On December 6, 2012, California Attorney General Kamala D. Harris announced a lawsuit against Delta Air Lines, Inc. (“Delta”) for violations of the California Online Privacy Protection Act (“CalOPPA”). The suit, which the Attorney General filed in the San Francisco Superior Court, alleges that Delta failed to conspicuously post a privacy policy within Delta’s “Fly Delta” mobile application to inform users of what personally identifiable information is collected and how it is being used by the company. CalOPPA requires “an operator of a commercial Web site or online service that collects personally identifiable information through the Internet about individual consumers residing in California who use or visit its commercial Web site or online service,” such as a mobile application, to post a privacy policy that contains the elements set out in CalOPPA. According to Attorney General Harris’ complaint, Delta has operated the “Fly Delta” application for smartphones and other electronic devices since at least 2010. The complaint alleges that “[d]espite collecting substantial personally identifiable information (“PII”) such as user’s full name, telephone number, email address, frequent flyer account number and PIN code, photographs, and geo-location, the Fly Delta application does not have a privacy policy. It does not have a privacy policy in the application itself, in the platform stores from which the application may be downloaded, or on Delta’s website.”
On December 5, 2012, the Federal Trade Commission announced that the online advertising company Epic Marketplace, Inc. (“Epic”) agreed to settle charges that it engaged in “history sniffing” to secretly and illegally collect information about consumers’ interest in sensitive medical and financial issues. History sniffing is the practice of determining whether a consumer has previously visited a webpage by checking how a browser displays a hyperlink. The consent order requires Epic to destroy all data collected from history sniffing and bars Epic from engaging in history sniffing in the future.
On November 28, 2012, the UK Information Commissioner’s Office (“ICO”) issued monetary penalties totaling £440,000 to two owners of a marketing company that sent millions of unlawful spam SMS text messages over a period of three years.
On November 20, 2012, the UK Information Commissioner’s Office (“ICO”) published “Anonymisation: Managing Data Protection Risk Code of Practice” (the “Code”). The purpose of the Code is to provide organizations with a framework for assessing the risks of anonymization. It also sets forth good practice recommendations that may be adopted by organizations to provide a “reasonable degree of confidence” that the publication and sharing of anonymized data will not lead to an “inappropriate disclosure of personal data.” The published Code follows a consultation on the same topic earlier this year. The ICO also announced the creation of the UK Anonymisation Network, which will promote the sharing of good practices related to anonymization across the public and private sectors.
On November 13-15, 2012, delegates at the IAPP Europe Data Protection Congress in Brussels were given insight into how discussions with key policymakers are progressing. As European Parliament rapporteur and Member of the European Parliament Jan Philipp Albrecht aims to finalize the reform of the EU Data Protection Directive by the end of the current European Parliament’s mandate in 2014, this ambitious goal faces numerous hurdles.
On October 26, 2012, the Federal Trade Commission finalized its settlement agreements with two businesses that allegedly exposed thousands of customers’ sensitive personal information by allowing peer-to-peer (“P2P”) file-sharing software to be installed on the companies’ computer systems. The approved settlements prohibit Georgia auto dealer Franklin’s Budget Car Sales, Inc. (“Franklin”) and Utah-based debt collector EPN, Inc. (“EPN”) from misrepresenting their privacy and information security practices and requires both businesses to establish and maintain a comprehensive information security program subject to biennial, independent, third-party audits for 20 years. The settlement with Franklin also bars the company from violating the Gramm-Leach-Bliley Act (“GLBA”) Safeguards Rule and Privacy Rule.
On November 7, 2012, the Federal Trade Commission announced that it had settled charges against payday lending and check cashing companies alleged to have improperly disposed of consumers’ personal information. In its complaint, the FTC maintained that PLS Financial Services, Inc., and The Payday Loan Store of Illinois violated the FTC’s Disposal Rule as well as the Gramm-Leach-Bliley Act’s Privacy Rule and Safeguards Rule by disposing of documents that contained consumers’ Social Security numbers, bank account numbers and credit reports in unsecured dumpsters near the companies’ payday lending and check cashing retail stores. The FTC also alleged that the companies violated the FTC Act by misrepresenting that they would reasonably protect consumer information.
On October 29, 2012, the UK Information Commissioner’s Office (“ICO”) served private sector financial services company The Prudential Assurance Company Limited (“Prudential”) with a monetary penalty of £50,000 in connection with a serious violation of the Data Protection Act 1998 (“DPA”). The violation concerned a mix-up involving Prudential customer details. In March 2007, the customer records of two individuals who shared the same first name, surname and date of birth were mistakenly merged into a single customer record. Over the course of the following three years, mortgage and pension policy information relating to each customer was routinely sent to the wrong individual until Prudential took steps to separate the two customers’ records in September 2010.
On October 23, 2012, just two weeks after issuing a series of reports highlighting the UK Information Commissioner’s Office’s (“ICO’s”) concerns regarding data protection compliance within the public sector, the ICO has imposed a monetary penalty of £120,000 and issued an enforcement notice against Stoke-on-Trent City Council (“Stoke Council”) in relation to a serious data breach. The breach involved the transmission of sensitive personal information related to a child protection case by email in an unmarked and unprotected manner to the incorrect email address.
On October 22, 2012, the Federal Trade Commission announced a proposed settlement agreement with Compete, Inc. (“Compete”), an online market research company that collects clickstream data from consumers to generate and sell analytical reports about consumer behavior on the Internet.
On October 10, 2012, the Federal Trade Commission announced that consumer reporting agency Equifax Information Services LLC (“Equifax”) and several of its customers, including Direct Lending Source, Inc. (“Direct Lending”), have agreed to pay a combined total of nearly $1.6 million to settle FTC allegations that they violated the Fair Credit Reporting Act (“FCRA”) in connection with the sale of data regarding consumers in financial distress.
On October 4, 2012, the Federal Trade Commission announced that Artist Arena LLC (“Artist Arena”), an operator of fan websites for several popular recording artists, agreed to settle charges that it violated the Children’s Online Privacy Protection Act (“COPPA”) and the FTC’s COPPA Rule (“the Rule”) by improperly collecting personal information from children under the age of 13 without first obtaining verifiable parental consent. The settlement will impose a $1 million penalty on Artist Arena, bar future violations of the Rule and require deletion of the information collected in violation of the Rule.
