Photo of Cynthia Larose

Cynthia Larose is a Member in Mintz Levin’s Corporate Group and leads our Privacy and Security practice. She is a Certified Information Privacy Professional, working with clients in various industries to develop comprehensive information security programs on the front end, and providing timely counsel when it becomes necessary to respond to a data breach.

Since September, the Mintz Levin Privacy Webinar Series has focused on the upcoming EU General Data Protection Regulation (GDPR) to help businesses understand the reach and scope of the GDPR and prepare for the potentially game-changing privacy regulation. The GDPR will affect how US businesses handle and process personal data originating in the EU and may require changes to business process.

Access, Correction and Erasure: How to Minimize the Burden (2/16/2017)

This webinar, the sixth and final in our EU General Data Protection Regulation Series, considers companies’ obligations to give individuals access to their data and to correct or erase it.  We explore the new data portability requirements. The webinar concludes with some suggestions on how to make these requirements less burdensome.

Transferring Data from the EU (1/12/2017)

This webinar, the fifth in our EU General Data Protection Regulation Series, explores the ways in which the Regulation creates new avenues for data transfers, and narrows others. In particular, we consider sector-specific Commission decisions, privacy seals/certifications, the exception for non-repetitive, limited transfers, and the outlook for BCRs and Model Clauses.

Data Protection Officers: Do You Need One? (12/15/2016)

This webinar, the fourth in our EU General Data Protection Regulation Series, examines the criteria that dictate whether or not your organization needs to appoint a Data Protection Officer. We discuss the role of the DPO, the significance of the “independence” requirement, and the qualifications required to hold the position.

Good-bye to the Cure-all: The New Rules on Consent (11/10/2016)

This webinar, the third in our EU General Data Protection Regulation Series, reviews the new restrictions on relying on user consent to data processing and data transfers. In addition to the general “imbalance of power” problem, we consider the implications of the Directive on unfair terms in consumer contracts and changes that may need to be made to terms of use and privacy policies when dealing with consumers.

Accountability, Data Security, Data Impact Assessments and Breach Notification Requirements (10/13/2016)

This webinar, the second in our EU General Data Protection Regulation Series, focuses on the data security and accountability requirements of the Regulation, including reviews and documentation of internal policies and procedures and data impact assessments. We also explore the breach notification requirements and actions that companies can take in advance to mitigate the need for breach notification.

One-Stop Shopping Mall? The New Regulatory Structure (9/14/2016)

This webinar, the first in our EU General Data Protection Regulation Series, explains the powers and role of the new European Data Protection Board, how a “lead supervisory authority” will be designated for each controller, and how the lead supervisory authority will interact with other interested supervisory authorities. We also look at the complaint process from the point of view of the individual who is claiming a violation, and explore the likely role that will be played by public interest organizations bringing group complaints.

“Don’t make promises that you don’t intend to keep” is an admonishment received by every child and delivered by every parent. This pithy maxim is equally applicable to consent orders entered into with regulatory authorities. Indeed, Upromise’s failure to abide by it is costing the company $500,000 in the form of a civil penalty from the Federal Trade Commission (FTC). Continue Reading More Broken Privacy Promises from Upromise: Key Takeaways From Upromise’s Latest Settlement with the FTC

 

We are well into March Madness … and Happy St. Patrick’s Day!

You may have already had your bracket busted by now…..but you should have Mintz Levin’s Third Annual Employment Law Summit on your schedule and the panel on Cybersecurity and Employee Data Breaches may help you avoid a security incident/personal data buster.

Teamwork is a key to advancing in the Big Dance and HR and IT could make a powerful team in fighting cybersecurity risks in your company. Just because cybersecurity threats affect cyberspace does not take the human element out of the prevention/mitigation loop.   And the Luck of the Irish has nothing to do with it……

Even though IT plays the role of the center in managing the game flow with respect to the company’s data security, the HR department should not sit on the bench. HR has the point guard skills necessary to mitigate important insider threats and properly train the rest of the team to play it safe.

Businesses are a treasure trove of information about people – customers, employees, business contacts. Loss or theft of any of these can cost a company both in cold cash and in reputation. We’ll take a look at the crazy-quilt of laws and discuss how HR managers and counsel can make the important connections between HR professionals and security professionals and keep your company in the game.

We hope you will join us in New York on April 6th as our panel ventures into cyberspace. Please remember to register here, as you won’t want to miss this important event.

