The Federal Trade Commission has issued yet another warning to companies operating online: make sure your privacy policy is not making promises that you cannot (or do not) keep.
Read our analysis of the FTC v. Myspace complaint and consent order here.
Navigant recently published the latest update of its comprehensive Information Security and Data Breach Report, which adds yet another analytic view of the data breach picture. And the view is not a pretty one. You can get a copy of the report here.
Some of the “highlights”:
Symantec has released its annual Internet Security Threat Report, and the numbers are astounding.
According to the report, malicious attacks on networks skyrocketed by 81 percent in 2011. The report also highlights that advanced persistent threats, known as APT attacks, are spreading to organizations of all sizes, with the number of daily APT attacks increasing from 77 per day to 82 per day by the end of 2011. Such attacks are no longer limited to large organizations, as demonstrated by the data in the report. According to Symantec, more than 50 percent of such attacks target companies with fewer than 250 employees. It is possible that smaller organizations are now being targeted because they are somehow related to larger companies, through supply chain or other relationships — and they are less well-defended.
The 2011 Report also includes information regarding data breaches. According to Symantec, approximately 1.1 million identities were stolen per data breach on average in 2011, and hacking incidents exposed 187 million identities in 2011 — the largest number for any type of data breach in 2011.
Now here comes the “kicker”…….the most frequent cause of data breaches was theft of loss of unencrypted data on a computer or other medium on which data is stored or transmitted, such as a smartphone, USB drive, or a backup device. These theft or loss related breaches exposed 18.5 million identities.
It’s May, 2012 — do you know where your data is????
Bloomberg Securities Law Report recently published an article authorized by Mintz Levin attorneys Adam Veness and Cynthia Larose analyzing the privacy and cybersecurity risks disclosed in the Facebook IPO, and offering some tips for practitioners.
An employee — former employee — of the South Carolina Department of Health and Human Services found out the hard way after transferring the information of more than 228,000 Medicaid beneficiaries to his personal email account. The data included Medicare numbers (which include Social Security numbers as part of the identifier) linked to the beneficiaries names. The Department’s response? “[T]he employee has been fired.” Not only was Christopher Lykes, Jr. fired, he has also been charged by the South Carolina Law Enforcement Division with 5 counts of criminal violation of confidentiality laws.
Compliance and privacy officers should feel free to print out the article from the Charleston Post and Courier or the Greenville News as a “teachable moment” to discourage everyone’s favorite secure email workaround.
Written by Kimberly Gold
If your company needs another reminder that policies and procedures, risk assessments, documentation and training are critical elements for HIPAA compliance programs, we have another corrective action plan – and monetary fine – that should be utilized as a “teachable moment” for health care providers and business associates alike.
Phoenix Cardiac Surgery, P.C. has agreed to pay a $100,000 fine and implement a corrective action plan under a Resolution Agreement with the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) after a lengthy investigation into potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy and Security Rules.
OCR investigated the physician practice following a report that it had been posting clinical and surgical appointments on a publicly accessible Internet-based calendar. OCR’s investigation, dating back to 2003, found that Phoenix Cardiac Surgery had failed to implement sufficient policies and procedures to appropriately safeguard patient information. OCR also concluded that the physician practice did not adequately document employee training on the Privacy and Security Rules, identify a security official, conduct a risk analysis, or obtain satisfactory assurances in business associate agreements with Internet-based calendar and email providers. In a press release announcing the Phoenix Cardiac Surgery settlement, OCR Director Leon Rodriquez expressed the agency’s hope that health care providers “pay careful attention” to the Resolution Agreement and the expectation that all providers, “no matter the size,” fully comply with the Privacy and Security Rules.
The Resolution Agreement has a clear warning for service providers: Vendors of services that store and transmit patient information, including the seemingly innocuous Web-based e-mail and calendar services, are business associates and are required to comply with the Privacy and Security Rules. It also serves as a reminder to health care providers to ensure that business associate agreements are in place for all these types of services.
