Privacy & Information Security Law Blog

On August 6, 2018, the Federal Trade Commission published a notice seeking public comment on whether the FTC should expand its enforcement power over corporate privacy and data security practices. The notice, published in the Federal Register, follows FTC Chairman Joseph Simons’ declaration at a July 18 House subcommittee hearing that the FTC’s current authority to do so, under Section 5 of the FTC Act, is inadequate to deal with the privacy and security issues in today’s market.

On July 19, 2018, the French Data Protection Authority (“CNIL”) announced that it served a formal notice to two advertising startups headquartered in France, FIDZUP and TEEMO. Both companies collect personal data from mobile phones via software development kit (“SDK”) tools integrated into the code of their partners’ mobile apps—even when the apps are not in use—and process the data to conduct marketing campaigns on mobile phones.

On July 12, 2018, two U.S. Senators sent a letter to the Federal Trade Commission asking the agency to investigate the privacy policies and practices of smart TV manufacturers. In their letter, Senators Edward Markey (D-MA) and Richard Blumenthal (D-CT) note that smart TVs can “compile detailed profiles about users’ preferences and characteristics” which can then allow companies to personalize ads to be sent to “customers’ computers, phones or any other device that shares the smart TV’s internet connection.”

On July 11, 2018, computer manufacturer Lenovo Group Ltd. (“Lenovo”) agreed to a proposed $8.3 million settlement in the hopes of resolving consumer class claims regarding pop-up ad software Lenovo pre-installed on its laptops. Lenovo issued a press release stating that, "while Lenovo disagrees with allegations contained in these complaints, we are pleased to bring this matter to a close after 2-1/2 years."

On June 28, 2018, the Governor of California signed AB 375, the California Consumer Privacy Act of 2018 (the “Act”). The Act introduces key privacy requirements for businesses, and was passed quickly by California lawmakers in an effort to remove a ballot initiative of the same name from the November 6, 2018, statewide ballot. We previously reported on the relevant ballot initiative. The Act will take effect January 1, 2020.

On June 25, 2018, the New York Department of Financial Services (“NYDFS”) issued a final regulation (the “Regulation”) requiring consumer reporting agencies with “significant operations” in New York to (1) register with NYDFS for the first time and (2) comply with the NYDFS’s cybersecurity regulation. Under the Regulation, consumer reporting agencies that reported on 1,000 or more New York consumers in the preceding year are subject to these requirements, and must register with NYDFS on or before September 1, 2018. The deadline for consumer reporting agencies to ...

As reported in BNA Privacy Law Watch, a new law makes data protection a constitutional right in Chile. The measure, which was enacted by the National Congress of Chile, lists “protection of one’s personal data” as an individual right under the Constitution’s Article 19. As a result of this measure, Chilean courts must expedite privacy-related cases under constitutional protection.

On June 21, 2018, California lawmakers introduced AB 375, the California Consumer Privacy Act of 2018 (the “Bill”). If enacted and signed by the Governor by June 28, 2018, the Bill would introduce key privacy requirements for businesses, but would also result in the removal of a ballot initiative of the same name from the November 6, 2018, statewide ballot. We previously reported on the relevant ballot initiative.

Recently, Iowa and Nebraska enacted information security laws applicable to personal information. Iowa’s law applies to operators of online services directed at and used by students in kindergarten through grade 12, whereas Nebraska’s law applies to all commercial entities doing business in Nebraska who own or license Nebraska residents’ personal information.

On July 1, 2018, HB 183, which amends Virginia’s breach notification law, will come into effect (the “amended law”). The amended law will require income tax return preparers who prepare individual Virginia income tax returns to notify the state’s Department of Taxation (the “Department”) if they discover or are notified of a breach of “return information.” Under the amended law, “return information” is defined as “a taxpayer's identity and the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, assessments, or tax payments.”

On November 6, 2018, California voters will consider a ballot initiative called the California Consumer Privacy Act (“the Act”). The Act is designed to give California residents (i.e., “consumers”) the right to request from businesses (see “Applicability” below) the categories of personal information the business has sold or disclosed to third parties, with some exceptions. The Act would also require businesses to disclose in their privacy notices consumers’ rights under the Act, as well as how consumers may opt out of the sale of their personal information if the business sells consumer personal information.

Recently, the Personal Data Collection and Protection Ordinance (“the Ordinance”) was introduced to the Chicago City Council. The Ordinance would require businesses to (1) obtain prior opt-in consent from Chicago residents to use, disclose or sell their personal information; (2) notify affected Chicago residents and the City of Chicago in the event of a data breach; (3) register with the City of Chicago if they qualify as “data brokers”; (4) provide specific notification to mobile device users for location services; and (5) obtain prior express consent to use geolocation data from mobile applications.

Recently, Colorado’s governor signed into law House Bill 18-1128 “concerning strengthening protections for consumer data privacy” (the “Bill”), which takes effect September 1, 2018. Among other provisions, the Bill (1) amends the state’s data breach notification law to require notice to affected Colorado residents and the Colorado Attorney General within 30 days of determining that a security breach occurred, imposes content requirements for the notice to residents and expands the definition of personal information; (2) establishes data security requirements applicable to businesses and their third-party service providers; and (3) amends the state’s law regarding disposal of personal identifying information.

