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

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.

The U.S. Federal Trade Commission (“FTC”) has filed a lawsuit against device manufacturer D-Link for allegedly deceiving the marketplace about the security of its products and, in turn, unfairly placing customer privacy at risk.

Overview

Taiwan-based manufacturers D-Link Corporation and D-Link Systems, Inc. (collectively, “D-Link”) design a variety of home network devices, such as routers, IP cameras, and baby monitors. Devices such as these are susceptible to hacking when they are connected to each other and to the internet (in what is often referred to as the “Internet of Things” or “IoT”), and weak security measures therefore pose a significant security concern. Judging from D-Link’s advertisements for its products, the company is certainly aware of these risks. D-Link boasted that its routers are safe locked from hackers thanks to “Advanced Network Security,” its baby monitors and cameras assure a “Secure Connection” to protect the livestream view of a sleeping child, and promises of an “easy” and “safe” network appear repeatedly during the set up process for a D-Link device with an online interface. As the FTC explains in its lawsuit, claims like those made by D-Link are not only misleading but also dangerous.

Despite an apparent awareness of consumers’ cybersecurity concerns, the FTC alleges that D-Link neglected to build common security measures into the devices it sells. The allegations are startling: mobile app credentials were stored unsecured in plain text on consumer devices; a private company key code was accidentally made viewable online for six months; hard-coded login credentials in camera software left video feeds vulnerable to unauthorized viewers. And that’s just the beginning. More details are listed in the FTC’s complaint filed in a U.S. District Court in California on January 5, 2017. These lapses, and D-Link’s deceptive advertising, prompted the FTC to charge the company with a violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. §45.

As of January 10th, D-Link has denied the allegations outlined in the complaint and has retained the Cause of Action Institute as counsel to defend against the action.

The growing IoT problem

In recent years, the FTC has tried to keep pace with mounting concerns over the IoT industry by filing a handful of complaints focused on consumer protection. For example, it went after the company TRENDnet after the firm’s faulty software allowed hundreds of personal security cameras to be hacked. It also filed an action against computer parts manufacturer ASUS after its cloud services were compromised and the personal information of thousands of consumers was posted online. These isolated mistakes add up; when millions of unsecured and seemingly innocuous Wi-Fi-enabled devices join the global network, they can serve as a massive launchpad for crippling cyber-attacks like the one that overwhelmed internet traffic operator Dyn and shut down several major websites in October 2016. The efforts of the FTC are aimed at mitigating such attacks and encouraging technology developers to invest effort and resources in order to secure their IoT devices before they hit the marketplace.

Search for solutions

Both the FTC and the National Institute of Standards and Technology (NIST) have released reports offering guidelines and technical standards for building reliable security into the framework of new systems and devices. As we wrote about recently, the Obama administration had also left the Trump administration an extensive report on cybersecurity recommendations. Achieving these standards will require a combination of regular agency enforcement and greater market demand for safe, secure devices. In the meantime, some digital vigilantes are working to stop cyber-attacks before they start. Netgear, for instance, has launched a “bug bounty program” offering cash rewards of $150-$15,000 for eager hackers to track and report security gaps in its devices, applications, and APIS. Indeed, incentivizing solutions rather than quietly overlooking mistakes, and searching for loopholes in our laws, will make a substantial difference in safeguarding the IoT landscape.

It’s likely that 2017 will see still more data breaches and hacking stories, and companies should be looking closely at cybersecurity as a risk management issue, and not as an IT issue (we’ve been saying that for years ….).

One of the issues for 2017 will continue to be global changes in data protection laws, and how US companies operating in a global environment prepare for compliance with competing regulations.

To that end, we continue our ongoing series of webinars on the European Union’s General Data Protection Regulation (GDPR).

The upcoming webinar, the fifth in our GDPR Series, will explore the ways in which the Regulation creates new avenues for data transfers, and narrows others. In particular, we will consider sector-specific Commission decisions, privacy seals/certifications, the exception for non-repetitive, limited transfers, and the outlook for BCRs and Model Clauses.

Registration is online here.

