Privacy & Information Security Law Blog

On July 22, 2019, the Federal Trade Commission announced that Equifax Inc. (“Equifax”) agreed to pay at least $575 million, and potentially up to $700 million, as part of a global settlement agreement with the FTC, the Consumer Financial Protection Bureau (“CFPB”), and 48 U.S. states and territories to resolve investigations into the colossal data breach the company suffered in 2017. This is the largest data breach settlement in U.S. history.

The UK Information Commissioner’s Office (“ICO”) published its 2018-19 Annual Report on July 9, 2019. This is the first Annual Report published by the ICO since the EU General Data Protection Regulation (“GDPR”) took effect on May 25, 2018.

A number of bills to amend the California Consumer Privacy Act of 2018 (“CCPA”) are still pending before the California legislature. Of particular interest to many businesses is AB 25. AB 25 would exempt from the CCPA’s application “[p]ersonal information collected by a business about a natural person in the course of the natural person acting as a job applicant to, an employee of, owner of, director of, officer of, medical staff member of, or contractor of that business” if the personal information is collected and used by the business solely within the context of the person’s role or former role as a job applicant to, an employee of, owner of, director of, officer of, medical staff member of, or a contractor of that business. The bill also would exempt from the CCPA’s application emergency contact information of these exempted categories of individuals and information necessary to administer benefits for persons related to such individuals.  Notably, AB 25 does not appear to exempt business-to-business customer representatives or representatives of other third-party business partners.  AB 25 also would authorize a business to require authentication of a consumer that is reasonable in light of the nature of the personal information requested. The bill further would authorize a business to require a consumer to submit the consumer’s verifiable request through the consumer’s account, where the consumer maintains an account with the business.

On July 11, 2019, Washington Attorney General Bob Ferguson announced that his office had entered into a consent decree and $10 million settlement with Premera Blue Cross (“Premera”) that stems from a 2014-2015 breach that affected more than 11 million individuals. The settlement, which includes a payment of roughly $5.4 million to Washington state and $4.6 million to a coalition of 29 other state Attorneys General (the “Multistate AGs”), is one of the largest ever for a breach involving protected health information (“PHI”) and comes just one month after another notable HIPAA settlement involving a similar coalition of state AGs.

On July 9, 2019, the UK Information Commissioner’s Office (“ICO”) announced its intention to fine Marriott International, Inc. (“Marriott”) £99,200,396 (approximately $124 million) for infringements of the EU General Data Protection Regulation (“GDPR”). The ICO’s announcement followed Marriott’s notification of the proposed fine to the U.S. Securities and Exchange Commission (“SEC”).

On July 1, 2019, the Dutch Data Protection Authority (Autoriteit Persoonsgegevens, (the “Dutch DPA”)) announced that it had expanded its guidance on data breaches. The updates aim to answer questions about data breaches received by the Dutch DPA from organizations since 2016.

On July 8, 2019, the UK Information Commissioner’s Office (“ICO”) announced that it intends to fine British Airways (“BA”), which is owned by International Consolidated Airlines Group, S.A., £183,390,000 (approximately $230,000,000) for violating the EU General Data Protection Regulation (“GDPR”). This is the first fine to be announced publicly by the ICO under the GDPR and hints at the tough stance it is likely to take with regard to future breaches.

Texas Governor Greg Abbott recently signed into law HB 4390 (the “Bill”), which amends the state’s data breach notification law and creates an advisory council tasked with studying and developing recommendations regarding data privacy legislation.

Arizona Attorney General Mark Brnovich recently announced a settlement with healthcare software provider Medical Informatics Engineering Inc. (“MIE”) and its wholly owned subsidiary NoMoreClipboard, LLC. The settlement resolves a multistate litigation arising out of a May 2015 data breach in which hackers infiltrated WebChart, a web application run by MIE, and stole the electronic Protected Health Information (“ePHI”) of over 3.9 million individuals. Arizona and 15 other states (the “Multistate AGs”) filed the suit in December 2018, asserting claims under the federal Health Insurance Portability and Accountability (“HIPAA”) as well as various applicable state data protection laws. Notably, the lawsuit was the first-ever multistate litigation alleging claims under HIPAA.

Maryland Governor Larry Hogan recently signed into law House Bill 1154 (the “Bill”), which amends the state’s data breach notification law. Among other obligations, the amendments expand the required actions a business must take after becoming aware of a data security breach.

On May 31, 2019, the Cyberspace Administration of China (the “CAC”) published Draft Regulations on Network Protection of Minor’s Personal Information (the “Draft Regulations”), timing the release to coincide with International Children’s Day. The Draft Regulations, based on the existing Cybersecurity Law of China (the “Cybersecurity Law”), is more protective of minors’ information than the Information Security Technology — Personal Information Security Specification (GB/T 35273 – 2017) (the “Specification”) and its draft amendment, which also address some limited provisions on network operators’ use and treatment of minors’ information.