Recently, a Google researcher discovered a serious flaw with the content delivery network (CDN) provided by CloudFlare.  This vulnerability has now become known as Cloudbleed, in a nod to the earlier Heartbleed SSL vulnerability.  The Cloudfare CDN allows users of the service to have their content stored at Cloudflare Network Points of Presence (PoPs) rather than a single origin server.  This reduces the amount of time it takes to serve websites in disparate geographical locations.  The service is popular, with Cloudflare having over five million customers, including Uber, OkCupid, and FitBit.

The Cloudbleed vulnerability involved a situation where sensitive data was inadvertently displayed or “leaked” when visiting a website that used certain Cloudflare functionality.  Cloudflare has estimated that the leak was executed 1,242,071 times between September 22nd and February 18th.  Search engines such as Bing, Yahoo, Baidu and Google also cached the leaked data.  The researcher who discovered the leak found all sorts of sensitive data being leaked, including private messages from major dating sites, full messages from a well-known chat service, online password manager data and hotel bookings, passwords and keys.

The Clouldbleed vulnerability is a reminder that companies that leverage external vendors to receive, process, store, or transfer sensitive data must find ways to reduce the risk created by the relationship to an acceptable level.  We have three steps that companies should consider taking to accomplish this.  

First, companies should understand how external vendors will interact with their data flows.  Companies that leverage Cloudflare services have given it access to sensitive data, including private messages, passwords, and keys.  The risks of providing this data to external vendors cannot be understood if the company itself does not understand at a senior organizational level what is being transferred.  Ask questions about the proposed procurement of vendor-provided services to understand what interaction the service/vendor has with your data.

Second, companies should make sure that they have permission to transfer user data to third parties, based on its existing terms of use and privacy policy documents that the relevant data subjects have agreed to.  Generally speaking, in most cases, the company collecting the data from the data subject will remain responsible for any issues that occur downstream, including loss or breach of the data through a third party vendor relationship.

Third, companies should carefully negotiate their vendor contracts in light of their own risk tolerance.  The contract should contemplate the data at issue, including by type and category, such as private messages and passwords, and should to the extent feasible transfer all risk of a breach on the vendor side to the vendor.  In many cases, it will be appropriate to require that the vendor carry insurance to satisfy its obligations under the agreement, including data breach remediation should it become an issue.

Companies with any questions regarding this process should not hesitate to contact the Privacy and Security team at Mintz Levin.

 

Last week, Snap Inc. (“Snap” or the “Company”) – the parent company of the wildly popular app Snapchat (“Snapchat” or the “App”) – became a publicly traded company on the New York Stock Exchange in the biggest tech IPO since Alibaba in 2014.  Priced at $17 per share, the Snap stock opened at $24 per share on Thursday morning and closed at $24.48 per share, bringing the Company’s market capitalization to approximately $28 billion. In today’s post, we’re taking a closer look at Snap’s S-1 filing (“Snap S-1”) with the U.S. Securities and Exchange Commission (SEC) with a particular focus on the Company’s disclosures of risk factors associated with cybersecurity and privacy risks.  Continue Reading A Deep Dive into Privacy/Security Disclosures in Snap’s S-1

In an effort to combat the growing prevalence of large-scale corporate cyberattacks, the New York Department of Financial Services (“NYDFS”) is rolling out a revamped cybersecurity regulation for financial services companies to take effect TODAY (March 1, 2017). This ambitious regulation is broadly drafted and carries a heavy compliance burden intended to protect consumers and ensure the safety and soundness of New York State’s financial services industry.   Even if you are not directly in banking or insurance, read on to see how these regulations may affect your company. Continue Reading It’s March 1: The Cybersecurity Goal Post Has Been Moved

Five Things You (and Your M&A Diligence Team) Should Know

Recently it was announced that Verizon would pay $350 million less than it had been prepared to pay previously for Yahoo as a result of data breaches that affected over 1.5 billion users, pending Yahoo shareholder approval. Verizon Chief Executive Lowell McAdam led the negotiations for the price reduction.  Yahoo took two years, until September of 2016, to disclose a 2014 data breach that Yahoo has said affected at least 500 million users, while Verizon Communications was in the process of acquiring Yahoo.  In December of 2016, Yahoo further disclosed that it had recently discovered a breach of around 1 billion Yahoo user accounts that likely took place in 2013.

