In Taft’s Privacy and Data Security Insight, we have been writing regularly on the California Consumer Privacy Act and what to expect as it goes into effect in January.  Like many new privacy laws, panic begins to set in about how to actually address the new approach towards consumer privacy (remember the great GDPR panic of May 25, 2018?)  In our last blog, we told you about the final amendments to the CCPA and how the language of the law will finally read. The next step to the implementation of the United States’ most comprehensive state privacy law is the issuance of the Attorney General’s  Proposed Regulations, a Notice of Proposed Rulemaking Action, and an Initial Statement of Reasons. These draft documents attempt to answer the question burning in the minds of lawyers and businesses around the country:  HOW am I supposed to actually do this? With these draft documents finally out (awaiting public comments until December), we have what we are to understand as the AG’s guidance to businesses on how to comply with the provisions of the CCPA, including, but not limited to:

  1. How to properly notify consumers;
  2. How to handle consumer requests;
  3. How to verify the identity of consumers;
  4. Collecting personal information of minors; and
  5. How the value of consumer data is calculated.

The California Consumer Privacy Act (“CCPA”) will go into effect on January 1, 2020.

Continue Reading <i>How</i> am I supposed to do this?: California AG issues proposed regulations for making CCPA a reality

As we have discussed before, the California Consumer Privacy Act (“CCPA”) is forcing entities doing business in California to critically examine their information collection and sharing practices. Although California signed it into law last year, the CCPA does not go into effect until January 1, 2020. Last month, the California Legislature passed six amendments to the CCPA that will affect how businesses operate, while also affording California residents their newfound rights.

I. Limiting Personal information & Publicly Available Information (AB-874).
The CCPA, before this amendment, defined “personal information” as any information that “is capable of being associated with… a particular consumer or household.” This amendment changes that language to any information that “is reasonably capable of being associated with… a particular consumer or household.” This is an attempt to clarify and limit the scope of personal information and what information is “capable of being associated with” a consumer. Much like other areas of the law, we expect contentious debate over what is “reasonable” when anticipating association with a particular consumer or household. Additionally, the definition of “personal information” will now exclude de-identified or aggregated consumer information. This amendment also removes restricting language on what information is treated as “publicly available” and simply states that it is information made available by federal, state, or local governments.

Continue Reading California Raisin’ the Stakes: Final CCPA Amendments Pass CA Legislature

What’s happening?

The one topic, as of late, that tops the list of incoming phone calls to our Privacy and Data Security practice seems to be from a client reporting that either:

  1. The client paid a bogus invoice to a fraudulent account as a result of a communication from someone who looked just like a trusted payee; OR
  2. The client’s long-standing, regularly-paying customer has been strangely behind a couple of months on making payments to the client. Upon follow up, the client finds out the customer received a change in payment instruction reportedly from the client via email and has been sending the client’s payments to another banking account via ACH.

Inevitably, in either case, the payment account is bogus. The recipient failed to check the validity of the email requesting the change in payment practices, such as a new bank account, or possibly moving to ACH or EFT for payments instead of mailing checks. The recipient might have recognized the sender’s name, email address and even observed the expected company branding and logos in the body of the email and signature line. But, rather than pause, place a call or verify the request and account validity, the recipient quickly makes the change and the payment is sent. Frequently, clients aren’t aware of the theft until it’s too late. The consequences are harsh, as getting the money back is not always easy to do, if at all possible. While there are sometimes remedies through bank action or even law enforcement, the speed with which such payments are made and money is removed make it difficult to make a company whole again.

Continue Reading Kiss that money goodbye! Why you must scrutinize payment processing changes at every level of your business.

In the summer of 2015, we cautioned that the Department of Defense’s (DoD’s) new cybersecurity regulations could be used offensively to support False Claims Act (FCA) cases and bid protests. Four years later, those premonitions have unfortunately come true. Recently, a federal court refused to dismiss a relator’s implied certification FCA case in which he alleged that his employer “misrepresented … to the government the extent to which it had equipment required by the regulations, instituted required security controls, and possessed necessary firewalls” in violation of DoD’s cybersecurity regulations. United States ex rel. Markus v. Aerojet Rocketdyne Holdings, Inc., No. 2:15-cv-2245, 2019 WL 2024595, *3 (E.D. Cal. May 8, 2019).

Continue Reading False Claims Act Case Based On DoD’s Cybersecurity Regulations Survives Motion to Dismiss

As the Jan. 1, 2020 operational date for the California Consumer Privacy Act (“CCPA”) approaches, the balance between consumer rights and company responsibility continues to be vigorously debated. As this blog predicted when we discussed the first set of amendments to the CCPA, negotiations and amendments to the CCPA continue. We review the most recent Feb. 22, 2019 consumer friendly amendment now—Senate Bill 561 (“SB 561”).