On May 28, 2019, the Cyberspace Administration of China (“CAC”) released draft Data Security Administrative Measures (the “Measures”) for public comment. The Measures, which, when finalized, will be legally binding, supplement the Cybersecurity Law of China (the “Cybersecurity Law”) that took force on June 1, 2017, with detailed and practical requirements for network operators who collect, store, transmit, process and use data within Chinese territory. The Measures likely will significantly impact network operators’ compliance programs in China.

On May 24, 2019, Oregon Governor Kate Brown signed Senate Bill 684 (the “Bill”) into law. The Bill, which takes effect January 1, 2020, amends the Oregon Consumer Identity Theft Protection Act (“OCITPA”) by enhancing the breach notification requirements applicable to third-party vendors.

On May 27, 2019, the Illinois General Assembly voted 79-32 to approve Senate Bill 1624, an amendment to the Personal Information Protection Act (“PIPA”). The bill’s sponsor, Senator Suzy Glowiak (D), expects Illinois Governor J.B. Pritzker (D) to sign the bill into law in short order. The amendment had already unanimously passed the state Senate last month.

On May 28, 2019, a federal jury returned a verdict awarding $1,000 to each of the roughly 68,000 class members whose criminal history was made publicly available online. The jury found that Bucks County willfully violated Pennsylvania’s Criminal History Records Information Act (“CHRIA”) and awarded the statutory minimum to each of the class members. As a result, Bucks County could pay up to $68 million in punitive damages.

On May 10, 2019, New Jersey Governor Phil Murphy signed into law a bill that amends New Jersey’s data breach notification law to expand the definition of personal information to include online account information. The amendment goes into effect September 1, 2019.

On May 6, 2019, the U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) announced that it had entered into a resolution agreement and $3 million settlement with Touchstone Medical Imaging (“Touchstone”). The settlement is the first OCR HIPAA enforcement action in 2019, following an all-time record year of HIPAA enforcement in 2018.

As reported by Bloomberg Law, on May 7, 2019, Washington State Governor Jay Inslee signed a bill (HB 1071) amending Washington’s data breach notification law. The new requirements include the following:

• Expanded Definition of Personal Information. HB 1071 expands the definition of “personal information.” Washington’s breach notification law previously defined personal information as an individual’s name in combination with the individual’s Social Security number, state identification card number, or financial account or credit or debit card number in combination with any required security code, access code or password that would permit access to an individual’s financial account. HB 1071 adds the following data elements to the definition, when compromised in combination with an individual’s name:
  • full date of birth;
  • private key that is unique to an individual and that is used to authenticate or sign an electronic record;
  • student, military or passport identification number;
  • health insurance policy number or health insurance identification number;
  • any information about a consumer’s medical history or mental or physical condition or about a health care professional’s medical diagnosis or treatment of the consumer; or
  • biometric data generated by automatic measurements of an individual’s biological characteristics such as a fingerprint, voiceprint, eye retinas, irises or other unique biological patterns or characteristics that is used to identify a specific individual.

On April 22, 2019, Washington state legislators voted to send HB 1071 (the “Bill”) to Governor Jay Inslee for consideration. The Bill was requested by Attorney General Ferguson and would strengthen Washington’s data breach law. The request to amend the current law followed Attorney General Ferguson’s third annual Data Breach Report, which found that data breaches affected nearly 3.4 million Washingtonians between July 2017 and July 2018.

On October 22, 2018, the UK Court of Appeal upheld the High Court’s decision that VM Morrison Supermarkets PLC (“Morrisons”) was vicariously liable for a data breach caused by a disgruntled former employee, despite Morrisons being cleared of any wrongdoing (VM Morrison Supermarkets PLC v Various Claimants). The case is important, given its potential “floodgate” effect on data breach class action claims in the UK. The Supreme Court has granted Morrisons permission to appeal the judgment on all grounds.

On January 25, 2019, Nigeria’s National Information Technology Development Agency (“NITDA”) issued the Nigeria Data Protection Regulation 2019 (the “Regulation”). Many concepts of the Regulation mirror the EU General Data Protection Regulation (“GDPR”).

Hunton Andrews Kurth LLP, in coordination with the U.S. Chamber of Commerce, recently issued a report setting forth best practices for an effective data breach notification framework (the “Report”). Lead Hunton authors are Lisa J. Sotto, chair of the Global Privacy and Cybersecurity practice, and partners Brittany M. Bacon and Aaron P. Simpson.

On March 12, 2019, the European Data Protection Board (“EDPB”) adopted an opinion on the interplay between the EU Directive on Privacy and Electronic Communications (“the ePrivacy Directive”) and the General Data Protection Regulation (“GDPR”) (the “Opinion”).

On March 5, 2019, the Global Privacy Enforcement Network (“GPEN”), a global network of more than 60 data protection authorities (“DPAs”) around the world, published the results of its 2018 intelligence gathering operation on organizations’ data privacy accountability practices (the “Sweep”). On the same date, some participating DPAs released the results of the Sweep exercise carried out in their respective jurisdiction.

On February 26, 2019, the European Data Protection Board (the “EDPB”) presented its first overview of the GDPR’s implementation and the roles and means of the national supervisory authorities to the European Parliament (the “Overview”).