Recently, Louisiana amended its Database Security Breach Notification Law (the “amended law”). Notably, the amended law (1) amends the state’s data breach notification law to expand the definition of personal information and requires notice to affected Louisiana residents within 60 days, and (2) imposes data security and destruction requirements on covered entities. The amended law goes into effect on August 1, 2018.

On June 6, 2018, the U.S. Court of Appeals for the Eleventh Circuit vacated a 2016 Federal Trade Commission (“FTC”) order compelling LabMD to implement a “comprehensive information security program that is reasonably designed to protect the security, confidentiality, and integrity of personal information collected from or about consumers.” The Eleventh Circuit agreed with LabMD that the FTC order was unenforceable because it did not direct the company to stop any “unfair act or practice” within the meaning of Section 5(a) of the Federal Trade Commission Act (the “FTC Act”).

On June 2, 2018, Oregon’s amended data breach notification law (“the amended law”) went into effect. Among other changes, the amended law broadens the applicability of breach notification requirements, prohibits fees for security freezes and related services provided to consumers in the wake of a breach and adds a specific notification timing requirement.

On May 24, 2018, the Federal Trade Commission granted final approval to a settlement (the “Final Settlement”) with PayPal, Inc., to resolve charges that PayPal’s peer-to-peer payment service, Venmo, misled consumers regarding certain restrictions on the use of its service, as well as the privacy of transactions. The proposed settlement was announced on February 27, 2018. In its complaint, the FTC alleged that Venmo misrepresented its information security practices by stating that it “uses bank-grade security systems and data encryption to protect your financial information.” Instead, the FTC alleged that Venmo violated the Gramm-Leach-Bliley Act’s (“GLBA’s”) Safeguards Rule by failing to (1) have a written information security program; (2) assess the risks to the security, confidentiality and integrity of customer information; and (3) implement basic safeguards such as providing security notifications to users that their passwords were changed. The complaint also alleged that Venmo (1) misled consumers about their ability to transfer funds to external bank accounts, and (2) misrepresented the extent to which consumers could control the privacy of their transactions, in violation of the GLBA Privacy Rule.

On April 11, 2018, Arizona amended its data breach notification law (the “amended law”). The amended law will require persons, companies and government agencies doing business in the state to notify affected individuals within 45 days of determining that a breach has resulted in or is reasonably likely to result in substantial economic loss to affected individuals. The old law only required notification “in the most expedient manner possible and without unreasonable delay.” The amended law also broadens the definition of personal information and requires regulatory notice and notice to the consumer reporting agencies (“CRAs”) under certain circumstances.

On May 14, 2018, the Centre for Information Policy Leadership (“CIPL”) at Hunton Andrews Kurth LLP published a study on how the ePrivacy Regulation will affect the design and user experiences of digital services (the “Study”). The Study was prepared by Normally, a data product and service design studio, whom CIPL had asked for an independent expert opinion on user experience design.

On March 28, 2018, Alabama became the final state in the U.S. to enact a data breach notification law. The Alabama Data Breach Notification Act of 2018 (S.B. 318) (“the Law”) goes into effect on June 1, 2018.

As reported in BNA Privacy Law Watch, on March 21, 2018, South Dakota enacted the state’s first data breach notification law. The law will take effect on July 1, 2018, and includes several key provisions:

On February 26, 2018, the United States Court of Appeals for the Ninth Circuit ruled in an en banc decision that the “common carrier” exception in the Federal Trade Commission Act is “activity-based,” and therefore applies only to the extent a common carrier is engaging in common carrier services. The decision has implications for FTC authority over Internet service providers, indicating that the FTC has authority to bring consumer protection actions against such providers to the extent they are engaging in non-common carrier activities. The Federal Communications Commission (“FCC”) has previously ruled that Internet access service is not a common carrier service subject to that agency’s jurisdiction.

On February 27, 2018, the Federal Trade Commission (“FTC”) announced an agreement with PayPal, Inc., to settle charges that its Venmo peer-to-peer payment service misled consumers regarding privacy and the extent to which consumers’ financial accounts were secured. This is the second significant FTC settlement in the past three months that addressed these issues, following the FTC’s action against TaxSlayer, Inc. and signals a renewed focus by the FTC on violations of the Gramm-Leach-Bliley Act’s (“GLBA’s”) Privacy and Safeguards Rules.

On February 22, 2018, the Federal Trade Commission (“FTC”) published a blog post that provides tips on how consumers can use Virtual Private Network (“VPN”) apps to protect their information while in transit over public networks. The FTC notes that some consumers are finding VPN apps helpful in protecting their mobile device traffic over Wi-Fi networks at coffee shops, airports and other locations. Through a VPN app, a user can browse websites and use apps on their mobile devices, still shielding the traffic from prying eyes as it transmits via public networks.

On February 6, 2018, the Federal Trade Commission (“FTC”) released its agenda for PrivacyCon 2018, which will take place on February 28. Following recent FTC trends, PrivacyCon 2018 will focus on privacy and data security considerations associated with emerging technologies, including the Internet of Things, artificial intelligence and virtual reality. The event will feature four panel presentations by over 20 researchers, including (1) collection, exfiltration and leakage of private information; (2) consumer preferences, expectations and behaviors; (3) economics, markets and experiments and (4) tools and ratings for privacy management. The FTC’s press release emphasizes the event’s focus on the economics of privacy, including “how to quantify the harms that result when companies fail to secure consumer information, and how to balance the costs and benefits of privacy-protective technologies and practices.”

