This year’s Super Bowl is at Levi’s Stadium in Santa Clara, California. Organizers are touting free, open and fast-paced wireless service. According to The Atlantic, the stadium will have 13,000 Wi-Fi access points, about one every 10 feet. (Click here for The Atlantic)
An estimated 100,000 devices are expected to be connected to the stadium network, including devices belonging to high ranking corporate officials who may be carrying a lot of sensitive data on their I-Phones and I-Pads. The FBI is warning fans not to be tricked into logging on to the wrong wireless network. Other security experts recommend cash payments when buying that beer or foam finger.
Russian hackers are suspected in a cyber attack on a Ukrainian electrical grid which would be the first time a cyber attack caused widespread electrical outage. U.S. firm blames Russian ‘Sandworm’ hackers for Ukraine outage.
On December 23, a large swath of the Ukraine involving about 700,000 homes was without power for several hours. It would be the first documented case of a cyber attack on an electrical power facility that caused an electrical blackout. The suspected malware is a virus called Black Energy. It is believed to have entered the system through a mundane phishing attack on email.
“It is a milestone,” said John Hultquist, director of cyber espionage analysis at iSight Partners. “We’ve definitely seen targeted destructive events against energy before – oil firms for example – but never the event which causes a blackout.”
Attempted cyber attacks on power infrastructures are not a new concern, but a successful one is, even for US power sources that are well defended. Among the many issues raised by such an event is whether the next phase of cyber problems has arrived and will eventually overtake claims for privacy breaches.
Late on December 17, 2015, Houston-based Landry’s Inc. announced a massive, network-wide credit card breach affecting its restaurants. Landry’s owns and operates over 500 restaurants, including well-known chains such as Bubba Gump’s, Rainforest Café, Mastro’s Restaurants, McCormick and Schmick’s, Morton Steakhouse and Claim Jumper. According to Kreb’s on Security, the breach may date back to May 2015 and in some cases, may be continuing. It is not clear yet how many restaurant chains are affected.
While Landry’s is investigating the scope of the breach (which the company expects could take weeks or months), it believes that the breach exposed data available on the magnetic stripe of credit cards, which includes consumer names, card numbers, expiration dates and verification codes. According to Kreb’s, banks have detected fraudulent charges. Although Landry’s is implementing an upgraded and more secure payment processing system, it believes that the breach began before the new system’s installation.
From an insurance perspective, what may make this breach different (and worse) is the sheer number of entities under the same corporate umbrella. Unlike the Anthem breach which targeted just Anthem, even though the fall-out reached multiple health plans, the Landry’s breach may involve multiple entities: individual restaurants and chains. If different restaurants and chains qualify as named insureds under a Landry’s policy, then insurers may be looking at a type of aggregation scenario: one insured is actually dozens of insureds, and they all have the same breach. But even if each restaurant has its own policy, they may come after Landry’s as the gateway to the breach.
Under either scenario, insurers will be getting to know the Landy’s breach in 2016.
On October 27, 2015 the U.S Senate passed by a vote of 74-21 the Cyber Information Sharing Act of 2015 (CISA). The bill allows government agencies and businesses to share information about cybersecurity threats with one another. Shared information is supposed to consist of “threat indicators” such as technical information about the type of malware used or how hackers cover their tracks once they penetrate a system. Bill sponsors say that shared information will help organizations better understand the source and type of attacks and therefore be better able to anticipate and defend against cyber attacks.
Companies are encouraged but not required to share cyber threat information with the Department of Homeland Security, which then shares information with other companies and government agencies. The bill requires companies and the DHS to scrub an individual’s personal information from the shared data. Participating companies are granted immunity for civil lawsuits brought by customers who sue for sharing private data.
The Senate bill was co-sponsored by Senate Intelligence Chair Richard Burr (R-North Carolina) and Vice Chair Sen. Diane Feinstein (D-California). Although supported by the White House and a wide range of business groups, the Senate bill was opposed by some legislators and technology companies such as Facebook, Google, Apple and Yahoo on grounds it provides too much data to government agencies without offering privacy protections for US citizens.
Senate bill 754 must be reconciled with similar legislation passed by the House of Representatives last April. A House-Senate agreement is not expected until 2016. Once signed into law by President Obama, the U.S. Attorney General has 180 days to finalize a plan for collecting and disseminating cyber threat data.
A PDF version of the 118-page bill can be found here: Senate Bill (S. 754) on Cyber Sharing (Passed Oct. 27, 2015) (01082756xAE57E)
Last week I attended the Privacy and Security Forum at George Washington University. Here are a few points to ponder.
•Privacy by design or privacy by default? Functionality requires design. Privacy by default means there is a malfunction.
•In a breach response, “privilege is the playbook.” Privilege determines who does what, when you do it, how you do it and who you share it with.
•In a breach response, proper communication is key, whether it be with the board, customers, insurers, law enforcement or regulators. Companies need to balance communications with running a business even though business instincts may be at odds with a legally sound breach response.
•Why do courts struggle to find harm in massive breach cases? Is it because the consequences of a breach – such as changing passwords- are considered just an inconvenience and not actual harm? Is a data breach too vague because it involves thousands of people with “innocuous” complaints?