The Overview provides key statistics relating to the consistency mechanism among national data protection authorities (“DPAs”), the cooperation mechanism of the EDPB, the means and powers of the DPAs and enforcement of the GDPR at the national level.

On January 29, 2019, the Dutch Data Protection Authority (Autoriteit Persoonsgegevens, the “Dutch DPA”) published a report (in Dutch) on the personal data breach notifications received in 2018 (the “Report”). The EU General Data Protection Regulation (the “GDPR”) requires data controllers to notify a personal data breach to the competent Data Protection Authority (“DPA”) within 72 hours after becoming aware of it. In the Netherlands, this breach notification requirement has been in place since January 1, 2016. However, the GDPR imposed additional requirements, including: providing certain information in a breach notification; data controllers’ mandatory obligation to notify affected individuals if the breach is likely to result in a high risk to the rights and freedoms of those individuals; companies duty to document any personal data breaches.

On January 16, 2019, Hunton Andrews Kurth hosted a breakfast seminar in London, entitled “GDPR: Post Implementation Review.” Bridget Treacy, Aaron Simpson and James Henderson from Hunton Andrews Kurth and Bojana Bellamy from the Centre for Information Policy Leadership (“CIPL”) at Hunton Andrews Kurth discussed some of the challenges and successes companies encountered in implementing the EU General Data Protection Regulation (the “GDPR”), and also identified key data protection challenges that lie ahead. The Hunton team was joined by Neil Paterson, Group Data Protection Coordinator of TUI Group; Miles Briggs, Data Protection Officer of TUI UK & Ireland; and Vivienne Artz, Chief Privacy Officer at Refinitiv, who provided an in-house perspective on the GDPR.

On January 10, 2019, Massachusetts Governor Charlie Baker signed legislation amending the state’s data breach law. The amendments take effect on April 11, 2019.

The U.S. Department of Health and Human Services (“HHS”) recently announced the publication of “Health Industry Cybersecurity Practices: Managing Threats and Protecting Patients” (the “Cybersecurity Practices”). The Cybersecurity Practices were developed by the Healthcare & Public Health Sector Coordinating Councils Public Private Partnership, a group comprised of over 150 cybersecurity and healthcare experts from government and private industry.

On December 27, 2018, the French Data Protection Authority (the “CNIL”) announced that it imposed a fine of €250,000 on French telecom operator Bouygues Telecom for failing to protect the personal data of the customers of its mobile package B&YOU.

New cybersecurity rules for insurance companies licensed in South Carolina are set to take effect in part on January 1, 2019. The new law is the first in the United States to be enacted based on the data security model law drafted by the National Association of Insurance Commissioners. The law requires licensed insurance companies to notify state insurance authorities of data breaches within 72 hours of confirming that nonpublic information in the company’s (or a service provider’s) system was “disrupted, misused, or accessed without authorization.” The breach reporting requirement is in addition to notification obligations imposed under South Carolina’s breach notification law and applies if the insurance company has a permanent location in the state or if the breach affects at least 250 South Carolina residents, among other criteria. The 72-hour notice requirement takes effect January 1, 2019.

On December 20, 2018, the French data protection authority (the “CNIL”) announced that it levied a €400,000 fine on Uber France SAS, the French establishment of Uber B.V. and Uber Technologies Inc., for failure to implement some basic security measures that made possible the 2016 Uber data breach.

On November 21, 2018, the Supreme Court of Pennsylvania ruled that a putative class action filed against UPMC (d/b/a The University of Pittsburg Medical Center) should not have been dismissed.

On November 9, 2018, Serbia’s National Assembly enacted a new data protection law. The Personal Data Protection Law, which becomes effective on August 21, 2019, is modeled after the EU General Data Protection Regulation (“GDPR”).

On October 23, 2018, the parties in the Yahoo! Inc. (“Yahoo!”) Customer Data Security Breach Litigation pending in the Northern District of California and the parties in the related litigation pending in California state court filed a motion seeking preliminary approval of a settlement related to breaches of the company’s data. These breaches were announced from September 2016 to October 2017 and collectively impacted approximately 3 billion user accounts worldwide. In June 2017, Yahoo! and Verizon Communications Inc. had completed an asset sale transaction, pursuant to which Yahoo! became Altaba Inc. (“Altaba”) and Yahoo!’s previously operating business became Oath Holdings Inc. (“Oath”). Altaba and Oath have each agreed to be responsible for 50 percent of the settlement.

Effective October 1, 2018, Connecticut law requires organizations that experience a security breach affecting Connecticut residents’ Social Security numbers (“SSNs”) to provide 24 months of credit monitoring to affected individuals. Previously, Connecticut law required entities to provide 12 months of credit monitoring for breaches affecting SSNs.

Recently, the French Data Protection Authority (the “CNIL”) published a statistical review of personal data breaches during the first four months of the EU General Data Protection Regulation’s (“GDPR”) entry into application. View the review (in French). 

Recently, the U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) entered into a resolution agreement and record settlement of $16 million with Anthem, Inc. (“Anthem”) following Anthem’s 2015 data breach. That breach, affecting approximately 79 million individuals, was the largest breach of protected health information (“PHI”) in history.