 

 

The Obama White House has grappled with cybersecurity more than any administration in history: China’s 2009 hack of Google, the 2015 Office of Personnel Management breach, and the recent investigation of Russian cyberattacks during the 2016 election, to name just a few examples. In the midst of the president-elect’s transition efforts, President Obama’s administration has published what it considers to be a blueprint for enhancing the cybersecurity capabilities of government institutions and our digital consumer society today and for years beyond Inauguration Day.   Continue Reading #MLWashingtonCyberWatch: White House Releases Cybersecurity Report Aimed at New Administration

 

The growing scale of cybersecurity concerns is prompting action from government leadership on the federal level. Before the Thanksgiving recess, the House’s Committee on Energy and Commerce got in on the act when two of its subcommittees–the Communications and Technology Subcommittee, chaired by Rep. Greg Walden (R-OR), and the Commerce, Manufacturing, and Trade Subcommittee, chaired by Rep. Michael C. Burgess, M.D. (R-TX)–held a joint hearing to investigate and consider the role of Internet-enabled devices (collectively referred to as the “Internet of Things,” or “IoT”) in high-profile online attacks.  Continue Reading House Energy & Commerce Committee Holds Hearing on Security of the Internet of Things

Even president-elect Donald Trump has been the victim of a data breach. Several times actually. The payment card system for his Trump Hotel Collection was infected by malware in May 2014 and 70,000 credit card numbers were compromised by the time the hack was discovered several months later.  The hotel chain paid a penalty to the State of New York for its handling of that incident.  The hotel chain also experienced at least two additional breaches during this past year affecting various properties. From a business perspective, Mr. Trump certainly understands the high costs of cybersecurity in dollars and distraction. But from the Oval Office, it is far less clear what the Trump Administration might do to secure our country’s digital infrastructure and prosecute cybercriminals. Equally uncertain are Mr. Trump’s views on privacy rights and how his presidency might affect federal protections for personal information and cross-border transfers of data. We do not have a crystal ball, but offer some thoughts. Continue Reading The Cyber President? What To Expect From the Trump Administration On Cybersecurity And Privacy

 

 

As we previewed last week, the Federal Communications Commission (FCC) has adopted new privacy rules that govern Internet service providers’ (ISPs) handling of broadband customer information.  Though the Wireline Competition Bureau stated that it expects it will be at least several days before the final Order is released to the public, the FCC released a fact sheet describing the rules as adopted.

These rules are the culmination of a process that began in 2015 with the reclassification of Broadband Internet Access Service (BIAS) as a common carrier telecommunications service regulated under Title II of the Communications Act.  As a consequence of reclassification, the obligations established under the privacy framework adopted by the Federal Trade Commission (FTC) no longer applied to ISPs due to the common carrier exception in Section 5 of the FTC Act.  Accordingly, the FCC determined that the privacy protections governing telephone customer proprietary network information (CPNI) set forth in Section 222 of the Communications Act would now apply to ISPs’ provision of BIAS.

On April 1, 2016, the Commission released a Notice of Proposed Rulemaking setting forth proposed privacy and data security rules that would govern ISPs’ provision of BIAS.  The rules originally proposed by the FCC would have subjected ISPs to significantly greater constraints on their ability to use customer data for advertising, marketing, and offering customized services and features than the FTC’s privacy framework, which continues to apply to websites, apps, and all other entities in the Internet ecosystem other than ISPs.  For example, while the FTC framework applies differing choice mechanisms (i.e., opt-in, opt-out, or implied consent) depending on the sensitivity of the data being collected and the context of its use, the FCC initially proposed to apply a default opt-in regime to virtually all data – rejecting any distinctions based on data sensitivity.

In response to comments from the FTC and others in the proceeding, the final rules adopted by the FCC align more closely with the FTC framework, though some important differences remain.  Continue reading for key elements of the proposed rules. Continue Reading What You Need to Know about the New Broadband Privacy Regulations

BREAKING NEWS –

The FCC has voted 3-2 along party lines to require internet service providers (ISPs) to get a customer’s explicit consent before they can use or share what is termed “sensitive” personal information.  That definition raises some eyebrows: according to the FCC’s rules, “sensitive” information includes browsing history, mobile location data, TV viewing history, call and text message records, and information about what mobile apps subscribers use.

The regulation was billed by the FCC as based on transparency, consumer choice and data security.

We will have a full analysis of the new regulations tomorrow.