On January 18, 2018, the Federal Trade Commission (“FTC”) released its 2017 Privacy & Data Security Update (the “Report”). The annual Report, which summarizes the privacy and data security-related activities conducted by the FTC over the past year, is broken down into five key areas: (1) enforcement; (2) advocacy; (3) workshops; (4) reports and surveys; (5) consumer education and business guidance; and (6) international engagement.

Read the full Report.

On January 10, 2018, the Law of 3 December 2017 creating the Data Protection Authority (the “Law”) was published in the Belgian Official Gazette. The Law was submitted in the Chamber of Representatives on August 23, 2017, and was approved by the Parliament in plenary meeting on November 16, 2017.

On January 9, 2018, the FTC issued a paper recapping the key takeaways from the FTC’s and National Highway Traffic Safety Administration’s June 2017 workshop on privacy and security issues involving connected cars. The workshop featured representatives from consumer groups, industry, government and academia.

On December 18, 2017, the French data protection authority (“CNIL”) publicly announced that it served a formal notice to WhatsApp regarding the sharing of WhatsApp users’ data with Facebook Inc. (“Facebook”). This decision, dated November 27, 2017, follows the CNIL’s investigations regarding Facebook’s 2014 acquisition of WhatsApp. In 2016, WhatsApp updated its Terms of Service and Privacy Policy to reflect the sharing of information with Facebook. Following this update, the Article 29 Working Party (“Working Party”) requested explanations from WhatsApp on its data processing practices and data sharing, and asked the company to stop sharing data for targeted advertising purposes. The Working Party also gave a mandate to its subgroup in charge of the cooperation on investigations and sanctions to coordinate actions of the relevant national data protection authorities. It is in that context that the CNIL started its investigation of WhatsApp’s data processing practices.

On December 12, 2017, the Federal Trade Commission hosted a workshop on informational injury in Washington, D.C., where industry experts, policymakers, researchers and legal professionals considered how to best characterize and measure potential injuries and resulting harms to consumers when information about them is misused or inappropriately protected.

Recently, the Federal Trade Commission released the final agenda for a workshop being held on December 12, 2017, that will address the various consumer injuries that result from the unauthorized access to or misuse of consumers’ personal information.

On November 8, 2017, Sears Holding Management Corporation (“Sears”) requested that the FTC reopen and modify a 2009 Commission Order (the “Order”) settling charges that Sears inadequately disclosed the scope of consumer data collected through the company’s software application. The initial FTC complaint alleged that Sears represented to consumers that its downloadable software application would track users’ “online browsing,” but in fact tracked nearly all of the users’ Internet behavior. Sears petitioned the FTC to modify the Order’s definition of ...

On November 8, 2017, the FTC announced a settlement with Georgia-based online tax preparation service, TaxSlayer, LLC (“TaxSlayer”), regarding allegations that the company violated federal rules on financial privacy and data security. According to the FTC’s complaint, malicious hackers were able to gain full access to nearly 9,000 TaxSlayer user accounts between October 2015 and December 2015. The hackers allegedly used the personal information contained in the users’ accounts, including contact information, Social Security numbers and financial information, to engage in tax identify theft and obtain tax refunds through filing fraudulent tax returns. The FTC charged TaxSlayer with violating the Gramm-Leach-Bliley Act’s Safeguards Rule and Privacy Rule. 

Recently, the Office of the Privacy Commissioner of Canada (“OPC”) issued its 2017 Global Privacy Enforcement Network Sweep results (the “Report”), which focused on certain privacy practices of online educational tools and services targeted at classrooms. The OPC examined the privacy practices of two dozen educational websites and apps used by K-12 students. The “sweep” sought to replicate the consumer experience by interacting with the websites and apps, and recording the privacy practices and controls in place. The overarching theme of the Report is “user controls over personal information,” which the OPC further refined into four subthemes: (1) transparency, (2) consent, (3) age-appropriate collection and disclosure, and (4) deletion of personal information.

On October 19, 2017, the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs (“LIBE Committee”) narrowly voted to approve an amended version of the e-Privacy Regulation (“Regulation”). The committee vote is an important step in the process within the European Parliament. This vote will be followed by a vote of the European Parliament in its plenary session on October 23-26. If the plenary also votes in favor, the European Parliament will have a mandate to begin negotiations with the Member States in the Council. If these negotiations (commonly known as “trilogue”) succeed, the Regulation will be adopted.

On October 19, 2017, the White House announced that President Donald J. Trump plans to nominate two individuals to serve as commissioners of the Federal Trade Commission. President Trump selected Joseph Simons to lead the FTC as its chairman for a seven-year term, beginning September 26, 2017. Simons’ background primarily has focused on antitrust matters. From June 2001 to August 2003, he led the FTC’s antitrust initiative as Director of the FTC’s Bureau of Competition.