As reported on the Insurance Recovery Blog, Hunton Andrews Kurth insurance practice head Walter Andrews recently commented to the Global Data Review regarding the infirmities underlying an Orlando, Florida federal district court’s ruling that an insurer does not have to defend its insured for damage caused by a third-party data breach.

On September 26, 2018, the U.S. District Court for the District of Colorado ("the Court") refused to dismiss all putative class claims against Chipotle Mexican Grill, Inc. (“Chipotle”). This litigation arose from a 2017 data breach in which hackers stole customers’ payment card and other personal information by using malicious software to access the point-of-sale systems at Chipotle’s locations. 

On September 26, 2018, Uber Technologies Inc. (“Uber”) agreed to a settlement (the “Settlement”) with all 50 U.S. state attorneys general (the “Attorneys General”) in connection with a 2016 data breach affecting the personal information (including driver’s license numbers) of approximately 607,000 Uber drivers nationwide, as well as approximately 57 million consumers’ email addresses and phone numbers. The Attorneys General alleged that after Uber learned of the breach, which occurred in November 2016, the company paid intruders a $100,000 ransom to delete the data. The Attorneys General alleged that Uber failed to promptly notify affected individuals of the incident, as required under various state laws, instead notifying affected customers and drivers of the breach one year later in November 2017. 

Recently, the UK Information Commissioner's Office (“ICO”) fined credit rating agency Equifax £500,000 for failing to protect the personal data of up to 15 million UK individuals. The data was compromised during a cyber attack that occurred between May 13 and July 30, 2017, which affected 146 million customers globally. Although Equifax’s systems in the U.S. were targeted, the ICO found the credit agency's UK arm, Equifax Ltd, failed to take appropriate steps to ensure that its parent firm, which processed this data on its behalf, had protected the information. The ICO investigation uncovered a number of serious contraventions of the UK Data Protection Act 1998 (the “DPA”), resulting in the ICO imposing on Equifax Ltd the maximum fine available.

As reported in BNA Privacy Law Watch, the Office of the Privacy Commissioner of Canada (the “OPC”) is seeking public comment on recently released guidance (the “Guidance”) intended to assist organizations with understanding their obligations under the federal breach notification mandate, which will take effect in Canada on November 1, 2018. 

On September 5, 2018, the U.S. District Court for the Central District of California held that a class action arising from a 2016 Uber Technologies Inc. (“Uber”) data breach must proceed to arbitration. The case was initially filed after a 2016 data breach that affected approximately 600,000 Uber drivers and 57 million Uber customers. 

As reported on Hunton's Insurance Recovery blog, the Second Circuit has rejected Chubb subsidiary Federal Ins. Co.’s request for reconsideration of the court’s July 6, 2018, decision, confirming that the insurer must cover Medidata’s $4.8 million loss under its computer fraud insurance policy. In July, the court determined that the loss resulted directly from the fraudulent emails. The court again rejected the insurer’s argument that the fraudster did not directly access Medidata’s computer systems. But the court again rejected that argument, finding that access indeed occurred when the “spoofing” code in emails sent to Medidata employees ended up in Medidata’s computer system.

On August 15, 2018, U.S. District Judge Lucy Koh signed an order granting final approval of the record $115 million class action settlement agreed to by Anthem Inc. in June 2017. As previously reported, Judge Koh signed an order granting preliminary approval of the settlement in August 2017.

On August 3, 2018, Ohio Governor John Kasich signed into law Senate Bill 220 (the “Bill”), which provides covered entities with an affirmative defense to tort claims, based on Ohio law or brought in an Ohio court, that allege or relate to the failure to implement reasonable information security controls which resulted in a data breach. According to the Bill, its purpose is “to be an incentive and to encourage businesses to achieve a higher level of cybersecurity through voluntary action.” The Bill will take effect 90 days after it is provided to the Ohio Secretary of State ...

On August 3, 2018, California-based Unixiz Inc. (“Unixiz”) agreed to shut down its “i-Dressup” website pursuant to a consent order with the New Jersey Attorney General, which the company entered into to settle charges that it violated the Children’s Online Privacy Protection Act (“COPPA”) and the New Jersey Consumer Fraud Act. The consent order also requires Unixiz to pay a civil penalty of $98,618.

On June 28, 2018, the Governor of California signed AB 375, the California Consumer Privacy Act of 2018 (the “Act”). The Act introduces key privacy requirements for businesses, and was passed quickly by California lawmakers in an effort to remove a ballot initiative of the same name from the November 6, 2018, statewide ballot. We previously reported on the relevant ballot initiative. The Act will take effect January 1, 2020.

On July 1, 2018, HB 183, which amends Virginia’s breach notification law, will come into effect (the “amended law”). The amended law will require income tax return preparers who prepare individual Virginia income tax returns to notify the state’s Department of Taxation (the “Department”) if they discover or are notified of a breach of “return information.” Under the amended law, “return information” is defined as “a taxpayer's identity and the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, assessments, or tax payments.”

