One of the fascinating aspects of the privacy-related negotiations between the EU and the US over the past couple of years has been the EU’s efforts to decouple trade (e.g, TTIP) and security-related negotiations from the Safe Harbor 2.0 negotiations. The US Senate’s Judiciary Committee pushed back firmly on that yesterday when it adopted amendments to the Judicial Redress Act, which the EU requires to be passed before it will sign the Umbrella Agreement between the US and EU relating to the sharing of crime-related information between law enforcement authorities. The basic aim of the Judicial Redress Act is to give EU citizens the same rights as US citizens under the United States’ Privacy Act of 1974. The European Commission has said a number of times that passage of the Judicial Redress Act was a step in the right direction for Safe Harbor 2.0 (without saying it was enough to fully address the Commission’s concerns). Continue Reading Tying it all together: Safe Harbor and Security-Related Data Flows
Federal Trade Commission
(So) What if there’s no Safe Harbor 2.0?
There’s no doubt businesses in the EU and US would breathe a sigh of relief if a new Safe Harbor agreement is put in place between before European data protection authorities start prosecuting companies for potentially illegal personal data transfers to the US. But if it doesn’t happen, the US is actually not any worse off than most of the rest of the world. No other country has a special agreement with the EU concerning personal data transfers, and only eleven countries have been deemed to be “adequate” by the European Commission: Andorra, Argentina, Canada (commercial organizations only), Faeroe Islands, Guernsey, Israel, Isle of Man, Jersey, New Zealand, Switzerland and Uruguay.
Only one of the countries on the “adequate” list, Switzerland, is a “top ten” EU trade partner, according to the latest trade statistics published by the Commission (based on 2014 figures). Only two of the countries are in the top twenty (Canada is in twelfth place). Japan, India, Brazil, Turkey, South Korea, all “top ten” EU trade partners, are not on the “adequate” list. Nor is China or Russia, both of which have significant trade with the EU (coming in second and third in the “total EU trade” rankings published by the Commission). So if the US isn’t on the “adequate” list, it is no worse off than most other major EU trade partners. Continue Reading (So) What if there’s no Safe Harbor 2.0?
Wyndham and FTC Settle Case Over “Unfair” Data Security Practices
The years-long saga of the Federal Trade Commission’s suit against Wyndham Hotels over data breaches that occurred at least as early as April 2008 is finally coming to an end with a proposed settlement filed today with the court. The original complaint, which is summarized in this post from 2012, alleged that Wyndham’s claims to use “standard industry practices” and “commercially reasonable efforts” to protect customers’ personal information were deceptive, and its actual practices unfair, in light of the company’s lax security practices. Wyndham argued that the FTC lacks the authority to police data security practices, but in August 2015 the Third Circuit found against Wyndham, holding that the FTC’s authority to take action against a company’s unfair practices extends to enforcement of data security practices.
The proposed settlement, which is in effect for 20 years, reached between Wyndham and the FTC provides the first notice to companies of what they should expect from the FTC in the event of a data breach due to a failure to maintain reasonable data security standards. The various settlement provisions are similar to those imposed in cases brought by the FTC over misrepresentations in privacy policies (as opposed to this case, which involved a suit over the laxity of the company’s actual data security practices).
Those provisions include Wyndham agreeing to undertake the following:
- • Establishment a comprehensive information security program to protect credit card data, which must include risk assessments, reasonable safeguards, and regular monitoring for the next 20 years;
- • Annual information security audits and independent assessments of its compliance with the Payment Card Industry Data Security Standard (PCI DSS) over the next 20 years;
- • Obtain the certification of an independent certified assessor before implementing any “significant change” to its data security practices that the change would not cause it to fall out of compliance;
- • Provide all assessments to FTC;
- • Keep records relied on to prepare each annual assessment for three years; and
- • Submit to compliance monitoring by the FTC.
Notably, and different from the settlements of privacy-related cases, Wyndham will not be required to pay a fine.
EU Top Court Invalidates Safe Harbor and Sends Facebook Case Back to Irish Data Protection Authority
UPDATE: Here’s a link to the English-language version of the ECJ’s full decision: Schrems Safe Harbor Decision
A press release issued by the Court of Justice of the EU (ECJ) regarding its decision in the Schrems Safe Harbor case (C-362/14) confirms that the ECJ has declared Safe Harbor invalid. The ECJ has sent the case back to the Irish Data Protection Authority to determine whether Facebook Ireland’s transfer of personal data to the US is permitted under EU data protection law, in light of Facebook’s participation in the NSA’s PRISM program. We are awaiting publication of the decision and will report further after it becomes available.
In the meantime, here’s the background to this decision and some suggestions for what to do next if your company relies on Safe Harbor:
The European Union’s Data Protection Directive (1995) prohibits the transfer of personal information outside of the European Economic Area unless the receiving country ensures an adequate level of privacy protection. Soon after the Directive was passed, the European Commission determined that the US doesn’t offer adequate levels of protection. The EU and the US negotiated the Safe Harbor agreement in 2000 to allow US companies to self-certify that they provide protections that are equivalent to the requirements of the Data Protection Directive.