While some may be thinking that the $350 million price reduction has effectively settled the matter, unfortunately, this is far from the case. These data breaches will likely continue to cost both Verizon and Yahoo for years to come.  Merger and acquisition events that are complicated by pre-existing data breaches will likely face at least four categories of on-going liabilities.  The cost of each of these events will be difficult to estimate during the deal process, even if the breach event is disclosed during initial diligence.

Continue Reading Data Breaches Will Cost Yahoo and Verizon Long After Sale

As our readers know we maintain a summary of U.S. state data breach notification laws, which we refer to as the “Mintz Matrix.”   Our latest update is available here, and it should be part of your incident response “toolbox” and part of your planning.

 During 2016, amendments to breach notification laws in five states went into effect (California, Nebraska, Oregon, Rhode Island and Tennessee).  And by the end of last year, well over twenty states had introduced or were considering new regulations or amendments to their existing security breach laws.  We expect there to continue to be significant regulatory activity in the data security space during 2017.  As always, we will keep you abreast of changes and will release updated versions of our Mintz Matrix to keep pace with developments in the states.

We are keeping an eye out for signs of support for a national breach notification law.  So far, there does not appear to be much political motivation for undertaking this effort.  A key sticking point is anxiety among a number of states that a federal law would offer less protection than their existing state law.  This is a valid concern since a national standard will only alleviate the significant burden of complying with the present patchwork of state laws if it has broad pre-emptive effect.  Only time will tell if state and federal lawmakers can work together to develop a comprehensive nationwide regime for security breach notification and remediation.

In the meantime, we must keep tabs on the forty-seven states (along with the District of Columbia, Guam, Puerto Rico and the Virgin Islands) with their own security breach laws.  Here is what’s been happening since our previous update in the Fall:

 California

 California amended its security breach law in order to require disclosure to affected residents (and to the Attorney General if more than 500 Californians are affected) when encrypted personal data is acquired by an unauthorized person together with an encryption key or security credential that could render the personal data readable or useable.

We note also that former Congressman Xavier Becerra recently took over as Attorney General in California, replacing Kamala Harris who aggressively pursued regulation in the privacy arena during her tenure as AG and who now serves California as one of its U.S. Senators.  Given this change in leadership, it will be interesting to see if the state continues to be a leader in pushing for stringent data security and privacy measures at the state and federal level.

 Illinois

Last summer Illinois passed an amendment to its Personal Information Protection Act (“PIPA”) that significantly broadened protections for personal information and the obligations imposed on businesses that handle such data.  The amendment became effective on January 1, 2017 and made several key changes to PIPA:

  • Definition of Personal Information. PIPA’s definition of “personal information” has now been expanded to include medical information, health insurance information, and unique biometric data used for authentication purposes (examples cited in the statute are a fingerprint, retina or iris image, or unique physical representations or digital representations of biometric data). The amended definition also encompasses a user name or email address in combination with a password or security question and answer that would permit access to an online account when either the user name or email address, or password or security question and answer, are not encrypted or redacted.
  • Encryption Safe Harbor. While PIPA already provided a safe harbor for data collectors if data disclosed due to a security breach was fully encrypted or redacted, the amendment clarified that the safe harbor does not apply if the keys to unencrypt or unredact or otherwise read compromised encrypted or redacted data have also been acquired in connection with the security breach.
  • Nature of Notification. For security breaches involving a user name or email address in combination with a password or security question and answer, data collectors may now provide notice in electronic or other form to affected Illinois residents. Such notice must direct individuals to promptly change their user name or password and security question and answer, or to take other appropriate steps to protect all online accounts for which the affected resident uses the same user name or email address/password or security question and answer. The amended statute also provides an additional option for substitute notice when residents affected by a security breach are confined to one geographic area.
  • New Exemptions. The amendment added an exemption for data collectors who meet their obligations under applicable provisions of the Health Insurance Portability and Accountability Act (“HIPAA”) and the Health Information Technology for Economic and Clinical Health Act (“HITECH”). Any data collector that provides notice of a security breach to the Secretary of Health and Human Services pursuant to its obligations under HITECH must also provide this notification to the Illinois Attorney General within five business days of notifying the Secretary. This exemption will primarily apply to certain entities operating in the healthcare space. The amended statute also deems financial institutions subject to applicable provisions of the Gramm-Leach-Bliley Act in compliance with PIPA’s data security requirements.
  • Security Requirements. Beyond addressing breach notification, the amendment requires covered entities to implement and maintain reasonable security measures to protect records containing personal information of Illinois residents and to impose similar requirements on recipient parties when disclosing such personal information pursuant to a contract. The amended statute also requires state agencies to report security breaches affecting more than 250 Illinois residents to the Illinois Attorney General.

