Cyber Security

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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.

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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.

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I don’t mean to ruin your holiday weekend, but we thought to send out a friendly reminder on the next set of rolling deadlines and requirements from New York’s financial services cybersecurity law (23 NYCRR 500). A regulated organization that must comply with the law, or “covered entity,” is “any person operating under or required to operate under a license, registration, charter, certificate, permit, accreditation or similar authorization under the Banking Law, the Insurance Law or the Financial…
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Last November, Taft’s Scot Ganow and Bill Wagner wrote on Ohio first-of-its kind state legislation which would provide companies a safe harbor from some litigation resulting from a data breach. This month, Governor John Kasich signed the Ohio Senate Bill 220, also known as the Ohio Data Protection Act, into law. The law goes into effect in November, and is aimed at providing entities conducting business in Ohio with special protection from litigation in the event of a security incident or breach under certain circumstances. Specifically, the law creates a safe harbor affirmative defense when an entity adopts cybersecurity measures designed to: (1) protect the security and confidentiality of personal information; (2) protect against any anticipated threats or hazards to the security or integrity of the personal information; and (3) protect against unauthorized access to and acquisition of information that is likely to result in a material risk of identity theft or other fraud.
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Earlier this year, there was a report on a new spear-phishing attack seeking to steal people’s sensitive data.  The spear-phishing email message, apparently drafted to look like it came from FedEx, included a link that took the recipient of the email to a Google Docs page and then used a script to download malware to the employee’s computer. What was notable about this spear-phishing attempt was that the email “bait” actually included employee sensitive data, such as his or her Social Security Number.  This is yet another new wrinkle in such phishing attempts and should serve as a reminder about being diligent in continually monitoring and improving your cybersecurity program.

Last year alone, cybercriminal activity increased 38%. While cybercriminal activity comes in different forms,  90% of all successful cybersecurity attacks begin with phishing emails. That’s right, 90%! If you are wondering whether this should alarm you as a business owner, IT SHOULD. That’s because the greatest workplace threat to data security is rarely cyber-hackers. As we have shared before, the biggest risks are employees making things easy for hackers or violating policies themselves. Every day, millions of employees read their emails. Consequently, in reading those emails, every day thousands of employees unknowingly open phishing emails, downloading malware viruses to their computer and company databases.

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Every year, the culprit that tops the list of information security risk is the same one from the previous year, and the year before that: your employees. Sure, hackers and technical failures get a lot of attention, but time and again it is the low-tech failures of employees that lead to security incidents and data breaches. To be clear, it is rarely the disgruntled employee, but more often the apathetic or unaware employee that clicks the phishing link or lets the bad guy into the building. And, unlike the technological safeguards that can cost you thousands of dollars, remedying the issues with employees doesn’t have to cost a lot time or money. However, it can still have the biggest payoff. Here are three easy things you can do to immediately reduce the risk to your sensitive information, and in doing so, truly make “security everyone’s business.”
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A recent GAO decision denying a contractor’s protest because of cybersecurity concerns offers contractors four lessons on how to avoid making the same mistakes.

I.  Background Facts and Decision

Syneren Technologies Corporation was one of 20 contractors who responded to a Navy RFP to award an ID/IQ contract for IT systems and software to support human resource operations involving a variety of business enterprise services. The work was to be performed at a government facility and involved DoD and Navy

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Ohio is poised to lead the nation by incentivizing businesses to implement certain cybersecurity controls, which can be an affirmative defense to a data breach claim based on negligence. Under the proposed legislation, if a business is sued for negligently failing to implement reasonable information security controls resulting in a data breach, the business can assert its compliance with the cybersecurity control as an affirmative defense at trial.

For years we have counseled our clients to implement a comprehensive data…
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Join Taft attorneys Barbara Duncombe and Bill Wagner for a complimentary seminar on the DoD cybersecurity regulations on Oct. 18 at Taft’s Indianapolis office. They will participate in an informal, interactive discussion with Richard Banta and Alex Carroll from Lifeline Data Centers and Josh Griswold and Joe Turek from Chubb concerning recent developments (including cyber breaches), evolving standards of compliance and practical, effective risk mitigation strategies. Click here to register.

Topics will include:

  • Final preparations to ensure compliance with DoD’s

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Here are three takeaways for your business from the Presidential Executive Order on Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure signed on May 11, 2017.

1. Incorporate the NIST Cybersecurity Framework into your business.

The Executive Order requires federal agencies to use the well-established NIST Cybersecurity Framework to fulfill their mission to protect federal networks and critical infrastructure and to appropriately plan for and procure cybersecurity training, products, and services for the future.

As background, the Framework was

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