Currently, over 4,500 US companies rely on the EU-US Safe Harbor program to make their transfer of personal data from the EU to the US legal under European privacy laws.
If your company relies exclusively on Safe Harbor as the basis for its transfer of personal data from the EU to the US, it will need to find another basis for the transfer as soon as possible. The primary options are:
- Consent of the data subject to the transfer. In most circumstances, the consent needs to be explicit and fully informed to be valid. It’s also important to keep records of the consent in case there’s a challenge.
- Binding corporate rules for intragroup transfers. BCRs need to be approved by the relevant national information commissioners, and this is a lengthy process (potentially 18 months or more). So while this is a longer term option, it won’t help if Safe Harbor is not available. Also, BCRs are vulnerable on the same grounds as Safe Harbor.
- Contracts between the exporting and receiving entities. The European Commission has provided model clauses that can be incorporated into agreements to ensure adequate protection of the transferred personal data. However, see the cautions below.
- In the UK, companies may be able to make their own adequacy determinations under guidance issued by the UK’s Information Commissioner’s Office.
There’s a very important caveat that would apply to all of these alternatives except possibly the data subject consent option: BCRs and model contracts require the data recipients essentially to promise that the data will be protected to the same level as in the EU. If your company could receive a subpoena from the NSA or other US government agency to disclose the personal data of EU residents, then the BCRs and contracts (and UK adequacy determinations) would presumably face the same weakness that the Safe Harbor faces: a fundamental incompatibility between EU data protection law and the powers of US government agencies to conduct intelligence operations and require US companies to comply.
Privacy Monday – August 24, 2015 – Breaking News: FTC vs. Wyndham Update
Rather than our usual Privacy Monday “bits and bytes,” we have a breaking story relating to the ongoing Wyndham/FTC saga.
Today, Wyndham Worldwide Corp. lost a critical round in the Third Circuit. Anticipated since April, 2014, the three-judge panel upheld U.S. District Judge Esther Salas’ ruling that the Federal Trade Commission (FTC) has the authority under the “unfairness” prong of Section 5 of the FTC Act to bring suit against companies over data security practices.
For all the background leading up to today’s ruling, we send you back to our April 2014 post summarizing Judge Salas’ ruling and a recap of the entire case history, going back to June 2012 when the FTC filed its complaint. The FTC originally alleged that Wyndham had engaged both in unfair and deceptive business practices in violation of Section 5 by failing to maintain reasonable and appropriate security measures. The alleged security failures led to at least three data breaches between April 2001 and January 2010, exposing consumer data and payment card account numbers. Wyndham has been fighting back all along the way, using this case to oppose the FTC’s authority and claiming that the agency exceeded statutory powers.
The appeals court said that Wyndham “cannot argue it was entitled to know with ascertainable certainty the cybersecurity standards by which the FTC expected it to conform….[T]he company can only claim that it lacked fair notice of the meaning of the statute itself — a theory it did not meaningfully raise and that we strongly suspect would be unpersuasive under the facts.”
This precedential opinion squarely rejects Wyndham’s argument that the FTC exceeded its statutory authority and Congress never intended for the commission to be able to use its Section 5 powers to police “failures to institute voluntary industry best practices” and virtually ensures the position of the FTC as “top cop” for data privacy and security regulation.
Privacy Monday – August 17, 2015: Three Bytes for End of Summer
It’s Privacy Monday again – and summer is winding down.
Here are three bytes of privacy/security information to start your week:
1. House Committee Releases HHS Breach Investigation
If you are subject to HIPAA and the oversight of the Department of Health and Human Services (HHS), schadenfreude will probably best describe your reaction.
A report recently released by the House Energy & Commerce Committee reveleaed that hackers have breached at least five divisions of HHS — including the FDA — in the last three years.
“What we found is alarming and unacceptable,” committee Chairman Fred Upton, Michigan Republican, and Oversight and Investigations Subcommittee Chairman Tim Murphy, Pennsylvania Republican, said in a joint statement. “At a time when sensitive information is held by so many in the public and private sectors, Americans should not have to worry that the U.S. government is left so vulnerable to attack.”
The 27-page review of HHS information security found that the breaches were unsophisticated and the affected agencies “often struggled to provide accurate, clear and sufficient information on the security incidents” during the course of their investigation. According to the committee, officials at two breached agencies were unable to provide accurate details about security incidents within their own networks. “These incidents raise questions about whether information security officials have the appropriate level of expertise,” the report reads.
Continue Reading Privacy Monday – August 17, 2015: Three Bytes for End of Summer
Privacy Monday – May 11, 2015
On this Privacy Monday, we have some upcoming events that you might want to add to your calendar.
Wednesday, May 13 – Mintz Employment Law Summit (Boston)
A discussion of hot topics facing employers, including Privacy in the Workplace. Free event, breakfast and lunch included. Register here.