Recently, Louisiana amended its Database Security Breach Notification Law (the “amended law”). Notably, the amended law (1) amends the state’s data breach notification law to expand the definition of personal information and requires notice to affected Louisiana residents within 60 days, and (2) imposes data security and destruction requirements on covered entities. The amended law goes into effect on August 1, 2018.

On May 14, 2018, the Department of Energy (“DOE”) Office of Electricity Delivery & Energy Reliability released its Multiyear Plan for Energy Sector Cybersecurity (the “Plan”). The Plan is significantly guided by DOE’s 2006 Roadmap to Secure Control Systems in the Energy Sector and 2011 Roadmap to Achieve Energy Delivery Systems Cybersecurity. Taken together with DOE’s recent announcement creating the new Office of Cybersecurity, Energy Security, and Emergency Response (“CESER”), DOE is clearly asserting its position as the energy sector’s Congressionally-recognized sector-specific agency (“SSA”) on cybersecurity.

On April 11, 2018, Arizona amended its data breach notification law (the “amended law”). The amended law will require persons, companies and government agencies doing business in the state to notify affected individuals within 45 days of determining that a breach has resulted in or is reasonably likely to result in substantial economic loss to affected individuals. The old law only required notification “in the most expedient manner possible and without unreasonable delay.” The amended law also broadens the definition of personal information and requires regulatory notice and notice to the consumer reporting agencies (“CRAs”) under certain circumstances.

The Federal Trade Commission has modified its 2017 settlement with Uber Technologies, Inc. (“Uber”) after learning of an additional breach that was not taken into consideration during its earlier negotiations with the company. The modifications are based on the fact that Uber failed to notify the FTC of a November 2016 breach, which took place during the time that the FTC was investigating an earlier, 2014 breach. The 2016 breach occurred when intruders used an access key that an Uber engineer had posted on GitHub to download more than 47 million user names, including related email addresses or phone numbers, as well as more than 600,000 drivers’ names and license numbers. The FTC alleged that after Uber learned of the breach, it paid the intruders a $100,000 ransom through its “bug bounty” program. The bug bounty program is intended to reward responsible disclosure of security vulnerabilities.

The Canadian government recently published a cabinet order stating that the effective date for breach notification provisions in the Digital Privacy Act would be November 1, 2018. At that time, businesses that experience a "breach of security safeguards" would be required to notify affected individuals, as well as the Privacy Commissioner and any other organization or government institution that might be able to reduce the risk of harm resulting from the breach.

On March 28, 2018, Alabama became the final state in the U.S. to enact a data breach notification law. The Alabama Data Breach Notification Act of 2018 (S.B. 318) (“the Law”) goes into effect on June 1, 2018.

As reported in BNA Privacy Law Watch, on March 21, 2018, South Dakota enacted the state’s first data breach notification law. The law will take effect on July 1, 2018, and includes several key provisions:

On March 8, 2018, the Ninth Circuit Court of Appeals (“Ninth Circuit”) reversed a decision from the United States District Court for the District of Nevada. The trial court found that one subclass of plaintiffs in In re Zappos.Com, Inc. Customer Data Security Breach Litigation, had not sufficiently alleged injury in fact to establish Article III standing. The opinion focused on consumers who did not allege that any fraudulent charges had been made using their identities, despite hackers accessing their names, account numbers, passwords, email addresses, billing and shipping addresses, telephone numbers, and credit and debit card information in a 2012 data breach. 

On March 15, 2018, the Trump Administration took the unprecedented step of publicly blaming the Russian government for carrying out cyber attacks on American energy infrastructure. According to a joint Technical Alert issued by the Department of Homeland Security and the FBI, beginning at least as early as March 2016, Russian government cyber actors carried out a “multi-stage intrusion campaign” that sought to penetrate U.S. government entities and a wide range of U.S. critical infrastructure sectors, including “organizations in the energy, nuclear, commercial facilities, water, aviation and critical manufacturing sectors.”

On March 14, 2018, the Department of Justice and the Securities and Exchange Commission (“SEC”) announced insider trading charges against a former chief information officer (“CIO”) of a business unit of Equifax, Inc. According to prosecutors, the CIO exercised options and sold his shares after he learned of a cybersecurity breach and before that breach was publicly announced. Equifax has indicated that approximately 147.9 million consumers had personal information that was compromised.

On February 12, 2018, the Luxembourg data protection authority (Commission nationale pour la protection des donées, “CNPD”) published on its website (in English and French) a form to be used for the purpose of compliance with data breach notification requirements applicable under the EU General Data Protection Regulation (the “GDPR”). The CNPD also published questions and answers (“Q&As”) regarding the requirements.

On February 13, 2018, the U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) announced that it entered into a resolution agreement with the receiver appointed to liquidate the assets of Filefax, Inc. (“Filefax”) in order to settle potential violations of HIPAA. Filefax offered medical record storage, maintenance and delivery services for covered entities, and had gone out of business during the course of OCR’s investigation. 

