12/13/18 Update: Here is the video from the session described below.
On Wednesday, December 12, 2018, I’ll be speaking at the Data Security hearing, part of the FTC Hearings on Competition and Consumer Protection in the 21st Century. My panel begins at 1:00 PM:
The U.S. Approach to Consumer Data Security
Wednesday, December 12, 2018 from 1:00 PM to 2:30 PM
Center for Democracy & Technology
Daniel J. Solove
George Washington University Law School
University of Pittsburgh
Perkins Coie LLP
Lisa J. Sotto
Hunton Andrews Kurth LLP
Moderator: James Cooper
Federal Trade Commission, Bureau of Consumer Protection
I previously spoke at an earlier hearing in this series back in September on a panel about consumer privacy protection (video / transcript). The upcoming hearing focuses on data security.
Cybersecurity litigation is currently at a crossroads. Courts have struggled in these cases, coming out in wildly inconsistent ways about whether a data breach causes harm. Although the litigation landscape is uncertain, there are some near certainties about cybersecurity generally: There will be many data breaches, and they will be terrible and costly. We thus have seen the rise of cybersecurity insurance to address this emergent and troublesome risk vector.
I am delighted to be interviewing Kimberly Horn, who is the Global Focus Group Leader for Cyber Claims at Beazley. Kim has significant experience in data privacy and cyber security matters, including guiding insureds through immediate and comprehensive responses to data breaches and network intrusions. She also has extensive experience managing class action litigation, regulatory investigations, and PCI negotiations arising out of privacy breaches.
I hope you enjoy my latest cartoon about data security — a twist on the angel on one shoulder and devil on the other. Humans are the weakest link for data security. Attempts to control people with surveillance or lots of technological restrictions often backfire. I believe that the most effective solution is to train people. It’s not perfect, but if training is done right, it can make a meaningful difference.
I hope you enjoy my latest cartoon about passwords on the Dark Web. These days, it seems, login credentials and other personal data are routinely stocking the shelves of the Dark Web. Last year, a hacker was peddling 117 million LinkedIn user email and passwords. And, late last year, researchers found a file with 1.4 billion passwords for sale on the Dark Web. Hackers will have happy shopping for a long time.
In In re Zappos.com, Inc., Customer Data Security Breach Litigation (9th Cir., Mar. 8, 2018), the U.S. Court of Appeals for the 9th Circuit issued a decision that represents a more expansive way to understand data security harm. The case arises out of a breach where hackers stole personal data on 24 million+ individuals. Although some plaintiffs alleged they suffered identity theft as a result of the breach, other plaintiffs did not. The district court held that the plaintiffs that hadn’t yet suffered an identity theft lacked standing.
Standing is a requirement in federal court that plaintiffs must allege that they have suffered an “injury in fact” — an injury that is concrete, particularized, and actual or imminent. If plaintiffs lack standing, their case is dismissed and can’t proceed. For a long time, most litigation arising out of data breaches was dismissed for lack of standing because courts held that plaintiffs whose data was compromised in a breach didn’t suffer any harm. Clapper v. Amnesty International USA, 568 U.S. 398 (2013). In that case, the Supreme Court held that the plaintiffs couldn’t prove for certain that they were under surveillance. The Court concluded that the plaintiffs were merely speculating about future possible harm.
Early on, most courts rejected standing in data breach cases. A few courts resisted this trend, including the 9th Circuit in Krottner v. Starbucks Corp., 628 F.3d 1139 (9th Cir. 2010). There, the court held that an increased future risk of harm could be sufficient to establish standing.