 Massachusetts

 For those information junkies out there!  The Office of Consumer Affairs and Business Regulation (the “OCABR”) in Massachusetts has created a public web-based archive of data breaches reported to the OCABR and the Massachusetts Attorney General since 2007.  The data breach notification archive is available at www.mass.gov/ocabr and includes information about which entity was breached, how many Massachusetts residents were affected, if the breach was electronic or involved paper, and the nature of remediation services offered to affected residents.

 It is always a good time to review your incident response plan and data privacy policies to bring everything in line with changes happening on the state level. 

 And now for the disclaimer: The Mintz Matrix is for informational purposes only and does not constitute legal advice or opinions regarding any specific facts relating to specific data breach incidents. You should seek the advice of the Mintz Levin privacy team or other experienced legal counsel when reviewing options and obligations in responding to a particular data security breach.

Make sure to get your February 2017 Mintz Matrix!  Available here for downloading and always linked through the blog’s right-hand navigation bar.

 

What does your TV-watching history say about you? According to a recent lawsuit against VIZIO, Inc., it might be more than you think! One of the world’s largest sellers of “smart” televisions has recently paid a $2.2 million settlement following charges by the Federal Trade Commission and the Office of the New Jersey Attorney General that it was unlawfully tracking and selling 11 million consumers’ viewing data. The resulting court order has important repercussions for both consumers and smart TV producers.  Continue Reading Who is Watching you Watch TV? If You Have VIZIO … Your TV Might Be Watching You

 

It’s that taxing time of the year.   Employees have received W-2 forms and the tax filing season has begun in earnest.  And, as night follows day, last year’s W-2 spear-phishing scam has returned.  The IRS and state tax authorities have issued a new alert  to HR and payroll departments to beware of phony emails intended to capture personal information of employees.   The emails generally appear to be from a senior executive (typically the CEO or CFO) to a company payroll office or HR employee and request a PDF or list of employee W-2 forms for the tax year.   Those forms contain all the information any cybercriminal needs to file a fraudulent tax return for a tax refund.   That scam cost the US taxpayer about $21 billon in 2016.  Over 70 companies fell victim to the 2016 scam and hundreds of thousands of employee records, including Social Security numbers, were compromised.

To refresh your memory, here are some of the details that may be contained in the emails:

  • Kindly send me the individual 2016 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review.
  • Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary).
  • I want you to send me the list of W-2 copy of employees wage and tax statement for 2016, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me asap.

We’ve already seen some activity on this front being reported from around the country.  These incidents not only create angst for employees, but they constitute data breaches reportable under state law because personal information has been exposed to an unauthorized (and unknown) individual and the risk of identity theft is high.   Last year’s incidents also resulted in class action lawsuits by employees against some of the victimized companies.

Employees Are Front Line of Defense

These emails look absolutely legitimate.  That is what makes them so effective.  The header of the email may look exactly as one would expect, mirroring the company fonts, duplicating automated signature blocks, and containing the actual email address of the spoofed executive in the “From:” line. Often, the return email address won’t even be visible until after the reply is sent unless the user specifically expands the address field. If you look carefully, it is likely that the domain name is a few characters “off” from the company’s legitimate domain name, such as substituting the number one (1) for the letter “l” or replacing a “.org” with a “.com”.   The more sophisticated attacks may utilize information obtained from LinkedIn® or social media designed to lull the target into a false sense of trust.

Awareness of these attacks and the problem is the key for employees.   

Train employees — particularly HR and payroll employees — who handle sensitive information to be wary of direct requests for personal information from company executives.   Send out samples of such emails and establish a campaign to raise employee consciousness.  A bit of skepticism goes a long way in protecting against this type of attack.  Confirmation of this type of request should be standard operating procedure, no matter who appears to have sent it.   Your company’s IT department should also be monitoring for phishing trends and remaining on the alert for suspicious outgoing activity, including large files or attachments.

Ask.  Since we have already seen reports of these attacks very early in this tax year, it is time to check in and insure that your company has not already fallen victim.   It’s important to respond quickly to reduce total damage to the organization, and most importantly, to your employees.  Affected individuals can protect themselves with certain forms filed with the IRS – but it’s only effective if they know soon enough.

 

The Mintz Levin Privacy team is here to help with employee training or preparing a plan to respond to an incident.