Continue Reading California: Shore to Please Consumer Privacy Rights Advocates

On Jan. 25, 2019, the Illinois Supreme Court issued a landmark opinion in Rosenbach v. Six Flags Entertainment Corporation, a case brought under the Illinois Biometric Information Privacy Act (“BIPA”). 740 ILCS 14/1 et seq. The court reversed the decision of the Illinois appellate court and held that a plaintiff may bring a lawsuit under BIPA as an “aggrieved” party based upon a defendant’s violation of the statutory requirements of BIPA and without the plaintiff being required to show actual damages.

The court’s decision has important ramifications for the many lawsuits that have already been brought under BIPA and opens the way for plaintiffs to seek BIPA’s liquidated damages and injunctive relief based upon technical violations of the statute.

Continue Reading The Illinois Supreme Court Clears the Way for a Proliferation of Lawsuits Under the Illinois Biometric Information Privacy Act

The Indiana Attorney General recently asserted a novel claim under the Indiana Deceptive Consumer Sales Act that, if successful, opens the door for data breach victims to file class action lawsuits and recover $500 or more per person in statutory damages and attorney’s fees. Damages can add up fast as a data breach involving 2,000 people could result in $1,000,000 in damages, not including attorney’s fees. Data breaches may also result in a lawsuit by the Attorney General for civil penalties, attorney fees, and injunctive relief. Now is the perfect time to consider hardening your company’s cyber security defenses and increasing your cyber insurance policy limits.

Continue Reading Indiana Business Owners May Now Face Million Dollar Lawsuits From Data Breach Victims

The Background of the Law

Of late, the U.S. private sector has been abuzz with the European Union’s new General Data Protection Regulations and the implementation of the same. However, savvy companies cannot forget that state legislatures have been for some time enacting statutes aimed at protecting its residents in how businesses use and disseminate their personal information. In 2008, Illinois became one of the first states to be mindful of the uniqueness of biometrics with the passage of the Biometric Information Privacy Act (“BIPA”), 740 ILCS 14/5, et seq. BIPA provides standards of conduct for private entities in connection with the collection, use, retention, and destruction of “biometric identifiers” and “biometric information.” A “biometric identifier” is defined as a retina or iris scan, fingerprint, voiceprint, or scan of a person’s hand or face geometry while “biometric information” is defined as “any information … based on an individual’s biometric identifier used to identify an individual,” 740 ILCS 14/10. Under BIPA, a private entity in possession of such identifiers and information must establish written policies regarding their retention and destruction and cannot obtain such data unless it: (1) informs the subject of the collection; (2) informs the subject of the specific purpose for the collection and how long the data would be stored; and (3) receives written consent from the subject. 740 ILCS 10/15(b). Importantly, BIPA also provides a private cause of action for “[a]ny person aggrieved by a violation” of the statute and the greater of $1,000 in liquidated damages or actual damages for negligent violations and the greater of $5,000 in liquidated damages or actual damages for intentional or reckless violations. 740 ILCS 14/20(1) and (2). The statute also provides for reasonable attorneys’ fees and costs. 740 ILCS 14/20(3).

While initially dormant, BIPA became the focal point for a flurry of class action lawsuits starting in 2015 against social media websites that used facial recognition for photo tagging purposes. More recently, it has been used increasingly against employers who had timekeeping systems that required fingerprinting scans. At that time, many companies were unaware that BIPA even existed or that it could apply to the technology they were using.

Continue Reading The Illinois Biometric Information Privacy Act: Aggrieved or Not Aggrieved – That is the Question

Last week, I had the pleasure of speaking at the 11th Annual Northern Kentucky University Cybersecurity Symposium. This year, over three hundred attendees ranging from IT and security professionals, to corporate executives and attorneys, gathered for workshops and presentations relating to nascent privacy and security issues. During my presentation, “So Goes California, So Goes the Nation,” I discussed the California Consumer Privacy Act (“CCPA”), and the California legislature’s recent amendments to the CCPA (“the Amendments”), which were signed into law by Governor Brown on Sept. 28, 2018.