On September 5, 2017, the FTC announced that Lenovo, Inc. (“Lenovo”) agreed to settle charges that its preloaded software on some laptop computers compromised online security protections in order to deliver advertisements to consumers. The settlement agreement (the “Settlement”) is between Lenovo, the FTC and 32 State Attorneys General. 

On July 28, 2017, the FTC published the second blog post in its “Stick with Security” series. As we previously reported, the FTC will publish an entry every Friday for the next few months focusing on each of the 10 principles outlined in its Start with Security Guide for Businesses. This week’s post, entitled “Start with security – and stick with it,” looks at key security principles that apply to all businesses regardless of their size or the types of data they handle.

On July 21, 2017, New Jersey Governor Chris Christie signed a bill that places new restrictions on the collection and use of personal information by retail establishments for certain purposes. The statute, which is called the Personal Information and Privacy Protection Act, permits retail establishments in New Jersey to scan a person’s driver’s license or other state-issued identification card only for the following eight purposes:

On July 5, 2017, the FTC announced that Blue Global Media, LLC (“Blue Global”) agreed to settle charges that it misled consumers into filling out loan applications and then sold those applications, including sensitive personal information contained therein, to other entities without verifying how consumers’ information would be used or whether it would remain secure. According to the FTC’s complaint, Blue Global claimed it would connect loan applicants to lenders from its network of over 100 lenders in an effort to offer applicants the best terms. In reality, Blue Global “sold very few of the loan applications to lenders; did not match applications based on loan rates or terms; and sold the loan applications to the first buyer willing to pay for them.” The FTC alleged that, contrary to Blue Global’s representations, the company provided consumers’ sensitive information—including SSN and bank account number—to buyers without consumers’ knowledge or consent. The FTC further alleged that, upon receiving complaints from consumers that their personal information was being misused, Blue Global failed to investigate or take action to prevent harm to consumers.

On June 12, 2017, a putative class action was filed in the U.S. District Court for the Northern District of Georgia against Tempur Sealy International, Inc. and Aptos, Inc. Tempur Sealy is a mattress, bedding and pillow retailer based in Lexington, Kentucky. Aptos is headquartered in Atlanta, Georgia, and formerly hosted and maintained Tempur Sealy’s website and online payment system. The plaintiff alleges that the breach was discovered in November of 2016 and involved the exposure of payment card data and other PII of an undisclosed number of Tempur Sealy customers.   

On June 5, 2017, an Illinois federal court ordered satellite television provider Dish Network LLC (“Dish”) to pay a record $280 million in civil penalties for violations of the FTC’s Telemarketing Sales Rule (“TSR”), the Telephone Consumer Protection Act (“TCPA”) and state law. In its complaint, the FTC alleged that Dish initiated, or caused a telemarketer to initiate, outbound telephone calls to phone numbers listed on the Do Not Call Registry, in violation of the TSR. The complaint further alleged that Dish violated the TSR’s prohibition on abandoned calls and assisted and facilitated telemarketers when it knew or consciously avoided knowing that telemarketers were breaking the law.

On May 25, 2017, Oregon Governor Kate Brown signed into law H.B. 2090, which updates Oregon’s Unlawful Trade Practices Act by holding companies liable for making misrepresentations on their websites (e.g., in privacy policies) or in their consumer agreements about how they will use, disclose, collect, maintain, delete or dispose of consumer information. Pursuant to H.B. 2090, a company engages in an unlawful trade practice if it makes assertions to consumers regarding the handling of their information that are materially inconsistent with its actual practices. Consumers can ...

On May 23, 2017, various attorneys general of 47 states and the District of Columbia announced that they had reached an $18.5 million settlement with Target regarding the states’ investigation of the company’s 2013 data breach. This represents the largest multi-state data breach settlement achieved to date.

On May 22, 2017, New York Attorney General Eric T. Schneiderman announced that the AG’s office has reached a settlement (the “Settlement”) with Safetech Products LLC (“Safetech”) regarding the company’s sale of insecure Bluetooth-enabled wireless doors and padlocks. In a press release, Schneiderman indicated that this “marks the first time an attorneys general’s office has taken legal action against a wireless security company for failing to protect their [customers’] personal and private information.”

On May 12, 2017, a massive ransomware attack began affecting tens of thousands of computer systems in over 100 countries. The ransomware, known as “WannaCry,” leverages a Windows vulnerability and encrypts files on infected systems and demands payment for their release. If payment is not received within a specified time frame, the ransomware automatically deletes the files. A wide range of industries have been impacted by the attack, including businesses, hospitals, utilities and government entities around the world.

On April 6, 2017, New York Attorney General Eric T. Schneiderman announced that privacy compliance company TRUSTe, Inc., agreed to settle allegations that it failed to properly verify that customer websites aimed at children did not run third-party software to track users. According to Attorney General Schneiderman, the enforcement action taken by the NY AG is the first to target a privacy compliance company over children’s privacy.

On April 4, 2017, the Massachusetts Attorney General’s office announced a settlement with Copley Advertising LLC (“Copley”) in a case involving geofencing.

Recently, Virginia passed an amendment to its data breach notification law that adds state income tax information to the types of data that require notification to the Virginia Office of the Attorney General in the event of unauthorized access and acquisition of such data. Under the amended law, an employer or payroll service provider must notify the Virginia Office of the Attorney General after the discovery or notification of unauthorized access and acquisition of unencrypted and unredacted computerized data containing a Virginia resident’s taxpayer identification number in combination with the income tax withheld for that taxpayer. 