On February 12, 2018, in a settled enforcement action, the U.S. Commodity Futures Trading Commission (“CFTC”) charged a registered futures commission merchant (“FCM”) with violations of CFTC regulations relating to an ongoing data breach. Specifically, the FCM failed to diligently supervise an information technology provider's (“IT vendor’s”) implementation of certain provisions in the FCM’s written information systems security program. Though not unprecedented, this case represents a rare CFTC enforcement action premised on a cybersecurity failure at a CFTC-registered entity.

On February 1, 2018, the Singapore Personal Data Protection Commission (the “PDPC”) published its response to feedback collected during a public consultation process conducted during the late summer and fall of 2017 (the “Response”). During that public consultation, the PDPC circulated a proposal relating to two general topics: (1) the relevance of two new alternative bases for collecting, using and disclosing personal data (“Notification of Purpose” and “Legal or Business Purpose”), and (2) a mandatory data breach notification requirement. The PDPC invited feedback from the public on these topics.

On February 1, 2018, the Department of Health and Human Services’ Office for Civil Rights (“OCR”) announced a settlement with dialysis clinic operator, Fresenius Medical Care (“Fresenius”). Fresenius will pay OCR $3.5 million to settle claims brought under Health Insurance Portability and Accountability Act rules, alleging that lax security practices led to five breaches of electronic protected health information.

Recently, the General Services Administration (“GSA”) announced its plan to upgrade its cybersecurity requirements in an effort to build upon the Department of Defense’s new cybersecurity requirements, DFAR Section 252.204-7012, that became effective on December 31, 2017.

On January 23, 2018, multinational consulting firm Capgemini interviewed Bojana Bellamy, President of the Centre for Information Policy Leadership at Hunton & Williams, for their “Jane Meets” video series with the Chief Information Security Officer (“CISO”). Bellamy spoke with the CISO of Capgemini about companies’ readiness to comply with the EU General Data Protection Regulation (“GDPR”). In response to a question about the key responsibilities of a CISO in GDPR compliance, Bellamy said, “…where I see great involvement for CISO also is in ensuring that the company is ready to deal with security breaches. So it’s not just about preventing the breach, which is obvious, but it’s also about readiness to deal with the breach and readiness to then manage the breach and notify individuals and regulators, because that is what [the] GDPR requires.”

On January 25, 2018, the Standardization Administration of China published the full text of the Information Security Technology – Personal Information Security Specification (the “Specification”). The Specification will come into effect on May 1, 2018. The Specification is voluntary, but could become influential within China because it establishes benchmarks for the processing of personal information by a wide variety of entities and organizations. In effect, the Specification constitutes a best practices guide for the collection, retention, use, sharing and transfer of personal information, and for the handling of related information security incidents.

On January 8, 2017, the UK Information Commissioner (“ICO”) issued an unprecedented monetary penalty of £400,000 against British mobile phone retailer, The Car Phone Warehouse Limited. Following an attack on their system in 2015, the ICO found that the company had failed to take adequate steps to protect the personal data it held on its system.

On December 21, 2017, the Federal Energy Regulatory Commission (“FERC”) issued a Notice of Proposed Rulemaking (“NOPR”) aimed at expanding mandatory reporting obligations in relation to cybersecurity incidents. In particular, FERC’s NOPR would direct the North American Electric Reliability Corporation (“NERC”) to develop modifications to certain Critical Infrastructure Protection (“CIP”) Reliability Standards so that those standards require mandatory reporting of cybersecurity incidents that compromise or attempt to compromise a responsible entity’s Electronic Security Perimeter (“ESP”) or associated Electronic Access Control or Monitoring Systems.

As reported in BNA Privacy Law Watch, on December 6, 2017, health care provider 21st Century Oncology agreed to pay $2.3 million to settle charges by the Department of Health and Human Services' (“HHS”) Office for Civil Rights (“OCR”) that its security practices led to a data breach involving patient information. The settlement was made public in the company’s December 6, 2017, bankruptcy filing. The HHS charges stemmed from a 2015 data breach involving the compromise of Social Security numbers, medical diagnoses and health insurance information of at least 2.2 million ...

On December 1, 2017, the Centre for Information Policy Leadership (“CIPL”) at Hunton & Williams LLP submitted formal comments to the Article 29 Working Party (the “Working Party”) on its Guidelines on Personal Data Breach Notification (the “Guidelines”). The Guidelines were adopted by the Working Party on October 3, 2017, for public consultation.

On November 29, 2017, the EU’s Article 29 Working Party (”Working Party”) announced the establishment of a task force to coordinate the plethora of national investigations throughout the EU into Uber’s 2016 data breach that affected approximately 57 million users worldwide. The task force is being led by the data protection authority (”DPA”) in the Netherlands, where Uber has its EU headquarters, and includes representatives from the DPAs in France, Italy, Germany, Belgium, Spain and the United Kingdom.