As I explained during my presentation, the CCPA was fast-tracked through the California legislature in an attempt to preempt a state-wide voter initiative that would enact regulations on California businesses that collect personal information, but would have been immune from amendment absent a second state-wide voter initiative. Because the California legislature drafted and passed the CCPA in a week, a number of businesses have identified vague and confusing aspects of the law. Therefore, just eight weeks after passing the CCPA, the California legislature has already passed the first set of Amendments. Here are the top takeaways from my talk at NKU:

  • Private Right of Action & Civil Penalties: The CCPA creates a private right of action for a California citizen only when a company has suffered a data breach that is the result of the company’s failure to implement reasonable security measures. The CCPA requires the individual to contact the company prior to initiating an action, and allows the company thirty (30) days to cure the violation. The California Attorney General can also issue civil penalties of up to $2,500 per violation of the CCPA, and up to $7,500 per each intentional violation.
  • Role of California Attorney General: The Amendments clarified that although the CCPA takes effect on Jan. 1, 2020, the California Attorney General can wait until July 1, 2020 to promulgate final regulations. Further, the California AG cannot file enforcement actions under the CCPA until the earlier of July 1, 2020, or six months after the date of the final regulations. Accordingly, businesses regulated under the CCPA will have limited time to align their compliance programs before potential enforcement. Additionally, the original CCPA required any private right of action suits or class actions to be sent to the California AG’s office to determine whether a potential violation existed. The Amendments removed this requirement to avoid forcing the AG’s office into the role of a litigation gatekeeper.
  • Federal Privacy Regulations Exemptions: Originally, the CCPA contained exemptions for compliance for information already subject to federal privacy laws, such as Gramm-Leach-Bliley Act, Driver’s Privacy Protection Act or Health Information Portability and Accountability Act, whenever the CCPA conflicted with a requirement of the federal law. Now, under the amendments, that exemption simply applies across the board regardless of whether or not the CCPA conflicts with these laws. However, companies need to be aware that being subject to a federal regulation does not exempt all data being collected from the new CCPA. If a business collects data outside the federal regulations, then that data will still be regulated by the CCPA.

Continue Reading Change is in the California Air as Legislature Amends New Privacy Law

The struggles continue for Facebook. As you hopefully know by now, on Sept. 28, the social media giant announced a security breach affecting 50 million accounts. The breach involved the theft of password tokens that allow a user to stay signed in or to sign into numerous third party applications, such as Spotify, Instagram and Yelp, among thousands of others. We thought to take the opportunity with this most recent breach to remind you about best practices that can help you not only deal with this event at Facebook, but better manage security across all systems you might use.

Password Security

Facebook automatically logged out all 50 million users that were affected and another 40 million users that were potentially affected from the breach. While Facebook stated that passwords were not compromised, if you use the same password across multiple sites, now would be a great time to change your password. As we have written before, you should also consider using a password manager, such as Lastpass or 1Password. These applications require you to memorize one password and then it creates and stores strong unique passwords on your device(s) for every website that you use. Using a unique password for every website that you use keeps any breach of one website isolated from all the other websites. Need another cautionary tale about using the same password? (See: Yahoo! Breach).

Single Sign-On

In the Facebook settings page, you can see what third party applications or websites you are allowing Facebook to share your information with. Facebook has reset these tokens after the breach, but these tokens could have allowed the hackers access to the sites you used Facebook to access. You can use this opportunity to revoke permission to websites you do not use anymore or choose to not use Facebook to sign onto other websites in the future. As mentioned above, using a password manager to log into multiple websites is a strong alternative to Facebook and any site’s organic features.

Two-Factor Authentication

Another way to boost the security of your Facebook account is the use of two-factor authentication. Two-factor authentication requires the user to have two separate items to log into their accounts. This usually consists of something you know, like a password, and something you have, like a cellphone. This means that you cannot log into your account without both items. Therefore, should your password become compromised your account remains secure, unless the bad actor also possesses your second factor (cell phone). Facebook, along with several other popular websites, allows a user to configure his or her account for two-factor authentication. While this process may make logging in a longer process (we are talking seconds, people!), the benefits far outweigh the damage that can be caused when someone has breached your account.

Privacy Settings

Finally, while checking the settings in your Facebook account or any website account, take a minute to review your privacy settings. Facebook can be a treasure trove of information for malicious actors that may wish to send a spear-phishing email or launch any number of other attacks. Verify to whom you allow access to your posts or home page and try to limit it as much as possible. What you may consider to be innocuous information could be used to gain access to bank accounts through security questions, or maybe used to impersonate your boss in an email to you asking for your W-2 or other sensitive information.

The Facebook breach is not the last.  Breaches will continue to come in larger and larger numbers.  The one consistent factor is you.  Your choices to better manage your personal privacy and security provide you the best defense to the inevitable.