On September 25, 2012, the Federal Trade Commission announced that it had settled a case involving allegations of spying by software company DesignerWare, LLC (“DesignerWare”) and several rent-to-own companies that rent computers to consumers, such as Aaron’s, Inc., ColorTyme, Inc., and Premier Rental Purchase. The FTC collaborated with Illinois Attorney General Lisa Madigan in its investigation.
On September 17, 2012, the Department of Health and Human Services (“HHS”) announced a $1.5 million settlement with the Massachusetts Eye and Ear Infirmary and Massachusetts Eye and Ear Associates Inc. (“MEEI”) for potential violations of the HIPAA Security Rule. In connection with the announcement, the HHS Office for Civil Rights (“OCR”) Director Leon Rodriguez stated that organizations should pay special attention to safeguarding information “stored and transported on portable devices such as laptops, tablets, and mobile phones” and that “compliance with the HIPAA Privacy and Security Rules must be prioritized by management and implemented throughout an organization, from top to bottom.”
On September 12, 2012, Congressman Edward Markey (D-MA) released a bill that would require companies to tell customers about monitoring software installed on their mobile devices and obtain customers’ express consent before engaging in monitoring. These requirements would apply to mobile phone makers, network providers and application developers.
On September 5, 2012, the Federal Trade Commission issued guidelines for mobile app developers entitled “Marketing Your Mobile App: Get It Right from the Start.” The guidelines are largely a distillation of the FTC’s previously expressed views on a range of topics that have relevance to the mobile app space. They are summarized below:
On August 23, 2012, the Federal Trade Commission announced that it had filed suit against DISH Network LLC (“DISH Network”) alleging violations of the FTC’s Telemarketing Sales Rule (“TSR”). The FTC’s complaint claims that DISH Network is a “seller” and “telemarketer” as such terms are defined by the TSR because the company sells satellite television programming to consumers and also markets its programming through a variety of methods, including telemarketing. According to the complaint, since September 2007, DISH Network has engaged in initiating ...
On August 30, 2012, Taiwan’s Executive Yuan announced that the Personal Data Protection Act will become effective on October 1, 2012. In connection with the announcement, the Executive Yuan also proposed several amendments to certain controversial provisions to be discussed by the Legislative Yuan in September.
Reportedly, the amendments would include the following changes:
- adding “medical records” as a type of sensitive personal data, and inserting exceptions to restrictions on the use of sensitive personal data (e.g., for public interest reasons or with the data ...
On July 31, 2012, Minnesota Attorney General Lori Swanson announced a $2.5 million settlement with Accretive Health, Inc. (“Accretive”) for violations of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its implementing regulations, and various Minnesota debt collection and consumer protection laws. As we previously reported in January 2012, Accretive, which acted as a business associate to two Minnesota hospital systems, experienced a breach in July 2011 that involved the protected health information of more than 23,000 patients.
On August 8, 2012, the Federal Trade Commission settled with HireRight Solutions, Inc. (“HireRight”) for failure to comply with certain Fair Credit Reporting Act (“FCRA”) requirements. At first blush, the case may appear to be a simple FCRA matter – the FTC alleged that HireRight functioned as a consumer reporting agency when providing employment screening services to companies, but then failed to take steps to assure the accuracy of those reports and prevented consumers from dispute inaccurate information. Despite initial appearances, however, the case has broader geopolitical implications.
On August 10, 2012, a federal district court in California denied Hulu’s motion to dismiss the remaining claim in a putative class action suit alleging that the online streaming video provider transmitted users’ personal information to third parties in violation of the Video Privacy Protection Act (“VPPA”). The VPPA prohibits a “video tape service provider” from transmitting personally identifiable information of “consumers,” except in certain, limited circumstances. According to the complaint, Hulu allegedly allowed KISSmetrics, a data analytics company, to place tracking codes on the plaintiffs’ computers that re-spawned previously-deleted cookies, and shared Hulu users’ video viewing choices and “personally identifiable information” with third parties, including online ad networks, metrics companies and social media networks.
On July 24, 2012, Lisa J. Sotto, partner and head of the Global Privacy and Data Security Practice at Hunton & Williams LLP, gave a presentation on “Data Privacy in the Global Era” to the Western Independent Bankers Service Corporation. Sotto discussed U.S., EU and other international privacy laws, with a focus on two specific areas of interest, cloud computing and vendor management.
On August 10, 2012, the Federal Trade Commission announced that it has accepted the final settlement with Facebook which resolves allegations “that Facebook deceived consumers by telling them they could keep their information on Facebook private, and then repeatedly allowing it to be shared and made public.” As we previously reported, the settlement requires Facebook to (1) not misrepresent how it maintains the privacy or security of users’ personal information; (2) obtain users’ “affirmative express consent” before sharing their information with any third ...
On August 8, 2012, the Federal Trade Commission announced a settlement agreement with employment screening company HireRight Solutions, Inc. (“HireRight”). In its first enforcement action against an employment background screening company for Fair Credit Reporting Act (“FCRA”) violations, the FTC alleged that HireRight functioned as a consumer reporting agency, but failed to comply with certain FCRA requirements. The proposed consent order imposes a $2.6 million penalty on HireRight and requires the company to remedy the alleged FCRA violations, create and retain certain records and submit reports to demonstrate compliance.
Earlier this year, the Consumer Financial Protection Bureau (“CFPB”) published a Bulletin signaling its intent to regulate and exercise enforcement authority over service providers to financial institutions. Pursuant to Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its implementing regulation, Regulation P, the CFPB has authority over certain large banks, credit unions and other consumer financial services companies. The Bulletin notes that the CFPB’s goal is to ensure compliance with “[f]ederal consumer financial law,” which includes the Gramm-Leach-Bliley Act and its implementing regulations, the Privacy Rule and the Safeguards Rule.