On November 8, 2017, the FTC announced a settlement with Georgia-based online tax preparation service, TaxSlayer, LLC (“TaxSlayer”), regarding allegations that the company violated federal rules on financial privacy and data security. According to the FTC’s complaint, malicious hackers were able to gain full access to nearly 9,000 TaxSlayer user accounts between October 2015 and December 2015. The hackers allegedly used the personal information contained in the users’ accounts, including contact information, Social Security numbers and financial information, to engage in tax identify theft and obtain tax refunds through filing fraudulent tax returns. The FTC charged TaxSlayer with violating the Gramm-Leach-Bliley Act’s Safeguards Rule and Privacy Rule. 

On October 31, 2017, the New York and Vermont Attorneys General (“Attorneys General”) announced a settlement with Hilton Domestic Operating Company, Inc., formerly known as Hilton Worldwide, Inc. (“Hilton”), to settle allegations that the company lacked reasonable data security and waited too long to report a pair of 2015 data breaches, which exposed over 350,000 credit card numbers. The Attorneys General alleged that Hilton failed to maintain reasonable data security and waited more than nine months after the first incident to notify consumers of the breaches, in violation of the states' consumer protection and breach notification laws.

On September 29, 2017, Samanage USA, Inc. (“Samanage”), a North Carolina-based technology company that provided cloud-based IT support services as a subcontractor for Vermont’s health care exchange (“Vermont Health Connect”), agreed to a $264,000 settlement with the Vermont Attorney General in relation to a breach that exposed the Social Security numbers of 660 Vermont Health Connect users.

On September 19, 2017, the French Data Protection Authority (“CNIL”) launched an online public consultation on two topics identified by the Article 29 Working Party (“Working Party”) in its 2017 action plan for the implementation of the EU General Data Protection Regulation (“GDPR”). These two topics are transparency and international data transfers.

The Federal Trade Commission will host a workshop on informational injury on December 12, 2017.  The FTC’s three main goals for hosting the workshop are to:

1. “Better identify the qualitatively different types of injury to consumers and businesses from privacy and data security incidents;”
2. “Explore frameworks for how the FTC might approach quantitatively measuring such injuries and estimate the risk of their occurrence;” and
3. “Better understand how consumers and businesses weigh these injuries and risks when evaluating the tradeoffs to sharing, collecting, storing and using information.”

On August 25, 2017, U.S. District Judge Lucy Koh signed an order granting preliminary approval of the record class action settlement agreed to by Anthem Inc. this past June. The settlement arose out of a 2015 data breach that exposed the personal information of more than 78 million individuals, including names, dates of birth, Social Security numbers and health care ID numbers. The terms of the settlement include, among other things, the creation of a pool of funds to provide credit monitoring and reimbursement for out-of-pocket costs for customers, as well as up to $38 million in attorneys’ fees. Anthem will also be required to make certain changes to its data security systems and cybersecurity practices for at least three years.

As reported in BNA Privacy Law Watch, on August 22, 2017, the Russian privacy regulator, Roskomnadzor, announced that it had issued an order (the “Order”), effective immediately, revising notice protocols for companies that process personal data in Russia. Roskomnadzor stated that an earlier version of certain requirements for companies to notify the regulator of personal data processing was invalidated by the Russian Telecom Ministry in July.

On August 21, 2017, the United States Court of Appeals for the Eighth Circuit affirmed the dismissal of a putative class action arising from the Scottrade data breach. Notably, however, the Eighth Circuit did not agree with the trial court’s ruling that the plaintiff lacked Article III standing, instead dismissing the case with prejudice for failure to state a claim. 

As reported in BNA Privacy Law Watch, on August 17, 2017, Delaware amended its data breach notification law, effective April 14, 2018. The Delaware law previously required companies to give notice of a breach to affected Delaware residents “as soon as possible” after determining that, as a result of the breach, “misuse of information about a Delaware resident has occurred or is reasonably likely to occur.” The prior version of the law did not require regulator notification.

On August 15, 2017, the FTC announced that it had reached a settlement with Uber, Inc., over allegations that the ride-sharing company had made deceptive data privacy and security representations to its consumers. Under the terms of the settlement, Uber has agreed to implement a comprehensive privacy program and undergo regular, independent privacy audits for the next 20 years.

On August 1, 2017, a unanimous three-judge panel for the D.C. Circuit reversed the dismissal of a putative data breach class action against health insurer CareFirst, Attias v. CareFirst, Inc., No. 16-7108, slip op. (D.C. Cir. Aug. 1, 2017), finding the risk of future injury was not too speculative to establish injury in fact under Article III. 

On August 9, 2017, Nationwide Mutual Insurance Co. (“Nationwide”) agreed to a $5.5 million settlement with attorneys general from 32 states in connection with a 2012 data breach that exposed the personal information of over 1.2 million individuals. 

On July 28, 2017, the FTC published the second blog post in its “Stick with Security” series. As we previously reported, the FTC will publish an entry every Friday for the next few months focusing on each of the 10 principles outlined in its Start with Security Guide for Businesses. This week’s post, entitled “Start with security – and stick with it,” looks at key security principles that apply to all businesses regardless of their size or the types of data they handle.

On July 27, 2017, the French Data Protection Authority (“CNIL”) imposed a fine of €40,000 on a French affiliate of the rental car company, The Hertz Corporation, for failure to ensure the security of website users’ personal data.

