Digital transformation,[1] the process of leveraging technology, people and processes to innovate, requires an “all-in, ongoing commitment to improvement.”[2] But the main drivers of digital transformation – data and profits – don’t always mesh seamlessly.

As shown by recent class actions filed against Blackbaud and Morgan Stanley, and a settlement with the New York Attorney General by Dunkin’ Brands, digital transformation has numerous cybersecurity issues that present legal obligations and potential liability.

Blackbaud

In May, Blackbaud, Inc., a company that provides cloud software services to thousands of non-profits including hospitals, suffered a ransomware attack.[3]  In July, it began informing its users of the attack, many of whom used Blackbaud to process personal and sensitive information.

On August 12, the first of many lawsuits was filed against Blackbaud.  Among the allegations in the lawsuit, Blackbaud is accused of failing to properly monitor its computer network and systems, failing to implement policies to secure communications, and failing to train employees.

The five years prior to the attack are telling.  In that timeframe, Blackbaud underwent a digital transformation that involved acquiring numerous other software platforms including a predictive modeling platform, and a software provider focused solely on corporate giving.

Since the ransomware attack, Blackbaud has published cybersecurity improvements that support adherence to industry standards for incident management, employee training, systems and network testing, risk assessments, application security, encryption, and end-user authentication.[4]
Continue Reading Digital Transformation – Cybersecurity Lessons from Recent Lawsuits

March 2020 will long be remembered as the month and year of en masse shutdowns.  But the pandemic has done little if anything to slow new cybersecurity and data privacy laws.  As highlighted below, regulations for one have been submitted (CA), another has gone into effect (NY), and yet another has been proposed (CA).

California Consumer Privacy Act (“CCPA”) Gets Confirmed by State Attorney General

After nine months, a lot of public input, and three proposed drafts, the regulations for enforcement of the CCPA have been submitted for approval.  The final text of the regulations demonstrates how granular enforcement could be.  Here are five examples:

  1.  A business’s required privacy policy must include the date it was last updated.
  2. A business must provide at least two methods for consumers to send requests for deletion of their information.
  3. A service provider can retain, use, or disclose information in certain circumstances, such as to detect security incidents even after a deletion request.
  4. A business must confirm within 10 days that it has received a request to know what it has collected from consumers.
  5. A business must have a documented policy for verifying the identity of a person making a request related to their personal information.

Continue Reading Coast to Coast and Back Again – Cybersecurity and Data Privacy Rules

As this recent article illustrates, many ransomware operators are now collecting information from victims before encrypting their data, and then threatening to release what they’ve collected – or actually releasing some of it – to increase the chance they’ll get paid. There have been many cases already where at least a portion of data has

The U.S. Department of Education released some FAQs related to the Family Educational Rights and Privacy Act (FERPA) and corona virus. The Department’s Student Privacy Policy Office prepared the FAQs to assist officials in educational agencies and institutions such as school districts, schools, colleges and universities in managing public health issues related to COVID-19 while

Last year the FTC mandated what an organization’s written cybersecurity program should include to avoid being deemed “unfair and deceptive” to consumers,[1] and this year California consumers whose personal information is compromised may file lawsuits against organizations that failed to implement “reasonable security.”[2]

But several states provide legal safe harbors to organizations with written cybersecurity programs. Now, Utah is considering joining them. Under House Bill 158, referred to as the Cybersecurity Affirmative Defense Act (the “Proposed Act”),[3] if at the time of a data breach a covered entity has created, maintained, and complied with a written cybersecurity program it has an affirmative defense to a civil tort claim.
Continue Reading Utah Considers a Cybersecurity Safe Harbor as Ransomware Runs Riot

As states fill the legal void for consumer privacy rights,[1] a new federal standard has emerged to assist companies with their compliance efforts. The National Institute of Standards and Technology (“NIST”) Privacy Framework (“PF”) was released last month to help organizations manage the risks associated with their data processing activities.