As reported in BNA’s Privacy & Security Law Report,on June 25, 2012, a federal district court in California ruled that the California Supreme Court’s 2011 Pineda decision, which held that requesting and recording zip codes during credit card transactions violates the state’s Song-Beverly Credit Card Act, applies retrospectively to OfficeMax’s collection of zip codes from its customers. The Plaintiffs in Dardarian v. OfficeMax had filed a class action lawsuit against OfficeMax over the company’s collection of ZIP code information from customers at the point of sale, a practice that OfficeMax ended the day the Pineda decision was handed down.
On July 19, 2012, California Attorney General Kamala Harris announced the formation of a new Privacy Enforcement and Protection Unit (“Privacy Unit”) within the state’s Department of Justice. The new unit will centralize existing Department of Justice efforts to protect privacy, educate consumers and forge partnerships with relevant industry players. According to the Attorney General’s press release, the broad mission of the Privacy Unit will include enforcing laws on issues such as cyber privacy, health privacy, financial privacy, identity theft, government ...
On July 12, 2012, the National Telecommunications and Information Administration (“NTIA”) of the U.S. Department of Commerce convened the first meeting of its multistakeholder process to develop industry codes of conduct. As we reported in June, the stated purpose for this meeting, entitled “Seeking Common Ground Regarding Mobile Application Transparency,” was to establish “a working dialogue that will eventually lead to a code of conduct that is broadly adopted.” Lawrence Strickling, Department of Commerce Assistant Secretary for Communications and Information, opened the session, which he characterized as an effort to highlight the key issues and explore topics to be addressed. Strickling emphasized that the structure and approach to the work would likely differ from that with which participants were familiar, and that it would be important to arrive at a constructive process that encourages collaboration and open engagement.
On June 27, 2012, the Hong Kong Legislative Council passed a bill to amend the Personal Data (Privacy) Ordinance (the “Ordinance”). The amendment will become effective in phases. Most provisions will become effective on October 21, 2012, and the others will take effect on a day to be announced by publication in the Hong Kong Government Gazette.
In recent weeks, both state and federal regulators have considered security breach notification legislation. On June 15, 2012, Connecticut Governor Dannel Malloy signed a budget bill that, among other things, amends the state’s security breach notification law. The changes, which will take effect on October 1, 2012, most notably require businesses to notify the state Attorney General no later than the time when notice of a security breach is provided to state residents. Although the law does not specify when notice must be provided to affected individuals, the law states that such notice must be made “without unreasonable delay,” subject to law enforcement delays and the completion of an investigation by the business to determine the nature and scope of the incident, to identify affected individuals, or to restore the reasonable integrity of the data system. As we previously reported, Vermont also recently amended its breach notification statute to require businesses to notify the state Attorney General within 14 days of discovering a security breach or concurrently when notifying consumers, whichever is sooner.
On June 26, 2012, the Department of Health and Human Services (“HHS”) announced a resolution agreement and $1.7 million settlement with the Alaska Department of Health and Social Services (“DHSS”) for violations of the HIPAA Security Rule. This is the first HIPAA enforcement action taken by HHS against a state agency. In connection with the announcement, the HHS Office for Civil Rights (“OCR”) Director Leon Rodriguez stated that OCR “expect[s] organizations to comply with their obligations under [the HIPAA Security and Privacy Rules] regardless of whether they are private or public entities.”
On June 26, 2012, the Federal Trade Commission announced that it had filed suit against Wyndham Worldwide Corporation and three of its subsidiaries (“Wyndham”) alleging failures to maintain reasonable security that led to three separate data breaches involving hackers accessing sensitive consumer data. The FTC’s complaint claims that Wyndham violated the FTC Act by posting misleading representations on Wyndham websites regarding how the company safeguarded customer information, and by failing to provide reasonable security for personal information it collected ...
On May 30, 2012, the Federal Trade Commission hosted a public workshop addressing the need for new guidance on advertising and privacy disclosures online and in mobile environments. During the workshop, the FTC announced that it hopes to release an updated version of its online advertising disclosure guidance this fall that would incorporate input from businesses and consumer advocates. Topics explored at the workshop included:
- Best practices for privacy disclosures on mobile platforms and how they can be short, effective and accessible to consumers;
- how to put disclosures in proximity to offers on mobile platforms;
- social media disclosures; and
- the placement of material information on webpages.
On June 15, 2012, the National Telecommunications and Information Administration (“NTIA”) announced that, in response to a substantial number of comments it received regarding mobile privacy issues, it will convene its first multistakeholder meeting on July 12 to begin the process of developing a code of conduct that promotes transparency in the mobile application context.
On June 7, 2012, the Federal Trade Commission announced settlement agreements with two businesses that allegedly exposed customers’ sensitive personal information by allowing peer-to-peer (“P2P”) file-sharing software to be installed on their company computers and networks.
In its complaint against Franklin’s Budget Car Sales (“Franklin”), a Georgia automobile dealership that also provides financing services to its customers, the FTC alleged that Franklin failed to implement reasonable security measures to protect the consumer personal information that Franklin routinely collects in connection with its business. The FTC claimed that personal information of approximately 95,000 customers, including names, Social Security numbers, addresses, dates of birth, and drivers’ license numbers were made available and disclosed by a P2P application installed on a computer that was connected to Franklin’s computer network. In addition to alleging violations of Section 5 of the FTC Act, the FTC also claimed that Franklin violated the Gramm-Leach Bliley Act (“GLB”). This is the first FTC case against an auto dealer involving GLB violations. The FTC stated in its complaint that Franklin failed to implement reasonable security policies and procedures in violation of the GLB Safeguards Rule, and also failed to send consumers annual privacy notices and to provide the required opt-out mechanisms in violation of the GLB Privacy Rule.
On June 12, 2012, the Federal Trade Commission announced a settlement agreement with data broker Spokeo, Inc. (“Spokeo”). The FTC alleged that Spokeo operated as a consumer reporting agency and violated the Fair Credit Reporting Act (“FCRA”), and that certain of its advertisements were deceptive in violation of Section 5 of the FTC Act. The proposed settlement order imposes a $800,000 civil penalty on Spokeo and prohibits future violations of the FCRA. This is the first FTC case to address the sale of Internet and social media data in the employment screening context.
