Taft Appellate attorneys Jon Olivito and Michael Robertson recently wrote about a U.S. Court of Appeals for the Sixth Circuit decision that clarified the scope of conduct that could potentially expose any consumer business to immense liability.

In Thomas v. TOMS King (Ohio), LLC, No. 20-3977 (6th Cir. May 11, 2021), a consumer sued a defendant business alleging a violation of the Fair and Accurate Credit Transactions Act of 2003 (FACTA). The plaintiff alleged the defendant had violated the “truncation requirement” of FACTA and exposed her to an increased risk of identity theft by issuing a credit card that included the first six and last four digits of her credit card number. In an effort to thwart identify theft, the truncation requirement prohibits businesses from printing more than the last five digits of a customer’s credit or debit card number on a receipt. Violations of FACTA can expose businesses to actual and statutory damages, punitive damages, and attorneys’ fees.

Read the full Taft law bulletin.

As we have been writing over the past year, COVID-19 has presented a huge opportunity for hackers to wreak havoc on businesses and consumers.  While confidentiality of data is usually the focus with such data breaches, system and data access is also at risk of attack by these same threat actors.  We have seen this play out on a national scale the past couple of weeks with the pipeline shutdown due to ransomware.

According to the New York Department of Financial Services (“NYDFS”), insurance claims resulting from ransomware increased by 180% between 2018 and 2019, and almost doubled that amount in 2020. (Indeed, the pipeline company paid a ransom of $4.4 million.)  As a result, the U.S. cyber insurance market was $3.15 billion in 2019 and is expected to exceed $20 billion in the next five years. And just recently, a carrier announced it would no longer pay out for ransomware claims in France.   Earlier this year,  in response to the increase in ransomware attacks, the NYDFS issued seven best practices (“Framework”) that insurers should adopt, including a recommendation that insurers should stop paying ransom payments. Insurers should be aware of what the Framework entails and what this means for them when implementing cybersecurity programs and trying to obtain insurance coverage in the future.

Continue Reading NYDFS Answers Age Old “To Pay the Ransom or Not Pay the Ransom” Question with Definitive DON’T

In response to recommendations contained in the Solarium Commission report and the Solar Winds cybersecurity incident, President Biden issued an Executive Order on May 12, 2021, outlining new requirements for information technology providers that do business with the federal government. The purpose of the requirements are to protect federal networks from malicious cyber-attacks and to improve information-sharing between the U.S. government and the private sector on cyber issues, thereby strengthening the United States’ ability to respond to incidents when they occur.

Read more from Taft’s White House Transition Task Force here.

Guess what?  Last Thursday, the first Thursday in May, was World Password Day. Right? You didn’t even know it.  We in the Privacy and Data Security Practice Group thought it would be a perfect opportunity to talk about the importance of the most basic, but still effective way to safeguard your accounts and data. In the early days of the internet, a simple password was all you might need to adequately protect the one or two accounts you might have had. Your desktop login, your email, and maybe some early version of social media. Password security was taken so lightly; it wasn’t unusual for passwords to be stored in a plain text file on a desktop or on a sticky note at your desk. Those days are over. Well, they should be.

Continue Reading Celebrating World Password Day. Responsibly.

On April 1, 2021, the Supreme Court decided Facebook, Inc. v. Duguid, which narrowed the scope of the Telephone Consumer Protection Act of 1991 (TCPA). The Court unanimously ruled that Facebook did not violate the TCPA by sending unsolicited text messages to individuals without their consent, overturning the Ninth Circuit’s decision to broadly define automatic telephone dialing systems (“autodialers”) under the federal statute. The case boiled down to everyone’s favorite subject—grammar. Continue Reading Comma Again? The Supreme Court Provides a Grammar Lesson and Hands Down a Big Decision Impacting TCPA Compliance

In March 2020, the U.S. Department of Health and Human Services’ (HHS) Office of the National Coordinator for Health IT (ONC) finalized two rules which established extensive healthcare data sharing policies related to the 21st Century Cures Act’s information blocking provision and adopted new health information technology certification requirements to enhance patients’ access to their health information.

Largely in response to the COVID-19 public health emergency, in October 2020, HHS released an interim rule which provides healthcare systems some flexibility and time to adapt to pandemic-related challenges. The interim rule extends the compliance dates and timeframes necessary to meet specific requirements related to information blocking and Conditions and Maintenance of Certification (CoC/MoC). The interim final rule also adopts updated standards and makes technical corrections and clarifications to the ONC Cures Act Final Rule.

