Privacy & Information Security Law Blog

As the number of security breach incidents and privacy violations continues to increase, so too has the volume of lawsuits—particularly class action lawsuits—seeking damages for actual and future harms resulting from unauthorized disclosures of personal information. Affected companies have looked to their traditional insurance coverage to defray costs associated with responding to these incidents and lawsuits, but standardized commercial general liability policies may not provide adequate coverage.

On April 10, 2013, the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) jointly adopted rules that require broker-dealers, mutual funds, investment advisers and certain other regulated entities to adopt programs designed to detect “red flags” and prevent identity theft. These rules implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, that amended the Fair Credit Reporting Act (“FCRA”) to direct the SEC and the CFTC to adopt rules requiring regulated entities to address risks of identity theft. The 2003 amendments to the FCRA required other regulatory authorities to issue identity theft red flags rules, but did not authorize or require the SEC or the CFTC to issue their own rules.

On April 2, 2013, the Article 29 Working Party (the “Working Party”) adopted an Opinion (the “Opinion”) that elaborates on the purpose limitation principle set out in Article 6(1)(b) of the current EU Data Protection Directive 95/46/EC (the “Data Protection Directive”). The Opinion analyzes the scope of this principle under the Data Protection Directive, clarifies its limits and makes recommendations to strengthen it in the proposed General Data Protection Regulation (the “Proposed Regulation”). It also focuses on how to apply this principle in the context of Big Data and open data.

On April 5, 2013, during the Centre for Information Policy Leadership’s First Friday call, Centre President interviewed José Alejandro Bermúdez Durana, Deputy Superintendent for Data Protection for Colombia’s Superintendency of Industry and Commerce, and asked about the progress of Colombia’s new data protection law. Enacted in October 2012, the law provided a six month grace period for companies to prepare to comply with new requirements, which are expected to be implemented on April 18, 2013. The final regulation will be published thereafter. The Deputy Superintendent discussed industry cooperation and said that the regulation’s language on consent will be flexible.

On April 2, 2013, the Securities and Exchange Commission issued a report regarding the investigation of a prominent public company and its CEO over disclosures made on the CEO’s personal social media page. The Commission did not bring enforcement charges in this case, but the report set forth the Commission’s view that, under certain circumstances, issuer-sponsored social media can be a permissible channel of dissemination of information under Regulation FD.

Adopted in 2000, Regulation FD generally prohibits public companies and personnel acting on their behalf from ...

On April 3, 2013, the Federal Trade Commission issued a press release announcing that it had sent warning letters to operators of six websites that provide rental history reports to landlords for tenant screening purposes. The letters informed the website operators that they may be considered consumer reporting agencies (“CRAs”) subject to the requirements of the Fair Credit Reporting Act (“FCRA”).

On January 17, 2013, the U.S. Department of Health and Human Services issued a final omnibus rule modifying prior regulations enacted pursuant to the Health Insurance Portability and Accountability Act of 1996. Among the key changes that will come into effect this September is the addition of a provision that dramatically increases the number of organizations directly subject to the HIPAA Privacy, Security, Breach Notification and Enforcement Rules. In an article published in the March/April issue of Storage & Destruction Business Magazine, Lisa J. Sotto, partner and head of the ...

On March 8, 2013, the German government published a response to a formal inquiry from one of the German Parliament’s parties on the international security, data protection and surveillance implications of cloud computing. The response describes international cooperation between German and foreign law enforcement agencies that have used mutual legal assistance treaties to obtain cloud data in foreign jurisdictions. An earlier study by the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs considered the scope of U.S. laws that allow surveillance of non-U.S. residents in a cloud computing context. The German government’s response now provides information on how German law enforcement agencies obtain data from clouds outside their jurisdiction (e.g., in the United States) pursuant to mutual legal assistance treaties.

On March 8, 2013, a U.S. federal appeals court issued a decision in the case United States v. Cotterman, holding that the federal government must have “reasonable suspicion” of criminal activity to conduct a forensic search of laptops and similar devices in the possession of individuals attempting to cross the border. 

On March 28, 2013, the Department of Commerce’s Notice of Inquiry into “Incentives to Adopt Improved Cybersecurity Practices” was published in the Federal Register (78 Fed. Reg. 18954). This Notice, which includes a series of broad questions for owners of the nation’s critical infrastructure, follows up on earlier Commerce inquiries focused on incentives for noncritical infrastructure. The Notice states that Commerce will use the responses it receives to evaluate a set of incentives designed to encourage owners of critical infrastructure to participate in a voluntary cybersecurity program. The Notice also indicates that Commerce will use the responses to inform its evaluation of whether the incentives would require legislation or could be implemented pursuant to existing law and authorities. In addition, the Notice provides that Commerce may use the responses to develop a broader set of recommendations that would apply to U.S. industry as a whole.