On May 24, 2012, Massachusetts Attorney General Martha Coakley announced that South Shore Hospital agreed to a consent judgment and $750,000 payment to settle a lawsuit stemming from a data breach that occurred in February 2010. At that time, South Shore Hospital shipped several boxes of unencrypted back-up tapes to a service provider in Texas to erase them. The tapes contained the personal and protected health information of approximately 800,000 individuals, including names, Social Security numbers, financial account numbers and medical diagnoses. Several of the boxes went missing and have yet to be recovered, though there is no evidence that the information on the missing tapes has been misused.
On June 7, 2012, at the annual Safeguarding Health Information: Building Assurance through HIPAA Security Conference hosted in Washington, D.C. by the Department of Health and Human Services Office for Civil Rights (“OCR”) and the National Institute of Standards and Technology (“NIST”), OCR Director Leon Rodriguez said that, given HIPAA’s 15-year history and the substantial technical assistance OCR and NIST have provided covered entities, tolerance for HIPAA non-compliance is “much, much lower” than it has been in the past.
On June 1, 2012, the Attorney General of Vermont announced a series of recent legislative moves to enhance the state’s consumer protection laws, including amendments to Vermont’s security breach notification law. The changes, which were signed into law by Governor Peter Shumlin in early May, include a revised definition of “security breach,” the addition of a 45-day timing requirement for notifying affected consumers, and a requirement to notify the state Attorney General within 14 days of discovering the breach (or when notifying consumers, if sooner).
On May 8, 2012, the Federal Trade Commission announced a settlement agreement with the social networking service Myspace LLC (“Myspace”). The FTC alleged that Myspace’s practice of sharing users’ personal information with unaffiliated third-party advertisers conflicted with representations the company made in its privacy policy, and could allow those advertisers to obtain users’ names, publicly available information and information about their online browsing habits.
On May 3, 2012, Viviane Reding, Justice Commissioner and European Commission Vice-President, delivered a speech during the European data protection authorities’ (“DPAs’”) Spring Conference, which was held in closed sessions in Luxembourg. In her speech, Commissioner Reding discussed how the proposed EU Data Protection Regulation aimed to empower the DPAs and addressed some of the DPAs’ primary concerns with the reform.
On April 19, 2012, the French Data Protection Authority (the “CNIL”) issued a press release detailing its enforcement agenda for 2012. In a report adopted March 29, 2012, the CNIL announced that it will conduct 450 on-site inspections this year, with particular focus on the specific themes described below. The CNIL also indicated that it will continue the work started in 2011 with at least 150 additional inspections related to video surveillance, especially with respect to surveillance in locations that are frequented by large numbers of individuals.
The UK Information Commissioner’s Office’s (“ICO”) has revised its statutory Code of Practice on assessment notices (the “Code”). The ICO first issued the Code in 2010, when its audit powers came into force. The Code has now been updated to reflect changes in auditing standards and practices.
In the past month, the Department of Health and Human Services (“HHS”) sent its final omnibus rule modifying the HIPAA Privacy, Security and Enforcement Rules to the White House Office of Management and Budget (“OMB”) and announced a $100,000 settlement with Phoenix Cardiac Surgery, P.C. for violations of the HIPAA Rules.
On April 5, 2012, social media giant Twitter, Inc. (“Twitter”) filed a civil lawsuit against spammers and makers of spamming software claiming violations of Twitter’s user agreement and various California state and common laws. Borrowing from the popular term for unsolicited email messages, Twitter’s complaint describes “spam” on Twitter as “a variety of abusive behaviors” including “posting a Tweet with a harmful link … and abusing the @reply and @mention functions to post unwanted messages to a user.” The suit alleges that certain defendants violated Twitter’s Terms of Service, which prohibit “spam and abuse,” by distributing software tools “designed to facilitate abuse of the Twitter platform and marketed to dupe customers into violating Twitter’s user agreement.” Other defendants allegedly operated large numbers of automated Twitter accounts through which they attempted to “trick Twitter users into clicking on links to illegitimate websites.”
On March 27, 2012, the Federal Trade Commission announced a proposed settlement order with RockYou, Inc. (“RockYou”), a publisher and developer of applications used on popular social media sites. The FTC alleged that RockYou failed to protect the personal information of 32 million of its users, and violated multiple provisions of the FTC’s Children’s Online Privacy Protection Act (“COPPA”) Rule when it collected information from approximately 179,000 children.
On March 21, 2012, Massachusetts Attorney General Martha Coakley announced that Maloney Properties Inc. (“MPI”), a property management firm, executed an Assurance of Discontinuance and agreed to pay $15,000 in civil penalties following an October 2011 theft of an unencrypted company-issued laptop. The laptop contained personal information of more than 600 Massachusetts residents and was left in an employee’s car overnight. MPI has indicated that it has no evidence of unauthorized access to or use of the personal information in connection with this breach.
On March 19, 2012, the European Commission hosted this year’s Safe Harbor Conference in Washington, D.C., to address the transfer of data from Europe to the United States. Although it appears the Safe Harbor framework will remain unchanged for the time being, it seems unlikely the United States will be considered adequate, or even interoperable, with the EU for purposes of cross-border data transfers.
On March 13, 2012, the Department of Health and Human Services (“HHS”) announced that it had settled the first case related to the HITECH Act Breach Notification Rule. BlueCross Blue Shield of Tennessee (“BCBS Tennessee”) agreed to pay $1.5 million to settle potential HIPAA violations related to the October 2009 theft of 57 unencrypted hard drives containing protected health information (“PHI”) from a network data closet at a leased facility leased in Chattanooga, Tennessee.
On February 24, 2012, the German Federal Constitutional Court (Bundesverfassungsgericht) ruled that certain provisions in the Federal Telecommunications Act concerning the disclosure of telecom user data to law enforcement agencies violate the German constitution. The Court held that strict conditions apply when law enforcement authorities and intelligence agencies ask telecommunications service providers (which may include hospitals and hotels) to turn over certain user data, i.e. passwords and PIN codes.