On March 17, 2017, the Federal Trade Commission announced that Upromise, Inc., (“Upromise”) agreed to pay $500,000 to settle allegations (the “Settlement”) that it violated the terms of a 2012 consent order (the “2012 Order”) that required Upromise to provide notice to consumers regarding its data collection and use practices, and obtain third-party audits.

On March 17, 2017, retailer Neiman Marcus agreed to pay $1.6 million as part of a proposed settlement (the “Settlement”) to a consumer class action lawsuit stemming from a 2013 data breach that allegedly compromised the credit card data of approximately 350,000 customers.

On March 1, 2017, the Federal Communications Commission (“FCC”), under the new leadership of Chairman Ajit Pai, voted 2-1 to issue a temporary stay of the data security obligations of the FCC’s Broadband Consumer Privacy Rules (the “Rules”), which were to go into effect March 2, 2017. The temporary stay will remain in place until the FCC is able to act on pending petitions for reconsideration.

On February 22, 2017, the Federal Trade Commission announced that it had reached settlement agreements (“the Proposed Agreements”) with three U.S. companies charged with deceiving consumers about their participation in the Asia-Pacific Economic Cooperation Cross-Border Privacy Rules (“APEC CBPR”) system. The three companies are Sentinel Labs, Inc. (which provides endpoint protection software), SpyChatter, Inc. (which markets a private messaging app) and Vir2us, Inc. (which distributes cybersecurity software). In separate complaints, the FTC alleged that each company falsely represented in its online privacy policy that it participated in the APEC CBPR program (“the Program”), when in fact none of the companies have ever been certified as required by the Program. The Program requires participants to undergo a review by an APEC-recognized accountability agent, whose review certifies that participants meet the Program’s standards. The Program is based on nine data privacy principles: preventing harm, notice, collection limitation, use choice, integrity, security safeguards, access and correction, and accountability.

On February 17, 2017, Horizon Blue Cross Blue Shield of New Jersey (“Horizon”) agreed to pay $1.1 million as part of a settlement with the New Jersey Division of Consumer Affairs (the “Division”) regarding allegations that Horizon did not adequately protect the privacy of nearly 690,000 policyholders.

On February 6, 2017, the FTC announced that it has agreed to settle charges that VIZIO, Inc. (“VIZIO”), installed software on about 11 million consumer televisions to collect viewing data without consumers’ knowledge or consent. The stipulated federal court order requires VIZIO to pay $2.2 million to the FTC and New Jersey Division of Consumer Affairs. 

On February 1, 2017, the U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) announced a $3.2 million civil monetary penalty against Children’s Medical Center of Dallas (“Children’s”) for alleged ongoing violations of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) Privacy and Security Rules, following two consecutive breaches of patient electronic protected health information (“ePHI”). This is the third enforcement action taken by OCR in 2017, following the respective actions taken against MAPFRE Life Insurance of Puerto Rico and Presence Health earlier in January.

On January 23, 2017, the FTC released a Staff Report (the “Report”) on cross-device tracking technology that can link multiple Internet-connected devices to the same person and track that person’s activity across those devices. The Report follows a November 2015 workshop on the same subject and is based on information and comments gathered during that workshop.

On December 21, 2016, the Financial Industry Regulatory Authority (“FINRA”) announced that it had fined 12 financial institutions a total of $14.4 million for improper storage of electronic broker-dealer and customer records. Federal securities law and FINRA rules require that business-related electronic records be kept in “write once, read many” (“WORM”) format, which prevents alteration or destruction. FINRA found that the 12 sanctioned firms had failed to store such records in WORM format, in many cases for extended periods of time.

On December 20, 2016, the FTC announced that it has agreed to settle charges that Turn Inc. (“Turn”), a company that enables commercial brands and ad agencies to target digital advertising to consumers, tracked consumers online even after consumers took steps to opt out of tracking.

On December 14, 2016, the FTC announced that the operating companies of the AshleyMadison.com website (collectively, the “Operators”) have settled with the FTC and a coalition of state regulators over charges that the Operators deceived consumers and failed to protect users’ personal information. The FTC worked with a coalition of 13 states, the Office of the Privacy Commissioner of Canada and the Office of the Australian Information Commissioner to resolve this matter, which was initiated in the wake of the website’s July 2015 data breach.

On December 1, 2016, the nonpartisan Commission on Enhancing Cybersecurity (the “Commission”), established in February 2016 by President Obama as part of a $19 billion Cybersecurity National Action Plan, issued its Report on Securing and Growing the Digital Economy (the “Report”), which includes recommended actions that the government and private sector can take over the next 10 years to improve cybersecurity.

On November 30, 2016, the FTC released a staff summary (the “Summary”) of a public workshop called Putting Disclosures to the Test. The workshop, which was held on September 15, 2016, examined ways of testing and evaluating company disclosures regarding advertising claims and privacy practices. The Summary reviews the workshop and its key takeaways.