The settlement reaffirms OCR’s commitment to enforcing the Privacy and Security Rules, and its willingness to sanction covered entities for HIPAA violations. Just last month, BlueCross BlueShield of Tennessee agreed to pay $1.5 million to settle claims of non-compliance with the Privacy and Security Rules.
Monday, April 23, will begin Cyber Week, during which up to six different bills that focus on various aspects of cybersecurity may be considered on the House floor. The Rules Committee has not yet determined how the bills will be handled, but it is likely that the less controversial bills from the Committee on Science, Space and Technology will be considered under suspension and the remaining bills could possibly be combined to be voted on as a comprehensive cybersecurity package. On the other hand, Science Committee staff indicate that these bills might also be incorporated into a larger package. In order to prepare for Cyber Week, the House has scheduled a series of briefings and mark ups for this week.
H.R. 3523 – Cyber Intelligence Sharing and Protection Act (CISPA): This House Intelligence Committee bill, sponsored by Reps. Rogers (R-MI) and Ruppersberger (D-MD), was reported out of Committee on December 1, 2011. CISPA is the target of a “week of action” by public interest groups that were very strongly anti-SOPA/PIPA, such as the ACLU, Center for Democracy and Technology, and the Electronic Frontier Foundation. These groups are concerned about civil liberties and privacy issues raised by the bill. There have also been concerns over language in the bill that would have included intellectual property piracy in the definition of cyberthreat information. However the amendments in the discussion draft released earlier this week by the Intelligence Committee do not include that language. Furthermore, two high profile companies that were anti-SOPA – Facebook and Google – are not opposing this bill. In fact, Facebook released a statement in support of CISPA on Friday April 13. Rep. Ruppersberger’s staff has acknowledged that web activism could impact this legislation, but currently they are cautiously optimistic that the bill will move forward. The House is expected to focus on this bill during Cyber Week.
H.R. 4257 – Federal Information Security Amendments Act (FISMA): This House Oversight Committee bill, sponsored by Chairman Issa (R-CA), is scheduled for mark up this Wednesday, April 18. The goal of this legislation is to protect government IT systems through continuous monitoring of cybersecurity threats. After this week’s mark up, the House is expected to take up Chairman Issa’s bill during Cyber Week.
H.R. 3674 – Promoting and Enhancing Cybersecurity and Information Sharing Effectiveness Act (PRECISE): This bill, sponsored by Reps. Lungren (R-Ca) and Langevin (D-RI), was reported out of the Cybersecurity, Infrastructure Protection and Security Technologies Subcommittee on February 1, and the full Homeland Security Committee is scheduled to mark up the bill on Wednesday, April 18. While this bill is a priority for the Homeland Security Committee, it is not favored by House leadership and not expected see floor action during Cyber Week.
H.R. 2096 – Cybersecurity Enhancement Act: This bill, sponsored by Rep. McCaul (R-TX), was reported out of the Committee on Science, Space, and Technology on October 31, 2011. The Cybersecurity Enhancement Act focuses on federal cybersecurity strategic research and development, as well as the advancement of cybersecurity technical standards. During Cyber Week, Congress is expected to consider this bill, likely on the suspension calendar.
H.R. 3834 – Advancing America’s Networking and Information Technology Research and Development Act: This bill, sponsored by Rep. Hall (R-TX), was reported out of the Committee on Science, Space and Technology on March 22. Similar to the Cybersecurity Enhancement Act, Rep. Hall’s bill places priority on federal research and development programs. Because of the similarities in committee jurisdiction and focus, this bill may be considered on the suspension calendar as well.
Other Cybersecurity Proposals:
In addition to the bills described above, Rep. Mary Bono Mack (R-CA), Chair of the Manufacturing and Trade Subcommittee, introduced H.R. 4263, the SECURE IT Act, which is the companion to the Senate Republican cybersecurity bill introduced by Sen. McCain (R-AZ). Chairman Bono Mack’s House Subcommittee is not planning on marking up the bill in the near future. The bill was also referred to the Judiciary, Armed Services, and Intelligence Committees, but Bono Mack is waiting for some direction from leadership before moving forward. Because it appears that the House SECURE IT Act is not moving forward, the House Committee on Energy and Commerce will, somewhat surprisingly, not play a role during Cyber Week.