On January 25, 2012, the UK Information Commissioner’s Office (“ICO”) published an initial statement welcoming the European Commission’s proposed new General Data Protection Regulation (the “Proposed Regulation”), and commended the Commission’s efforts to strengthen the rights of individuals, recognize important privacy concepts such as privacy by design and privacy impact assessments, and include accountability requirements.
The White House today released its long-awaited report outlining a framework for U.S. data protection and privacy policy. As expected, “Consumer Data Privacy in a Networked World: A Framework for Protecting Privacy and Promoting Global Innovation in the Global Digital Economy” articulates a Consumer Privacy Bill of Rights based on the individual’s right to exercise control over what personal data companies collect from the individual and how companies use the data. The Consumer Privacy Bill of Rights, which reflects principles of fair information practices and applies to personal data, sets forth individual rights for consumers and corresponding obligations of companies in connection with personal data. It also provides for the consumer’s right to:
- transparent privacy and data security practices;
- expect that companies will collect, use and disclose data in a manner consistent with the context in which it was collected;
- have their data handled in a secure manner;
- access and correct personal data;
- set reasonable limits on the personal data that companies collect and retain; and
- have personal data handled by companies with appropriate measures in place to assure they adhere to the Consumer Privacy Bill of Rights.
In its new report, Mobile Apps for Kids: Current Privacy Disclosures are Disappointing, the Federal Trade Commission issues a “warning call to industry that it must do more to provide parents with easily accessible, basic information about the mobile apps that their children use.” The report indicates:
“Parents should be able to learn what information an app collects, how the information will be used, and with whom the information will be shared. App developers also should alert parents if the app connects with any social media, or allows targeted advertising to occur through the app. Third parties that collect user information through apps also should disclose their privacy practices, whether through a link on the app promotion page, the developers’ disclosures, or another easily accessible method.”
Monetary penalties are one mechanism in a suite of tools that the UK Information Commissioner’s Office (“ICO”) uses to encourage compliance with data protection regulations. The ICO generally uses monetary penalties to sanction deliberate or negligent breaches of the law, but the purpose is not to impose financial hardship but rather to “act as an encouragement towards compliance, or at least as a deterrent against non-compliance.” The following is a brief overview of the ICO’s authority to issue monetary penalties.
On January 24, 2011, Connecticut Attorney General George Jepsen and Consumer Protection Commissioner William Rubenstein announced that they had reached an Assurance of Voluntary Compliance (“AVC”) with Metropolitan Life Insurance Co. (“MetLife”) in connection with an incident involving the disclosure of customer personal information on the Internet. In November 2009, a MetLife employee posted the personally identifiable information of current and former MetLife customers, including their Social Security numbers, on the Internet. Following the discovery of the posting, MetLife acted to mitigate possible harm by providing credit monitoring and identity theft insurance to the affected customers.
On January 12, 2012, Hunton & Williams hosted an hour-long webinar on the current enforcement environment in the U.S. and EU. The webinar, Current Trends in Global Privacy Enforcement, covered issues ranging from the Federal Trade Commission’s tougher approach to investigations to increased monitoring of corporate privacy practices by European data protection authorities. Hunton & Williams speakers included Lisa J. Sotto, partner and head of the Global Privacy and Data Security practice, London partner Bridget Treacy, London senior attorney Rosemary Jay and Brussels ...
On December 28, 2011, UK Information Commissioner Christopher Graham outlined the ICO’s agenda for 2012 in a post on the ICO blog, highlighting the European Commission’s proposals for reviewing the EU data protection framework, the post-legislative scrutiny process with respect to the UK Freedom of Information Act (“FOIA”) and the ICO’s Information Rights Strategy. The Commissioner cautioned against allowing data protection compliance to fall by the wayside in the current, tough economic climate, especially given the inevitable reputational damage caused by big data breaches and the ICO’s power to impose fines.
On January 17, 2012, the European Commission initiated expedited infringement proceedings against Hungary over recent changes to its Constitution which are considered incompatible with EU law. The proceedings follow a number of changes made to the Hungarian Constitution that came into effect on January 1, 2012. Of particular concern to the Commission are amendments affecting the independence of the national data protection authority. The Hungarian government has one month to comply, or face enforcement proceedings in the European Court of Justice.
On January 5, 2012, the Federal Trade Commission announced a proposed settlement with Upromise, Inc., a membership reward service that gives cash rebates for college savings accounts to members who purchase products and services from its partner merchants. The FTC alleged that the “Personalized Offers” feature on the Upromise TurboSaver Toolbar (1) collected far more information about users’ browsing behavior than was disclosed at the time of installation, and (2) contrary to representations in the company’s privacy notice, transmitted that information, which included data such as Social Security numbers and financial account numbers, in clear text.
On November 29, 2011, the Federal Trade Commission announced that Facebook has settled charges that it deceived consumers by making false privacy promises. The settlement requires Facebook to (1) not misrepresent how it maintains the privacy or security of users’ personal information (2) obtain users’ “affirmative express consent” before sharing their information with any third party that “materially exceeds the restrictions imposed by a user’s privacy setting(s),” (3) implement procedures to prevent a third party from accessing users’ information no later than 30 days after the user has deleted such information or terminated his or her account, (4) establish, implement and maintain a comprehensive privacy program, and (5) obtain initial and biennial assessments and reports regarding its privacy practices for the next 20 years.
On November 29, 2011, at the International Association of Privacy Professionals (“IAPP”) Europe Data Protection Congress in Paris, France, Viviane Reding, Vice President of the European Commission and Commissioner for Justice, Fundamental Rights and Citizenship, provided insight into details of the proposals for the revised EU data protection framework. She focused explicitly on solutions for international data transfers, promoting Binding Corporate Rules ("BCRs") as a solution that can offer a simplified, yet comprehensive, structure for safeguarding international flows of data. Commissioner Reding referred to BCRs as offering the possibility of consistent enforcement and legal certainty, without stifling innovation.