On July 21, 2017, the FTC announced its publication of “Stick with Security,” a series of blog posts on reasonable steps that companies should take to protect and secure consumer data. The posts will build on the FTC’s Start with Security Guide for Businesses, and will be based on the FTC’s 60+ law enforcement actions, closed investigations and questions from businesses. Every Friday for the next few months, the FTC will publish on its Business Blog a new post focusing on each of the 10 “Start with Security” principles.

On July 25, 2017, the U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) announced the release of an updated web tool that highlights recent data breaches of health information.

In the third segment of this three-part series, Lisa Sotto, head of the Global Privacy and Cybersecurity practice at Hunton & Williams, discusses with The Electronic Discovery Institute how to respond to a data breach. It’s necessary, says Sotto, to have appropriate processes in place before a breach occurs. The “most important first step is to ensure that, when an issue arises, it’s escalated appropriately.”

Watch the full video.

On June 26, 2017, Airway Oxygen, a provider of oxygen therapy and home medical equipment, reported that it was the subject of a ransomware attack affecting 500,000 patients’ protected health information. The attack is the second largest health data breach recorded by the Office for Civil Rights (“OCR”) this year, and the largest ransomware incident recorded by OCR since it began tracking incidents in 2009.

On June 23, 2017, Anthem Inc., the nation’s second largest health insurer, reached a record $115 million settlement in a class action lawsuit arising out of a 2015 data breach that exposed the personal information of more than 78 million people. Among other things, the settlement creates a pool of funds to provide credit monitoring and reimbursement for out-of-pocket costs for customers, as well as up to $38 million in attorneys’ fees.

On June 12, 2017, a putative class action was filed in the U.S. District Court for the Northern District of Georgia against Tempur Sealy International, Inc. and Aptos, Inc. Tempur Sealy is a mattress, bedding and pillow retailer based in Lexington, Kentucky. Aptos is headquartered in Atlanta, Georgia, and formerly hosted and maintained Tempur Sealy’s website and online payment system. The plaintiff alleges that the breach was discovered in November of 2016 and involved the exposure of payment card data and other PII of an undisclosed number of Tempur Sealy customers.   

On June 13, 2017, Judge Andrea R. Wood of the Northern District of Illinois dismissed with prejudice a putative consumer class action filed against Barnes & Noble. The case was first filed after Barnes & Noble’s September 2012 announcement that “skimmers” had tampered with PIN pad terminals in 63 of its stores and exposed payment card information. The court had previously dismissed the plaintiffs’ original complaint without prejudice for failure to establish Article III standing. After the Seventh Circuit’s decision in Remijas v. Neiman Marcus Group, the plaintiffs filed an almost identical amended complaint that alleged the same causes of action and virtually identical facts. Although the court found that the first amended complaint sufficiently alleged Article III standing, the plaintiffs nevertheless failed to plead a viable claim. The court therefore dismissed the first amended complaint under Rule 12(b)(6). 

The U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) and the Health Care Industry Cybersecurity Task Force (the “Task Force”) have published important materials addressing cybersecurity in the health care industry.

On May 26, 2017, Alcoa Community Federal Credit Union (“Alcoa”), on behalf of itself, credit unions, banks and other financial institutions, filed a nationwide class action against Chipotle Mexican Grill, Inc. (“Chipotle”). The case arises from a breach of customer payment card data. The putative class consists of all such financial institutions that issued payment cards, or were involved with card-issuing services, for customers who made purchases at Chipotle from March 1, 2017, to the present. Plaintiffs allege a number of “inadequate data security measures,” including Chipotle’s decision not to implement EMV technology. 

On May 23, 2017, various attorneys general of 47 states and the District of Columbia announced that they had reached an $18.5 million settlement with Target regarding the states’ investigation of the company’s 2013 data breach. This represents the largest multi-state data breach settlement achieved to date.

On May 22, 2017, New York Attorney General Eric T. Schneiderman announced that the AG’s office has reached a settlement (the “Settlement”) with Safetech Products LLC (“Safetech”) regarding the company’s sale of insecure Bluetooth-enabled wireless doors and padlocks. In a press release, Schneiderman indicated that this “marks the first time an attorneys general’s office has taken legal action against a wireless security company for failing to protect their [customers’] personal and private information.”

On May 5, 2017, the U.S. District Court for the Southern District of New York entered a default judgment in favor of the SEC against three Chinese defendants accused of hacking into the nonpublic networks of two New York-headquartered law firms and stealing confidential information regarding several publicly traded companies engaged in mergers and acquisitions. The defendants allegedly profited illegally by trading the stolen nonpublic information. After the defendants failed to answer the SEC’s complaint, the court entered a default judgment against them, imposing a fine ...

On May 12, 2017, a massive ransomware attack began affecting tens of thousands of computer systems in over 100 countries. The ransomware, known as “WannaCry,” leverages a Windows vulnerability and encrypts files on infected systems and demands payment for their release. If payment is not received within a specified time frame, the ransomware automatically deletes the files. A wide range of industries have been impacted by the attack, including businesses, hospitals, utilities and government entities around the world.