Wednesday, May 13 – National Security, Privacy, and Renewing the USA PATRIOT Act, Hudson Institute, NY
Live streaming starts at noon. #PATRIOTAct. More information here.
Wednesday, May 13 – Ninth Annual Law & Information Society Symposium – Fordham Law School
Trends in the global processing of data, developments in new technologies, privacy enforcement actions and government surveillance put international privacy at the center of the global law and policy agenda. Government regulators, policymakers, legal experts, and industry players need to find solutions to cross-border conflicts and to the issues presented by innovative technologies. This conference seeks to create a robust, but informal dialog that will explore possible solutions to current questions arising from the international legal framework, infrastructure architecture and commercial practices. Information here.
Thursday, May 14 – IAPP KnowledgeNet (Boston area)
Learn about data privacy issues posed by wearables, wellness tracking apps, company wellness programs and other technologies and services here in the U.S. and abroad. Register here.
Monday, May 18 – 36th IEEE Symposium on Security & Privacy – Fairmont Hotel (San Jose)
Since 1980, the IEEE Symposium on Security and Privacy has been the premier forum for presenting developments in computer security and electronic privacy, and for bringing together researchers and practitioners in the field. The 2015 Symposium will mark the 36th annual meeting of this flagship conference. More information here.
Wednesday, May 27 – Mintz Privacy Wednesday Webinar – The Long Reach of COPPA
The fifth in our Wednesday Webinar series will focus on a discussion of COPPA, the long-awaited amendment and issues. We’ll also discuss the latest Federal Trade Commission settlements and how to avoid being the next target. Register here.
UPDATE: FTC Plans Review of YouTube Kids App
As we predicted in our post late last month, Google’s YouTube Kids app has attracted more than just the “curious little minds” Google was hoping for. Yesterday, a group of privacy and children’s rights advocates (including the Center for Digital Democracy and the American Academy of Child and Adolescent Psychiatry) asked the Federal Trade Commission “to investigate whether Google’s YouTube Kids app violates Section 5 of the FTC Act . . . .”
The advocacy group downloaded the YouTube Kids app onto an Android device, and two iOS devices. It then reviewed and assessed the app as it functioned; watching content Google says caters to children while protecting them from questionable or troubling content.
The advocacy group claims this review identified three features of the app it believes are unfair or deceptive. First, the group faults Google for offering content “intermixed” with advertising content in a manner the group claims “would not be permitted to be shown on broadcast or cable television” under Federal Communications Commission guidelines. Second, the group worries that much of advertising violates FTC Endorsement Guidelines because it is user-generated in a way capable of masking relationships with product manufacturers. Finally, the group claims the advertising content violates the YouTube Kids app’s stated policies and procedures.
Taken together, the advocacy group issues all collapse around the same core argument: very young children (generally under 5 years of age) cannot distinguish between actual content and advertising and that makes them “uniquely vulnerable to commercial influence.” This argument has a lot of emotional appeal: who wouldn’t want to protect small children? But the implications of this argument extend far beyond the YouTube Kids app, and would call into question any free, advertising supported video platform, including network television. As such, it seems like the advocacy groups position face significant First Amendment hurdles.
Although the advocacy group does not (yet) take issues with YouTube Kids’ data collection practices, it does question how the app is able to generate video recommendations. And its letter to the FTC explicitly asks the Commission to investigate whether or not children are being tracked without verifiable parental consent.
The ball is now squarely in the FTC’s court. It could launch a non-public investigation regarding the app’s practices, or it could do nothing. However, as the Commission has recently signaled a renewed interest in protecting children online (including entering a $19 million dollar settlement with Google over children’s in-app purchases last September), it seems likely the Commission will have at least some questions for Google following the advocacy group’s letter.
We’ll be sure to keep you posted.
Video Interview: Discussing Cross-Device Tracking on LXBN TV
Following up on my recent post on the matter, I had the opportunity to speak with Colin O’Keefe of LXBN on the subject of cross-device tracking. In the brief interview, I discuss the growing prevalence of cross-device tracking and what the FTC is doing in response.
Cross-Device Tracking: The New World
Facebook does it. Google does it. It’s everywhere in the mobile ad ecosystem. And your smartphone does it more often than you know, according to a study released on Monday by Carnegie Mellon.
Now, Federal authorities have turned their attention to cross-device and cross-service tracking of consumers over the last several days and weeks. Speaking at a Federal Communications Bar Association and American Bar Association joint event on March 25, Federal Communications Commission Enforcement Bureau Chief Travis LeBlanc expressed his privacy concerns with Triple-Play providers of Internet, video, and voice services aggregating customer data collected from across all three services. This came just a day after reports that Google would be testing a new model for television advertising in markets where it sells both Google Fiber Internet and television service. Also on March 24, the House Commerce, Manufacturing and Trade Subcommittee held a hearing on the Internet of Things that included questions about how personal information could be protected when collected and shared by connected devices. Continue Reading Cross-Device Tracking: The New World