Continue Reading Closing In On Impact: April 2021 Compliance Date For Information Blocking and Health IT Certification Requirements

On February 3, 2021, the Virginia Senate passed the Virginia Consumer Data Protection Act (“VCDPA” or the “Act”). Upon approval from Governor Ralph Northam, Virginia will be the second state in the nation to adopt a comprehensive data privacy law. This proposed legislation places Virginia alongside California at the forefront of domestic data privacy regulations.

In 2020, California changed the landscape of data privacy laws in the United States with the California Consumer Privacy Act (CCPA). The CCPA, a result of a ballot initiative by California, introduced the idea of widespread data subject rights for American consumers. Nearly three years later, Virginia is securing the second place spot with its enactment of the VCDPA. The Act mirrors the CCPA and the European Union’s General Data Protection Regulation (GDPR) in many ways. For instance, the Act contains a broad definition of “personal data.” It imposes certain fundamental processing principles, such as purpose limitation and data minimization rules, on businesses that process personal data. It also provides Virginia consumers with new rights to access, correct, delete, and request processing modifications with respect to their personal data.

Once signed into law, the VCDPA will be effective January 1, 2023. In the meantime, companies doing business in Virginia should start actively thinking of ways to incorporate VCDPA requirements into their existing privacy policies and procedures. The key features of the VCDPA are summarized below. Continue Reading And Then There Were Two: The Commonwealth of Virginia Joins California in Enacting Comprehensive Privacy Rights Law

Over the years on Taft’s Privacy and Data Security Insights, we have written on the risk of data breaches and the specific impact on privacy, or the compromise of confidentiality of personally identifiable information. However, many clients forget to also consider the value in other information they possess, specifically proprietary information, information subject to trade secret, and intellectual property. Today we will discuss how failing to account for intellectual property in your data security program can be costly, especially in the event of a data breach.

Intellectual property and specifically patent protection is a critical component for the success of many U.S. businesses, both large and small. As the desire to obtain patent protection grows, so too does the occurrence of data theft and other data breaches.  Therefore, companies need to know whether an invention is still patentable if the propriety information underlying the invention is the subject of a data breach or other cyber security failure. The question applies whether a data breach is accidental or malicious and whether it is perpetrated by an outside source or by an employee of the company.  The answer is the same: the patent rights are likely forfeited.

Continue Reading Data Breaches Ain’t Just About Privacy: Risking the Loss of Patent Rights by Data Breach with Subsequent Disclosure

The number of internet users in China has rapidly increased to over 900 million individuals as of March 2020.  As internet availability continues to rise in China and the country’s digital community grows in virtually all industries and populations, the People’s Republic of China is keying into the fact that foreign and domestic businesses seeking to capitalize on China’s market must adhere to rules regarding processing and transferring personal information across China’s borders.

On October 21, 2020, the National People’s Congress Standing Committee unveiled its draft Personal Information Protection Law (PIPL) to the public for view and comment.  If enacted, PIPL will be China’s comprehensive law on the protection of personal data.  The necessity of PIPL was cited in part by the National People’s Congress Standing Committee due to China’s explosive growth of information integration and the amount of personal data collected.  The Committee asserted that protection of its citizen’s personal information was of utmost importance for economic development and that there needed to be clear requirements in order to strengthen personal information protection.  Interestingly, PIPL provides numerous data protection principles similar to those we have seen enacted under the European Union’s General Data Protection Regulation and the California Consumer Privacy Act.  Specifically, the draft PIPL appears to take on general principles of transparency, fairness, limitations of purpose for data processing, retention limitations, and accountability.  Some of the more notable items within the draft PIPL include: Continue Reading China’s Personal Information Protection Law (PIPL) – Data Privacy in the Land of Big Data

Each month, new developments in European privacy law demonstrate both how the times are changing, and how the 2010 Standard Contractual Clauses are increasingly antiquated.  Last month, the Commission of the European Union (the “Commission”) published two preliminary implementing decisions:

(1) a draft new set of standard contractual clauses for transfers of personal data from the EU to third countries (the “Cross-Border SCCs”); and

(2) a draft of new standard contractual clauses for certain clauses in controller-processor data processing agreements (“DPAs”) pursuant to Article 28(7) of the General Data Protection Regulations (“GDPR”).

Both drafts, available here, were widely anticipated following the Court of Justice of the European Union (“CJEU”) Schrems II decision, which invalidated the EU-US Privacy Shield framework for cross-border data transfer. Once approved, these new clauses will replace the previous standard contractual clauses used by organizations as an appropriate safeguard for making international transfers of personal data under GDPR.

Continue Reading Oh the Times (and the Clauses), They are a-Changing’