considered autodialers, gave further strength to class actions based on reassigned cell numbers, and muddied the waters for constructing compliance mechanisms to support consumer revocation of consent.
On July 10, 2015, the Federal Communications Commission issued a declaratory ruling to resolve various concerns raised by 21 petitions regarding the Commission’s implementation of the Telephone Consumer Protection Act, which carries a $500 penalty for each call or text in violation.