On November 19, 2016, the French government enacted a bill creating a legal basis for class actions against data controllers and processors resulting from data protection violations. The bill, which aims to facilitate access to justice for French citizens, establishes a general class action regime and includes specific provisions regarding data protection violations. These provisions go beyond the class action provisions already in place for consumers by adding, within the context of the French Data Protection Act of 1978 (“Loi Informatique et Libertés”), a right to class actions for data protection violations regardless of industry sector.

On November 14, 2016, Lincoln Financial Securities Corp. (“LFS”), a subsidiary of Lincoln Financial Group, entered into a settlement (the “Settlement”) with the Financial Industry Regulatory Authority (“FINRA”), requiring LFS to pay a $650,000 fine and implement stronger cybersecurity protocols following a 2012 hack into its cloud-based server.

As reported on the Insurance Recovery blog, earlier this week, retailer Tesco Plc’s (“Tesco”) banking branch reported that £2.5 million (approximately $3 million) had been stolen from 9,000 customer bank accounts over the weekend in what cyber experts said was the first mass hacking of accounts at a western bank. The reported loss still is being investigated by UK authorities, but is believed to have occurred through the bank’s online banking system. The loss, which is about half of what Tesco initially estimated, is still substantial and serves as a strong reminder that ...

On October 25, 2016, the United States Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued an advisory entitled Advisory to Financial Institutions on Cyber-Events and Cyber-Enabled Crime (the “Advisory”), to help financial institutions understand how to fulfill their Bank Secrecy Act obligations with regard to cyber events and cyber-enabled crime. The Advisory indicates that SAR reporting is mandatory for cyber events where the financial institution “knows, suspects or has reason to suspect a cyber-event was intended, in whole or in part, to conduct, facilitate, or affect a transaction or a series of transactions….” Implementing this new guidance will require increased collaboration between AML and cybersecurity or IT departments in large institutions, and may create challenges for smaller banks that are more likely to outsource their cybersecurity functions.

On November 1, 2016, the FTC announced that a group of entities known as the Consumer Education Group (“CEG”) settled FTC charges that, between late 2013 and 2015, it made millions of telemarketing calls, including pre-recorded robocalls, to consumers on the national Do Not Call (“DNC”) Registry, in violation of the Telemarketing Sales Rule (“TSR”).

This post has been updated. 

On October 27, 2016, the Federal Communications Commission (“FCC”) announced the adoption of rules that require broadband Internet Service Providers (“ISPs”) to take steps to protect consumer privacy (the “Rules”). According to the FCC’s press release, the Rules are intended to “ensure broadband customers have meaningful choice, greater transparency and strong security protections for their personal information collected by ISPs.” 

On October 14, 2016, California Attorney General Kamala D. Harris announced the release of a publicly available online form that will enable consumers to report potential violations of the California Online Privacy Protection Act (“CalOPPA”). CalOPPA requires website and mobile app operators to post a privacy policy that contains certain specific content.

Recently, the Centre for Information Policy Leadership (“CIPL”) at Hunton & Williams LLP, a privacy and information policy think tank based in Brussels, London and Washington, D.C., and Telefónica, one of the largest telecommunications company in the world, issued a joint white paper on Reframing Data Transparency (the “white paper”). The white paper was the outcome of a June 2016 roundtable held by the two organizations in London, in which senior business leaders, Data Privacy Officers, lawyers and academics discussed the importance of user-centric transparency to the data driven economy.

On October 13, 2016, Elizabeth Denham, the UK Information Commissioner, suggested that directors of companies who violate data protection laws should be personally liable to pay fines at a House of Commons Public Bill Committee meeting when discussing the latest draft of the Digital Economy Bill (the “Bill”). The Bill is designed to enable businesses and individuals to access fast, digital communications services, promote investment in digital communications infrastructure and support the “digital transformation of government.” Measures to improve the digital landscape contained in the Bill include the introduction of a new Electronic Communications Code and more effective controls to protect citizens from nuisance calls. More controversially, however, the Bill also contains provisions both enabling and controlling the sharing of data between public authorities and private companies.

On October 27, 2016, the Federal Communications Commission (“FCC”) will vote on whether to finalize proposed rules (the "Proposed Rules”) concerning new privacy restrictions for Internet Service Providers (“ISPs”). The Proposed Rules, which revise previous versions introduced earlier this year, would require customers’ explicit (or “opt-in”) consent before an ISP can use or share a customer’s personal data, including web browsing and app usage history, geolocation data, children’s information, health information, financial information, email and other message contents and Social Security numbers.

On October 3, 2016, the Texas Attorney General announced a $30,000 settlement with mobile app developer Juxta Labs, Inc. (“Juxta”) stemming from allegations that the company violated Texas consumer protection law by engaging in false, deceptive or misleading acts or practices regarding the collection of personal information from children.

On September 23, 2016, the European Data Protection Supervisor (the “EDPS”) released Opinion 8/2016 (the “Opinion”) on the coherent enforcement of fundamental rights in the age of big data. The Opinion updates the EDPS’ Preliminary Opinion on Privacy and Competitiveness in the Age of Big Data, first published in 2014, and provides practical recommendations on how the EU’s objectives and standards can be applied holistically across the EU institutions. According to the EDPS, the Digital Single Market Strategy presents an opportunity for a coherent approach with respect to the application of EU rules on data protection, consumer protection, antitrust enforcement and merger control. In addition, the EDPS calls for greater dialogue and cooperation between data protection, consumer and competition authorities in order to protect the rights and interests of individuals, including the rights to privacy, freedom of expression and non-discrimination.