What the PF Does

Under the California Consumer Privacy Act, any California consumer whose personal information is compromised “as a result of the business’ violation of the duty to implement and maintain reasonable security procedures and practices … may institute a civil action.”[1]

Consumers can initiate this private right of action right now, whereas other consumer rights can only be enforced by the Attorney General beginning in July.[2]

Why This Matters

Most civil actions filed against companies during the last decade were dismissed. Why? Consumers were unable to demonstrate a suitable harm. Sure, cybersecurity incidents are a hassle for consumers to deal with, but that alone was not enough. Recently, however, courts have said “the hassle” is enough, at least for cases to proceed past their initial stages. This has led to a steady rise in both the number of cases that are settled and their dollar amounts.

Complicating things further, under the CCPA proving harm doesn’t necessarily matter. If personal information is compromised because of a failure to implement and maintain reasonable security, the CCPA quantifies harm to be “not less than one hundred dollars ($100) and not greater than seven hundred and fifty ($750) per consumer per incident” or an amount higher if proven.[3] What matters is whether your security is reasonable.

Google’s search engine defines reasonable as “as much is appropriate or fair.” For those who reminisce about how they spent three years in law school learning the many ways “reasonable” can be interpreted, the CCPA may trigger déjà vu; neither the CCPA nor its proposed regulations defines “reasonable security.” But reliable guidance is available.
Continue Reading CCPA Is Here – Is Your Security “Reasonable”?

On January 1, 2020, if your company sells goods or services to California consumers and meets certain criteria,[1] the agreements you have with companies that handle personal information on your behalf should be analyzed and, if necessary, updated just as your privacy notices should be updated.[2]

Examples of companies that handle personal information on a company’s behalf include marketing companies, managed security service providers (MSSP), and software-as-a-service (SaaS) providers such as payment processing, document and email management, and customer analytics companies.

Why this Matters

Under the California Consumer Privacy Act (“CCPA”), companies that handle consumer information on behalf of a company are “service providers.”[3] The CCPA requires that a company enter into an agreement with a service provider that

prohibits the entity receiving the information from retaining, using, or disclosing the personal information for any purpose other than for the specific purpose of performing the services specified in the contract for the business … [4]

This is important because the CCPA exempts a company for any violation of the CCPA if its service providers have executed an agreement and they, not the company providing the personal information, violates any of the rights given to California consumers under the CCPA.[5]
Continue Reading CCPA is Here – Are Your Agreements Ready?

Last year towards the end of May, a barrage of emails and pop-ups informed online users about how companies use cookies – small bits of software that track website activity – in accordance with a requirement under the European Union’s General Data Protection Regulation.

On January 1, 2020, many companies will inform consumers about updates to their privacy notices – agreements between companies and their consumers about how personal information is processed – in accordance with a requirement under the California Consumer Privacy Act (“CCPA”).

Why this Matters

A privacy notice (aka privacy policy or privacy statement) is typically the first place a company explains its practices for handling the personal information it collects.  Privacy notices have received considerable attention this year, not all of it positive.  You do not have to read all of the New York Times article, “We Read 150 Privacy Policies. They Were an Incomprehensible Disaster,” to know what it concluded.[1]  Similarly, an article titled “Are Organizations Ready for New Privacy Regulations?” summarizes the Online Trust Alliance’s analysis of 1,200 privacy statements and its view that many of these privacy notices could result in penalties for failing to follow new laws such as the CCPA.[2]  In addition, privacy notices have been the subject of litigation in cases asserting that the sale of customer information to non-affiliated entities for marketing purposes,[3] and the transfer of customer data in a merger, asset sale, or sale of customer information, were all improper because they violated companies’ privacy notices.[4]
Continue Reading CCPA is Here – Is Your Privacy Notice Ready?

Scammers are always seeking new ways to target victims for Business Email Compromise (BEC) scams, where they leverage email to try to convince you to give them credentials, send them confidential information like W2s, send them money by changing things like direct deposit instructions, or give any other data that can help them profit from