•Is the health industry lulled into thinking that its “space” on the privacy spectrum is relatively settled, compared to other industries still sorting out which regulations even apply?
•E-commerce is tailored and targeted. Legal on-line price discrimination occurs when e-merchants adjust prices or display different offers to different users, depending on your browsing history, your device (Mac or PC, desktop or mobile) or your location.
The White House announced today that the US and China have reached a “common understanding” to protect intellectual property, trade secrets and confidential business information from cyber thefts. The parties agreed that neither government will conduct or knowingly support theft of intellectual property in order to gain a competitive advantage. The countries agreed to provide timely responses to requests for information about malicious online activities.
Each nation will designate representatives to discuss cyber theft issues. The US representatives are expected to be from the Department of Homeland Security, the FBI and the Justice Department. No meetings by the group will be held until 2016.
A wide gulf remains between the parties about how to prevent further attacks by China and any U.S. response. No specific breaches were mentioned, including the massive OPM breach which US experts believe was launched from China. The Chinese government has denied any involvement.
Putting aside the salacious details, there is something different about the Ashley Madison hack when compared to other high profile breaches at Anthem or Target.
The Ashley Madison breach revealed secrets that are now known forever. What makes the Ashley Madison attack feel different is that it involved personal and intimate information, disclosed for public shaming, not profit.
Following the recent breach at Ashley Madison, an on-line site dedicated to helping married people find others looking to have an extramarital affair, at least four lawsuits were filed in the US against Ashley Madison’s parent company, Avid Life Media (two in California, one in Texas, and one in Missouri) and at least one in Canada where Avid Life Media is based. All the suits have been filed by anonymous “Jane” or “John Doe” plaintiffs alleging breach of contract, negligent protection of customer data and violation of various state privacy laws. The lawsuits also allege that the Ashley Madison companies knew that their networks were insecure, which may find support if the recent speculation that the hack was an “inside job” by a disenchanted employee proves to be true.
While the legal allegations are familiar to anyone following data breach lawsuits, there is something different about data that was stolen here. Yes, credit card information was accessed, but the crux of the Ashley Madison hack was to share people’s secrets, specifically the identities of people who anonymously tried to pursue an affair. Ashley Madison promised anonymity but the breach erases that promise. In “hacker speak,” the practice of stealing and publishing private information about someone with malicious intent is known as “doxxing.”
Ashley Madison users, while not the most sympathetic group to experience an invasion of privacy, may be victims of a breach that cuts to the heart of what it means to have “private” information stolen. Credit cards can be replaced, but secrets cannot be unrevealed. It strikes the same chords as a recent “internet of things” story about hackers who could hack a baby monitor and view a sleeping child.
These types of hacks show that there does not have to be a monetary loss in order for the hacking of personal information to make an impact. For companies like Ashley Madison that market their ability to protect secrets and other personal, non-monetary information (i.e. information beyond social securities and credit card numbers), the loss of goodwill from a breach is potentially more threatening than the cost of replacing stolen credit cards or defending lawsuits. Such companies would be well-served to plan ahead and take extra precautions with their sensitive data.
On May 31, 2015 the Illinois legislature passed amendments that expanded the Illinois Personal Information Protection Act (“PIPA”). Illinois Senate Bill 1833
The amendments made three significant changes to the existing law. First, the amendments expanded the definition of “personal information” to include medical, health insurance, consumer marketing information, biometrics and geophysical location. The current statute limits “personal information” to social security, driver’s license and financial accounts. Second, any breach involving 250 or more Illinois residents required written notice to the Attorney General within 30 days. The bill laid out the contents of consumer notification letters depending on whether the entity owns or leases the data. Third, the amendments required conspicuous posting of privacy policies, such as linking and text size on the homepage or the first significant page after entering the web site.
But on August 21, Illinois Republican Governor Bruce Rauner executed an amendatory veto, sending the bill back to the Illinois senate. The governor said the bill “went too far” and was a “significant departure” from other state data protection laws including the expanded definition of personal information. Gov. Rauner stated that a 45-day notification period is more reasonable than 30. He indicated that he would re-consider the bill if his changes were adopted.
Click on the link for our article published in the September 2015 edition of Financier Worldwide entitled Effective Cyber Security to Combat Crime and Protect Data with ten practical tips for protecting data. It is also available through Bloomberg Law.
Financier Worldwide (September 2015)
Today the Court of Appeals for the Third Circuit handed down its much anticipated opinion in FTC v Wyndham Worldwide. (FTC-Wyndham Opinion (August 24, 2015) (01049741xAE57E)
In a significant victory for the FTC’s policing powers, the court ruled that the FTC has authority under the “unfairness and deceptive acts or practices” provision in Section 5 of the FTC Act to sue companies that fail to enact reasonable cybersecurity practices to protect consumer data.
The court rejected Wyndham’s claim that it was denied due process because the FTC has never declared what cybersecurity measures are unfair. The court stated that Wyndham is entitled only to “notice of the meaning of the statute and not to the agency’s interpretation of the statute.”
The case will proceed on the merits at the district court level.
The FTC action arose from three data breaches against Wyndham in 2008 and 2009 involving about 600,000 credit cards and $10M in losses.