On September 15, 2016, the New Jersey Senate unanimously approved a bill that seeks to limit retailers’ ability to collect and use personal data contained on consumers’ driver and non-driver identification cards. The bill, known as the Personal Information and Privacy Protection Act, must now be approved by the New Jersey Assembly.

On August 29, 2016, the Federal Trade Commission announced that it is seeking public comment on the Gramm-Leach-Bliley Act (“GLB”) Safeguards Rule. The GLB Safeguards Rule, which became effective in 2003, requires financial institutions to develop, implement and maintain a comprehensive information security program to safeguard customer information.

On August 25, 2016, WhatsApp announced in a blog post that the popular mobile messaging platform updated its Terms of Service and Privacy Policy to permit certain information sharing with Facebook. After Facebook acquired WhatsApp in 2014, the Director of the FTC’s Bureau of Consumer Protection wrote a letter to both Facebook and WhatsApp that discussed the companies’ obligations to honor privacy statements made to consumers in connection with the acquisition.

The State Administration for Industry and Commerce of the People’s Republic of China published a draft of its Implementing Regulations for the P.R.C. Law on the Protection of the Rights and Interests of Consumers (the “Draft”) for public comment. The draft is open for comment until September 5, 2016.

On July 29, 2016, the Federal Trade Commission (“FTC”) announced that it had issued an opinion and final order concluding that LabMD, Inc. (“LabMD”) violated the unfairness prong of Section 5 of the FTC Act by failing to maintain reasonable security practices to protect consumers’ sensitive personal information. The unanimous decision reverses a November 2015 administrative law judge’s initial decision that, as we previously reported, dismissed the FTC’s charges against LabMD for failing to show that LabMD’s allegedly unreasonable data security practices caused, or were likely to cause, substantial consumer injury.

On June 29, 2016, the Federal Trade Commission announced that, to account for inflation, it is increasing the civil penalty maximums for certain violations of the FTC Act effective August 1, 2016. The FTC’s authority for issuing these adjustments comes from the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The Federal Register Notice indicates which sections of the FTC Act the adjustments will apply to, and the corresponding increases. For example, the FTC has increased the maximum fine from $16,000 to $40,000 for certain violations of Section 5 of ...

On June 22, 2016, the Federal Trade Commission announced a settlement with Singaporean-based mobile advertising network, InMobi, resolving charges that the company deceptively tracked hundreds of millions of consumers’ locations, including children, without their knowledge or consent. Among other requirements, the settlement orders the company to pay $950,000 in civil penalties. 

On June 15, 2016, the U.S. Department of Commerce’s National Telecommunications and Information Administration (“NTIA”) announced that its multistakeholder process to develop a code of conduct regarding the commercial use of facial recognition technology had concluded with the group reaching a consensus on a best practices document. As we previously reported, the NTIA announced the multistakeholder process in December 2013 in response to the White House’s February 2012 privacy framework, which directed the NTIA to oversee the development of codes of conduct that specify how the Consumer Privacy Bill of Rights applies in specific business contexts.

TCCWNA. The very acronym evokes head scratches and sighs of angst and frustration among many lawyers in the retail industry. You have probably heard about it. You may have even been warned about it. And you may currently be trying to figure out how best to minimize your risk and exposure this very moment. But what is it and why has virtually every retailer been hit with a TCCWNA class action demand letter or lawsuit in the past few months? And why are most retailers scrambling to update the terms and conditions of their websites?

On June 8, 2016, the Federal Trade Commission announced that Practice Fusion, an electronic health records company, agreed to settle FTC charges that the company misled consumers about the privacy of doctor reviews submitted to the company.

The Federal Trade Commission announced that it will host a workshop on September 15, 2016, “Putting Disclosures to the Test,” on the efficacy and costs of consumer disclosures in advertising and privacy policies. Planned discussion topics include examining disclosures meant to avoid deception in advertising, disclosures designed to inform consumers of data tracking, and industry-specific disclosures for jewelry, environmental and fuel-saving claims. The workshop is open to the public and will take place at the FTC’s Constitution Center offices in Washington, D.C ...

On June 1, 2016, a new do-not-call list (the “BLOCTEL list”) was implemented in France. French residents who do not wish to receive marketing phone calls may register their landline or mobile phone number online at www.bloctel.gouv.fr.

As we previously reported, the Supreme Court’s decision in Spokeo v. Robins has been nearly universally lauded by defense counsel as a new bulwark against class actions alleging technical violations of federal statutes. It may be that. But Spokeo also poses a significant threat to defendants by defeating their ability to remove exactly the types of cases that defendants most want in federal court. The decision circumscribes the federal jurisdiction, with all its advantages, that defendants have enjoyed under Class Action Fairness Act (“CAFA”) for the past decade.

On May 9, 2016, the Federal Trade Commission announced it had issued Orders to File a Special Report (“Orders”) to eight mobile device manufacturers requiring them to, for purposes of the FTC’s ongoing study of the mobile ecosystem, provide the FTC with “information about how [the companies] issue security updates to address vulnerabilities in smartphones, tablets, and other mobile devices.” The FTC’s authority to issue such Orders comes from Section 6(b) of the FTC Act.