On October 24, 2011, Israel’s Data Protection Authority, the Israeli Law, Information and Technology Authority in the Israeli Ministry of Justice (“ILITA”), announced significant developments in an information theft case affecting more than nine million Israeli citizens. In 2006, a contract worker hired by Israel’s Ministry of Welfare and Social Services downloaded a copy of Israel’s population registry to his home computer. The registry later fell into the hands of a software developer and a hacker before being disseminated on the Internet along with a program that allowed users to run searches and queries on the data. The stolen personal information included full names, identification numbers, addresses, dates of birth, dates of immigration to Israel, family status, names of siblings and other information.
On October 13, 2011, the Securities and Exchange Commission Division of Corporation Finance issued disclosure guidance (“Guidance”) regarding cybersecurity matters and cyber incidents. While the Guidance does not change existing disclosure requirements, it does add specificity to existing requirements. In some respects, that specificity is helpful, but the Guidance fails to take into account the uncertainty that inevitably accompanies efforts to assess and disclose cybersecurity matters and incidents.
Read a detailed summary of the Guidance and analysis regarding ...
On September 7, 2011, the United Kingdom Information Tribunal published a decision that appears to resolve the long-running uncertainty regarding the extent to which anonymized personal information may be disclosed under the UK’s Freedom of Information legislation. The UK’s FOIA was introduced and applicable to most of the UK in 2000, with equivalent law following for Scotland in 2002.
On September 14, 2011, UK Information Commissioner Christopher Graham said that the private sector “isn’t as good as it thinks it is” when it comes to data protection compliance, and that many of the compliance problems that arise originate in the private sector. While giving evidence to the House of Commons Justice Select Committee, the Commissioner criticized the private sector and, in particular, banks and other financial services companies.
On September 12, 2011, the Commissioner for Data Protection and Freedom of Information of the German federal state of North Rhine-Westphalia (“DPA”) imposed a fine of €60,000 on Easycash GmbH (“Easycash”), a leading German service provider for electronic payments.
On August 31, 2011, California Governor Jerry Brown signed into law amendments to that state’s security breach notification statute. The revisions establish new content requirements for breach notification letters to California residents, and mandate notification to the state Attorney General when a breach affects more than 500 Californians. Senate Bill 24 was the third effort by State Senator Joe Simitian to build on the landmark California breach notification law he authored in 2002. The two previous bills he proposed were passed by the California legislature, but vetoed by former Governor Arnold Schwarzenegger.
Lush Cosmetics Ltd. (“Lush”) has avoided a monetary penalty for its breach of the UK Data Protection Act 1998. Instead, the UK Information Commissioner’s Office (the “ICO”) has required Lush to sign an undertaking that obliges the company to “ensure that future customer credit card data will be processed in accordance with the Payment Card Industry Data Security Standard.”
On August 15, 2011, the Federal Trade Commission announced a settlement with W3 Innovations, LLC, doing business as Broken Thumbs Apps (“W3”) for violations of the Children’s Online Privacy Protection Act (“COPPA”) and the FTC’s COPPA Rule. This marks the FTC’s first privacy settlement involving mobile applications.
On July 27, 2011, the Ministry of Industry and Information Technology of the People’s Republic of China (the “MIIT”) published a draft rule including provisions regulating the processing of personal information by “Internet Information Service Providers.” The draft rule, entitled “Provisions on the Administration of Internet Information Services” (the “Draft Provisions”), is not the first rule regulating Internet information services in China. In 2000, the MIIT enacted the “Measures for the Administration of Internet Information Services” (the “Measures”), which took effect on September 25, 2000. However, the Measures do not include any explicit provisions addressing the protection of personal information.
On July 29, 2011, Massachusetts Attorney General Martha Coakley announced a $7,500 settlement with Belmont Savings Bank following a May 2011 data breach involving the names, Social Security numbers and account numbers of more than 13,000 Massachusetts residents. The bank has stated that it has no evidence of unauthorized access to or use of consumers’ personal information in connection with this breach.
Adam Kardash from Heenan Blaikie LLP in Canada reports that Industry Canada and the Canadian Radio-television and Telecommunications Commission (“CRTC”) have released draft regulations for Canada’s Anti-Spam Legislation (“CASL”). CASL imposes a consent-based anti-spam regime that restricts organizations’ ability to send commercial electronic messages. Industry Canada and the CRTC are charged with the task of implementing regulations under CASL.
On June 7, 2011, the Department of Health and Human Services (“HHS”) announced a resolution agreement and $865,500 settlement with the University of California at Los Angeles Health System (“UCLA Health System”) for violations of the HIPAA Privacy and Security Rules. UCLA Health System employees were accused of violating the Privacy Rule by improperly accessing the protected health information (“PHI”) of patients, including several high-profile celebrities who filed complaints with HHS. A subsequent investigation by HHS’s Office for Civil Rights (“OCR”) revealed that in addition to neglecting to sanction the employees who had improperly accessed patient PHI, UCLA Health System had failed to train its employees on the HIPAA Privacy and Security Rules or implement security measures to “reduce the risks of impermissible access to electronic protected health information by unauthorized users to a reasonable and appropriate level.”
On July 6, 2011, Mexico’s Secretary of Economy, in conjunction with the Federal Institute for Access to Information and Data Protection (“IFAI”), released wide-ranging privacy regulations for public comment. The regulations establish rules and guidelines for the implementation of Mexico’s Federal Law on the Protection of Personal Data in the Possession of Private Parties (Ley Federal de Protección de Datos Personales en Posesión de los Particulares), which became effective one year ago. Among the topics covered are jurisdictional issues, details regarding ...
On July 6, 2011, the UK Information Commissioner’s Office (the “ICO”) released its Annual Report and Financial Statements for 2010/11. Characterizing information as “the currency of democracy,” the report highlights the wide range of the ICO’s activities during the last twelve months, which focused on education and the provision of good practice guidance in addition to enforcement activities.
On July 1, 2011, the French Data Protection Authority (the “CNIL”) released a comprehensive handbook for health professionals (the “Guidance”). The Guidance reiterates that health professionals (e.g., doctors, nurses, hospitals, research laboratories) have an obligation to comply with the French Data Protection Act when collecting and processing health data on patients.