Furthermore, Rep. Goodlatte (R-VA) will not be introducing a cybersecurity bill in the Judiciary Committee because of the impact on a recent 9th Circuit decision involving the Computer Fraud and Abuse Act (CFAA). The court in United States v. Nosal ruled that CFAA did not apply to an employee who accessed a protected company computer with the intent to steal proprietary information. Because Rep. Goodlatte had planned to include changes to the CFAA, Chairman Smith (R-TX) and Rep. Goodlatte decided that they need to better understand the implications of the court’s decision before attempting any changes to the CFAA through legislation.
Upcoming House Cybersecurity Briefings:
April 17
April 18
For more information on legislative actions affecting cybersecurity, contact our colleagues at ML Strategies, or anyone in the Mintz Levin Privacy and Information Security group.
Back in January, the FTC announced that it would hold a workshop to examin the use of mobile payments in the marketplace and the effects on consumers. As promised, the workshop has been scheduled for April 26th, with a link to the agenda .
According to the FTC, the workshop will gather consumer advocates, industry members, government representatives, technologists, and academics to discuss the opportunities and challenges that mobile payments pose for businesses and consumers. The morning will kick off with an introduction to mobile payment technologies. Next on the agenda: a survey of the legal landscape and existing mechanisms for resolving disputes.
Panelists will explore a series of questions relating to the security and privacy implications of mobile payments, such as: What steps are being taken to ensure that consumers’ financial information is stored and transmitted securely? When someone uses a mobile payment service, what information is collected, by whom, and for what purpose? How does this compare to existing mechanisms for making payments?
Attendees will also hear a presentation from the Organization for Economic Co-operation and Development and panels will feature international participants.
Throughout the day, the conversation will go global. To learn from other countries’ experiences, panels will feature international participants and attendees will hear a presentation from the Organization for Economic Co-operation and Development (OECD).
The workshop will be held at the FTC’s Conference Center at 601 New Jersey Avenue, N.W., in Washington, D.C. and is free and open to the public.
Allow us to take a moment to congratulate one of our own. Mintz Levin colleague, Julia Siripurapu, has joined the ranks of certified privacy professionals! The CIPP credential is one of the best-recognized certifications in the “privacy world” and demonstrates Julia’s knowledge and proficiency with privacy-related matters.
Congratulations on an honor well-deserved, Julia!
Written by Ernie Cooper
Ruling earlier this week on a case brought by the Federal Trade Commission (FTC), a federal district court judge levied a total of $30 million in fines against two telemarketers for, among other things, placing prerecorded telemarketing “robocalls” to more than 2.7 million people with numbers on the national Do-Not-Call Registry. According to the FTC, this is “the largest penalty ever imposed for unlawful calls to consumers on the Do-Not-Call Registry.” While the fines assessed by the judge also encompassed the fraudulent nature of the calls, the number of calls and the fact that the telemarketers made no attempt to ensure persons on the Do-Not-Call Registry were not called, played a significant role in the decision to impose the fine. A copy of the decision can be found here.
All businesses making telemarketing calls – calls that advertise or are part of a program designed to sell a product or service – are required by both FTC and Federal Communications Commission (FCC) rules to ensure that calls are not placed to persons with numbers on the national Do-Not-Call Registry. This requirement applies to both prerecorded “robocalls” and calls made by live sales operators. While access to the Do-Not-Call Registry requires payment of a fee – currently $56 for each area code of data accessed, up to a maximum of $15,503 – that fee is a real bargain in light of the penalties that may be assessed for failure to use it, which may be as high as $11,000 per call.
Of course, compliance with do-not-call rules is only one part of compliance with FTC and FCC telemarketing rules. For example, the judge in this case also cited the telemarketers for failure to provide called parties an opportunity to opt out of future calls. Time of day, caller identification, and maintenance of a company-specific do-not-call list are just a few of many other considerations for producing a telemarketing campaign that will meet FTC and FCC standards. The large fine assessed by the judge this week underscores the seriousness with which these agencies view compliance with the Do-Not-Call Registry and all telemarketing rules.