On May 4, 2016, the Federal Trade Commission issued a press release announcing its recent settlement with the hand-held vaporizers manufacturer, Very Incognito Technologies, Inc. (“Vipvape”). The FTC had charged Vipvape with falsely claiming that it was a certified company under the Asia-Pacific Economic Cooperation (“APEC”) Cross-Border Privacy Rules (“CBPR”) framework. The settlement prohibits Vipvape from misleading consumers about its participation in any privacy and security certification program, including the APEC CBPR framework. This is the first CBPR-related case taken up by the FTC.

On April 13, 2016, Nebraska Governor Pete Ricketts signed into law LB 835 (the “Bill”), which among other things, adds a regulator notification requirement and broadens the definition of “personal information” in the state’s data breach notification statute, Neb. Rev. Stat. §§ 87-802 to 87-804. The amendments take effect on July 20, 2016.

In its third simulated test of the security of the power grid, the North American Reliability Corporation (“NERC”) reported general progress across the electric utility industry in defending against physical and cyber threats, while also identifying several areas for further improvement.

The NERC exercise, dubbed GridEx III, took place over two days in November 2015 and involved more than 4,400 individuals from 364 industry, law enforcement and government organizations across the United States, Canada and Mexico. The main objectives of the exercise were to test crisis response and recovery, improve communication, identify problem areas and engage senior-level leadership in the organizations involved.

On April 6, 2016, the Federal Trade Commission formally welcomed the updated Recommendation on Consumer Protection in E-commerce (the “Recommendation”) issued by the Organization for Economic Cooperation and Development (“OECD”) on March 24, 2016, endorsing the Recommendation’s broadened scope and increased consumer protections that “are designed to strengthen consumers’ trust in the expanding electronic marketplace.”

On March 24, 2016, Tennessee Governor Bill Haslam signed into law S.B. 2005, as amended by Amendment No. 1 to S.B. 2005 (the “Bill”), which makes a number of changes to the state’s data breach notification statute, Tenn. Code § 47-18-2107. The amendments take effect on July 1, 2016.

On March 18, 2016, a report was released by a joint team from the North American Electric Reliability Corporation’s Electricity Information Sharing Analysis Center and SANS Industrial Control Systems. According to the report, the cyber attack against a Ukrainian electric utility in December 2015 that caused 225,000 customers to lose power for several hours was based on months of undetected reconnaissance that gave the attackers a sophisticated understanding of the utility’s supervisory control and data acquisition networks.

On March 2, 2016, the Consumer Financial Protection Bureau (“CFPB”) reached a settlement with Dwolla, Inc. (“Dwolla”), an online payment system company, to resolve claims that the company made false representations regarding its data security practices in violation of the Consumer Financial Protection Act. Among other things, the consent order imposes a $100,000 fine on Dwolla. This marks the first data security-related fine imposed by the CFPB.

On February 23, 2016, the Federal Trade Commission announced that it reached a settlement with Taiwanese-based network hardware manufacturer ASUSTeK Computer, Inc. (“ASUS”), to resolve claims that the company engaged in unfair and deceptive security practices in connection with developing network routers and cloud storage products sold to consumers in the U.S.

On February 16, 2016, California Attorney General Kamala D. Harris released the California Data Breach Report 2012-2015 (the “Report”) which, among other things, provides (1) an overview of businesses’ responsibilities regarding protecting personal information and reporting data breaches and (2) a series of recommendations for businesses and state policy makers to follow to help safeguard personal information.

A federal judge of the U.S. District Court for the Northern District of Illinois denied Neiman Marcus’ motion to dismiss in Remijas et al. v. Neiman Marcus Group, LLC, 1:14-cv-01735.  As we previously reported, the Seventh Circuit reversed Judge James B. Zagel’s earlier decision dismissing the class action complaint based on Article III standing. At that time the Seventh Circuit declined to analyze dismissal under Federal Rule of Civil Procedure 12(b)(6) due to, among other reasons, the district court’s focus on standing.

On December 28, 2015, the People's Bank of China published Administrative Measures for Online Payment Business of Non-bank Payment Institutions (the “Measures”). The Measures were enacted to provide further details on the regulation of online payment businesses, in supplement to the earlier Administrative Measures for the Payment Services of Non-financial Institutions (the “2010 Measures”), published by the People's Bank of China on June 14, 2010. The 2010 Measures regulated the conduct of all payment services, including both online payment methods and three other types of payment methods, by all types of Non-bank Payment Institutions (“NBPIs”). The newer Measures are more focused and apply only to online payment methods, and only to NBPIs which have already obtained a Payment Business License and are engaged in an online payment business.

On January 5, 2016, the Federal Trade Commission announced that dental office management software provider, Henry Schein Practice Solutions, Inc. (“Schein”), agreed to settle FTC charges that accused the company of falsely advertising the level of encryption it used to protect patient data. The proposed Agreement Containing Consent Order (“Consent Order”) stems from an FTC complaint that alleged the company engaged in unfair or deceptive acts or practices by falsely representing that the Dentrix G5 software used industry-standard encryption and helped dentists protect patient data in accordance with the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).