On June 29, 2011, the Senate Committee on Commerce, Science and Transportation convened a hearing entitled “Privacy and Data Security: Protecting Consumers in the Online World.” In opening remarks, Committee Chair Senator Jay Rockefeller (D-WV) highlighted that the hearing would consider both privacy and data security and discussed three bills focused on these issues.
On June 24, 2011, the U.S. Department of Commerce’s International Trade Administration released a PowerPoint presentation on Mexico’s new private sector data protection law that was shared at a meeting of the OECD Working Party on Information Security and Privacy by Mexico’s Ministry of Economy and Federal Institute for Access to Information and Data Protection (“IFAI”). The presentation provides guidance on the creation of privacy notices and establishment of self-regulatory schemes, and also outlines the responsibilities of the Ministry of Economy and the IFAI ...
Two former employees of mobile phone provider T-Mobile have been ordered by a court in the United Kingdom to pay £73,700 (approximately $120,000) for the theft of T-Mobile customers’ personal data. The Chester Crown Court ordered David Turley and Darren Hames to pay £45,000 and £28,700 respectively, under confiscation orders, along with prosecution costs.
On June 13, 2011, Representative Mary Bono Mack (R-CA) released a discussion draft of the Secure and Fortify Data Act (the “SAFE Data Act”), which is designed to “protect consumers by requiring reasonable security policies and procedures to protect data containing personal information, and to provide for nationwide notice in the event of a security breach.” Representative Bono Mack is Chairman of the House Subcommittee on Commerce, Manufacturing and Trade. In a press release, Representative Bono Mack remarked that “E-commerce is a vital and growing part of our economy. We should take steps to embrace and protect it – and that starts with robust cyber security.” She added that “consumers have a right to know when their personal information has been compromised, and companies and other organizations have an overriding responsibility to promptly alert them.”
On June 15, 2011, Senator Al Franken (D-MN) and Senator Richard Blumenthal (D-CT) introduced the Location Privacy Protection Act of 2011 (the “Act”). As we reported previously, Senator Franken is chairman of the newly-created Senate subcommittee on Privacy, Technology and the Law. In his press release, Senator Franken explained that the Act is designed to “close current loopholes in federal law” while giving customers the ability to learn about and prevent the collection of their location information. The Act would apply only to non-government entities and would not impact law-enforcement activities. At a May 10, 2011 hearing, both Google and Apple were questioned about their privacy practices, and Franken subsequently challenged them to require their application developers to adopt clear and understandable privacy policies.
On June 9, 2011, two plaintiffs filed a class action complaint against Google in the United States District Court for the Southern District of Florida. The complaint alleges that Google’s Android phone “engaged in illegal tracking and recording of [p]laintiffs’ movements and locations … without their knowledge or consent” and that Google violated the Computer Fraud and Abuse Act and Florida statutory and common law by failing to inform Android users that their movements were being tracked and recorded through their phones.
On May 31, 2011, an Order was filed in the District Court for the Northern District of California granting final approval of the Google Buzz class action settlement and cy pres awards for organizations focused on Internet privacy policy or privacy education. Pursuant to the Order, the court adopted the Google Buzz settlement agreement and certified the proposed settlement class, which includes “all Gmail users in the United States presented with the opportunity to use Google Buzz through the Notice Date.” The court also approved the following list of organizations and ...
As reported by Kwang Hyun Ryoo and Ji Yeon Park of Bae, Kim & Lee LLC in Korea, on May 24, 2011, the government of South Korea published draft regulations to the Personal Information Protection Act (“PIPA”), the Republic’s new omnibus data protection law.
As we previously reported, PIPA was enacted on March 29, 2011, after past privacy legislation had languished in the Korean Parliament. The recently published regulations (an Enforcement Decree and Enforcement Regulations) apply to any “handler of personal information” or “data handler,” which is any entity that uses personal information for business purposes.
On June 6, 2011, join Hunton & Williams for a panel discussion on the implementation of the new EU Cookie Law in the UK, France, Germany and the Netherlands. EU law on the use of cookies is changing. Opt-in consent will be required, but specific requirements may differ across the EU. What are organizations doing to ensure compliance with the new cookie law? Listen to David Evans, Group Manager of Business and Industry of the Information Commissioner's Office, explain the steps that UK organizations are expected to take. Learn about cookie compliance in France, Germany and the ...
On May 25, 2011, the UK Information Commissioner’s Office (the “ICO”) issued a news release stating that organizations and businesses that run websites aimed at UK consumers will be given up to 12 months to “get their house in order” before enforcement of the new cookie law begins. Information Commissioner Christopher Graham made it clear, however, that “[t]his does not let everyone off the hook. Those who choose to do nothing will have their lack of action taken into account when we begin formal enforcement of the rules.”
From May 26, 2011, UK law regulating the use of cookies on websites will change from an opt-out regime, to one requiring prior opt-in consent. This change poses significant practical challenges for website operators. In guidance on the new regulations, the UK Information Commissioner has acknowledged the challenge but warned that website operators must take steps now to ensure that they are ready to comply.
On May 12, 2011, the Federal Trade Commission announced that Playdom, Inc., a Disney subsidiary, has agreed to pay $3 million to settle charges that the company violated Section 5 of the FTC Act and the Children’s Online Privacy Protection Rule (“COPPA Rule”) “by illegally collecting and disclosing personal information from hundreds of thousands of children under age 13 without their parents’ prior consent.” This settlement marks the largest civil penalty imposed for an FTC COPPA Rule violation.
On May 9, 2011, Senator Jay Rockefeller (D-WV), the Chairman of the Senate Committee on Commerce, Science and Transportation, introduced the “Do-Not-Track Online Act of 2011” (the “Act”). The Act instructs the Federal Trade Commission to promulgate regulations that would (1) create standards for the implementation of a “Do Not Track” mechanism that would enable individuals to express a desire to not be tracked online and (2) prohibit online service providers from tracking individuals who express such a desire. The regulations would allow online service providers to track individuals who do not want to be tracked only if (1) the tracking is necessary to provide a service requested by the individual (and the individuals’ information is anonymized or deleted when the service is provided), or (2) the individual is given clear notice about the tracking and affirmatively consents to the tracking.
