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.
Every year, we hear about how climate change is worsening. It seems the same story is happening with data security. Last year was the worst year in recorded data breach history. More than 5,200 breaches were reported in 2017, with more than 7.8 billion records compromised. By comparison, there are 7.6 billion people on Earth, so 2017 saw the number of records compromised surpass the total world population. Previously, 2016 was the record-holder with 6.3 billion records compromised. Are there any records left that haven’t been compromised?
Major breaches and security incidents included the enormous Equifax breach of 145 million records, the Uber breach, and the NSA leaked tools, which spawned WannaCry and other niceties. Click here for a collection of summaries of some of the more notable breaches of 2017.
Recently, HBO suffered a massive data breach. The hackers stole unreleased episodes of Game of Thrones and have been leaking them before they are broadcast. Episodes of other shows were also stolen. The hackers grabbed 1.5 terabytes of data including sensitive internal documents.
Harm has become the key issue in data breach cases. During the past 20 years, there have been hundreds of lawsuits over data breaches. In many cases, the plaintiffs have evidence to establish that reasonable care wasn’t used to protect their data. But the cases have often been dismissed because courts conclude that the plaintiffs have not suffered harm as a result of the breach. Some courts are beginning to recognize harm, leading to significant inconsistency and uncertainty in this body of law.
I am pleased to announce the launch of our new training program, Social Engineering: Spies and Sabotage. This course is a short module (~7 minutes long) that provides a general introduction to social engineering.
After discussing several types of social engineering (phishing, baiting, pretexting, and tailgaiting), the course provides advice for avoiding these tricks and scams. Key points are applied and reinforced with 4 scenario quiz questions.
A study recently revealed that nearly 25% of data breaches involve phishing, and it is the second most frequent data security threat companies face. Phishing is an enormous problem, and it is getting worse.
In a staggering statistic, on average, a company with 10,000 employees will spend $3.7 million per year handling phishing attacks.
by Daniel J. Solove
The U.S. Court of Appeals for the 3rd Circuit just affirmed the district court decision in FTC v. Wyndham Worldwide Corp., No. 14-3514 (3rd. Cir. Aug. 24, 2015). The case involves a challenge by Wyndham to an Federal Trade Commission (FTC) enforcement action emerging out of data breaches at the Wyndham.
Since the mid-1990s, the FTC has been enforcing Section 5 of the FTC Act, 15 U.S.C. § 45, in instances involving privacy and data security. Section 5 prohibits “unfair or deceptive acts or practices in or affecting commerce.” Deception and unfairness are two independent bases for FTC enforcement. During the past 15-20 years, the FTC has brought about 180 enforcement actions, the vast majority of which have settled. Wyndham was one of the exceptions; instead of settling, it challenged the FTC’s authority to enforce to protect data security as an unfair trade practice.
Among the arguments made by Wyndham, three are most worth focusing on:
(1) Because Congress enacted data security laws to regulate specific industries, Congress didn’t intend for the FTC to be able to regulate data security under the FTC Act.
(2) The FTC is not providing fair notice about the security practices it deems as “unfair” because it is enforcing on a case-by-case basis rather than promulgating a set of specific practices it deems as unfair.
(3) The FTC failed to establish “substantial injury to consumers” as required to enforce for unfairness.
The district court rejected all three of these arguments, and so did the 3rd Circuit Court of Appeals. Here is a very brief overview of the 3rd Circuit’s reasoning.
By Daniel J. Solove
Co-authored by Professor Paul Schwartz
This post is part of a post series where we round up some of the interesting news and resources we’re finding. For a PDF version of this post, and for archived issues of previous posts, click here. We cover health issues in a separate post.
Mayer Brown survey of executives: 25% of organizations lack both a CPO and CIO (March 2015)
by Daniel J. Solove
In a recent report, MIT security experts critiqued calls by government law enforcement for backdoor access to encrypted information. As the experts aptly stated:
“Political and law enforcement leaders in the United States and the United Kingdom have called for Internet systems to be redesigned to ensure government access to information — even encrypted information. They argue that the growing use of encryption will neutralize their investigative capabilities. They propose that data storage and communications systems must be designed for exceptional access by law enforcement agencies. These proposals are unworkable in practice, raise enormous legal and ethical questions, and would undo progress on security at a time when Internet vulnerabilities are causing extreme economic harm.”
The report is called Keys Under Doormats: Mandating Insecurity by Requiring Government Access to all Data and Communications and is by Harold Abelson, Ross Anderson, Steven M. Bellovin, Josh Benaloh, Matt Blaze, Whitfield Diffie, John Gilmore, Matthew Green, Susan Landau, Peter G. Neumann, Ronald L. Rivest, Jeffrey I. Schiller, Bruce Schneier, Michael Specter, and Daniel J. Weitzner.
by Daniel J. Solove
I’ve really been enjoying the new TV series Mr. Robot on USA. Network. It presents highly-engaging depictions of hacking and social engineering, and it is great entertainment for privacy and security geeks.
The protagonist is Elliot Alderson (played by Rami Malek), a tech who works at a cybersecurity firm in New York City. The show is narrated with voiceover by Elliot, and we get a glimpse into the mind of this reclusive and quiet person. Voiceover can often falter as a technique, but here it works wonderfully — and all the more impressive because Elliot speaks softly, often in monotone. But Elliot is such a fascinating character and Malek delivers Elliot’s monologue so effectively, that it becomes surprisingly engaging.
Elliot is very smart and clever, and he sees many around him as idiots. He suffers from severe bouts of depression, is a recluse who wants to be invisible, and he is very awkward around other people. He lives most of his life inside his head. The show presents the stark contrast between what he says to others and what he is thinking. In one scene, we see him speaking to his psychiatrist, telling her hardly anything. But we hear his thoughts and know that he is pondering quite a lot.