On May 3, 2011, the Federal Trade Commission announced that it had reached settlements with Ceridian Corporation and Lookout Services, Inc. after alleging both companies had misrepresented the extent of their data security practices and subsequently failed to safeguard their customers’ information. According to the FTC’s press release, the settlements “are part of the FTC’s ongoing efforts to ensure that companies secure the sensitive consumer information they maintain.”
On April 18, 2011, the European Commission (the “Commission”) adopted an Evaluation Report on the EU Data Retention Directive 2006/24/EC (the “Data Retention Directive”).
The Data Retention Directive requires that, for law enforcement purposes, telecommunications service and network providers (“Operators”) must retain certain categories of telecommunications data (excluding the content of the communication) for not less than six months and not more than two years. To date, most of the EU Member States have implemented the Data Retention Directive, but Czech Republic, Germany and Romania no longer have implementing laws in place because their constitutional courts have annulled the implementing laws as unconstitutional.
On April 12, 2011, U.S. Senators John Kerry (D-MA) and John McCain (R-AZ) introduced the Commercial Privacy Bill of Rights Act of 2011 (the “Act”) to “establish a regulatory framework for the comprehensive protection of personal data for individuals under the aegis of the Federal Trade Commission.” The bill applies broadly to entities that collect, use, transfer or store the “covered information” of more than 5,000 individuals over a consecutive 12-month period. Certain provisions of the bill would direct the FTC to initiate rulemaking proceedings within specified timeframes, but the bill also imposes requirements directly on covered entities.
On April 6, 2011, the European Commission formally requested that Germany immediately comply with a March 9, 2010 judgment (C-518/07) by the European Court of Justice (the “Court”) concerning the independence of German data protection authorities (“DPAs”).
As we previously reported, the Court ruled in March 2010 that Germany had failed to properly implement the requirement that DPAs are to act with “complete independence” in exercising the functions entrusted to them, as explicitly provided by the EU Data Protection Directive 95/46/EC. According to the Commission, 15 out of Germany’s 16 federal states have not yet undertaken any action to rectify the violation identified in the Court’s judgment. In its formal notice letter, the Commission ordered Germany to comply with the Court’s judgment within two months or risk a fine or penalty imposed by the Court.
As reported in BNA’s Privacy Law Watch, on March 29, 2011, South Korea’s president approved the Act on the Protection of Personal Data. This comprehensive privacy law will require nearly all businesses and government agencies to provide data breach protection, mandate the use of privacy assessments before establishing certain new databases, and establish a right to file class actions in court over alleged violations of the law. The implementing rules will be worked out before the law is due to take effect on September 30, 2011. South Korea first attempted to enact a comprehensive privacy law in 2004; however, for the past seven years, omnibus privacy bills sponsored by the government and lawmakers have stalled in Parliament.
On March 30, 2011, the Federal Trade Commission announced that Google agreed to settle charges that it used deceptive tactics and violated its own privacy promises to consumers when it launched its social network, Google Buzz, in 2010. According to the FTC’s complaint (main document, exhibits), Google led Gmail users to believe that they could choose whether or not they wanted to join Google Buzz. The options for declining or leaving Google Buzz, however, were ineffective. For those who joined Google Buzz, the controls for limiting the sharing of their personal information were difficult to locate and confusing. Furthermore, the FTC charged that Google violated its privacy policies by using information provided for Gmail for another purpose – social networking – without obtaining consumers’ permission in advance. Finally, the FTC alleged that Google misrepresented that it was treating personal information from the European Union in accordance with the U.S.-EU Safe Harbor framework because it failed to give consumers notice and choice before using their information for a different purpose from that for which it was collected.
On March 21, 2011, the French Data Protection Authority (the “CNIL”) published its decision to fine Google €100,000 for violating the French Data Protection Act.
In 2009, the CNIL inspected Google’s geolocation service (“Street View”), which revealed that Google had collected huge quantities of undeclared personal data (e.g., navigation data, email content, logins and passwords) through Wi-Fi connections accessed by its Street View cars. Google responded that the personal data had been collected by mistake, and promised to stop the Wi-Fi data collection.
On March 16, 2011, U.S. Department of Commerce Assistant Secretary for Communications and Information Lawrence Strickling called on Congress to enact robust, baseline legislation to “reform consumer data privacy in the Internet economy.” Speaking before the U.S. Senate Committee on Commerce, Science and Transportation, Assistant Secretary Strickling emphasized the Department of Commerce’s support for a legislative proposal that would adopt many of the recommendations of the “Green Paper,” a Department report authored last December.
On March 11, 2011, the Federal Trade Commission finalized a proposed settlement with Twitter, which resolved allegations that Twitter deceived consumers and failed to safeguard their personal information. The FTC first announced the proposed settlement in June 2010. Specifically, the FTC claimed that Twitter, contrary to its privacy policy statements, did not provide reasonable and appropriate security to prevent unauthorized access to consumers’ personal information and did not honor the consumers’ privacy choices in designating certain tweets as nonpublic. Intruders exploited these failures and obtained administrative control of the Twitter system. These intruders were able to gain unauthorized access to nonpublic tweets and user information, reset any user’s password, and send unauthorized tweets from any user account.
On March 8, 2011, the UK Information Commissioner’s Office (the “ICO”) issued a warning to UK businesses on the forthcoming amendments to the Privacy and Electronic Communications Directive (2002/58/EC as amended by 2009/136/EC) that will require businesses operating websites in the UK to obtain consent from website visitors to store information on their computers and retrieve that information in the form of cookies.
“LOANMOD TXT MSGS VIOL8 LAW, SEZ FTC.” So reads the headline on the Federal Trade Commission’s Bureau of Consumer Protection’s Business Center Blog. The posting announced the FTC’s complaint against a marketer who sent more than 5.5 million spam text messages at a “mind boggling” rate of about 85 per minute, every minute of every day. Allegedly, most or all of the messages were unsolicited, and, like most text messages, they caused many recipients to incur standard text messaging charges.
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