A few weeks ago, many Americans on the east coast spent several days scrambling for gas when Colonial Pipeline halted systems for 5,500 miles of pipeline as a precautionary measure after being hit by a ransomware attack. Highly publicized, the Colonial Pipeline ransomware attack is just one of many that have been hitting companies small and large. Healthcare has been a prime target, but other industries are equally at risk, and critical national infrastructure now appears to be a target. In 2020, over 2,000 local governments, health care facilities and schools were victims of ransomware. Continue Reading STEP UP SECURITY TO PROTECT YOUR ORGANIZATION FROM CRIPPLING RANSOMWARE ATTACKS
Organizations large and small across all industries collect and process personal information, be it user information, customer information or employee information. Some of this information may be sensitive, other information may be subject to stricter laws in other countries. In our practice, among the many data protection requirements to which an organization may be subject (depending on a number of circumstances), security is one that too many organizations overlook. To some extent, this may be due to the fact that – with the exception of some sector-specific rules – many laws relating to the protection of personal information are non-specific when it comes to security standards. For a variety of reasons, data protection laws tend to espouse a somewhat esoteric notion of “reasonable” security measures commensurate to the sensitivity of the data and the nature of the processing – much to the chagrin of organizations hoping to easily ascertain the practical scope of their obligation to protect data. However, encryption is one method that is often specifically cited when it comes to data protection standards.
What is Encryption?
At a high level, encryption is the process of scrambling information and rendering it unintelligible, such that only someone with a “key” can decipher and read it. Simply put, an algorithm encrypts the data and the encryption key enables the receiving party to decrypt it. Data prior to encryption is referred to as plaintext, while the scrambled information is referred to as ciphertext. Only an authorized party with a key should (in theory) be able to revert ciphertext to plaintext – hence the term “decipher” – in order to access and read the data in its original state.
Data can be encrypted at rest and/or in transit, and there are different categories/levels of encryption, none of which we address here because this is, after all, a legal blog. Suffice to say, however, that encryption, when properly implemented, is generally viewed as a strong way to secure personal information.
Encryption for Data Protection
Many, if not most, U.S. state data breach laws exempt companies from their notification requirements where the personal information subject to the unauthorized access is encrypted, provided of course that the encryption key has also not been accessed or acquired. This is because encrypted data is unintelligible to those who have nefariously gained access to it, so long as the encryption key was not also accessed. Likewise, personal information that is encrypted will not trigger the CCPA’s limited (and potentially costly) private right of action in the event of a data breach. On the flip side, if certain types of personal information are subject to an unauthorized access and exfiltration, theft, or disclosure and are unencrypted, the CCPA carries statutory damages ranging from $100-$750 per consumer per incident or actual damages, whichever is greater. This can add up very quickly. Organizations that appropriately encrypt personal information and suffer a data breach may therefore be significantly more protected from fines and litigation.
On the other side of the pond, the GDPR specifically mentions the use of encryption as a technical and organizational measure (security), and in 2018, the then-Article 29 Working Party noted that the availability of strong and efficient encryption is a necessity in order to guarantee the protection of individuals with regard to the confidentiality and integrity of their data which are the elementary underpinning of the digital economy. More recently, the CJEU’s Schrems II case, which invalidated the Privacy Shield and generated confusion as to the validity of transfers of personal data outside of the EEA (read more here), brought encryption to the forefront. Among the technical supplementary measures identified to mitigate risks to data subjects, many pointed to the need for encryption, including the European Data Protection Board, which noted that encryption could constitute an adequate safeguard so long as keys remain within the EU or trusted third countries. Organizations that appropriately encrypt personal information may therefore also be in a better position to receive transfers of personal data from controllers in the EU. If your organization provides services that involve processing personal data to customers in the EEA, it will help as you navigate the increasingly prevalent requests for transfer impact assessments.
Other laws also specifically refer to encryption as a method for protecting personal information. Overall, while encryption is often a topic of debate especially when it comes to law enforcement, the general consensus is that appropriate encryption can enable organizations to demonstrate at least some level of data protection (though encryption alone is not sufficient).
What Should Organizations Consider with Respect to Encryption?
There are, of course, residual risks to encryption: even if a system uses encryption, certain data (e.g., metadata) may still be subject to an unauthorized access. In addition, encryption keys must be kept secure to avoid compromise. The loss of a key (even in the absence of an unauthorized access) is equally problematic because this will preclude anyone from accessing the data, and could, under certain circumstances, constitute a data breach. Additionally, key re-use should be avoided. In other words, using cryptography is one thing, but getting it right is equally as important. Nevertheless, organizations should learn to love encryption – and properly implement it. Among other things, it can be a “get out of jail free” card for data breaches, and it will boost your customers’ confidence in your ability (and willingness) to secure data.
Data privacy and security terms have become ubiquitous in software license agreements, including in both hosted service agreements and software license agreements. Security terms have been the norm for many years in the SaaS world, where the software licensor is hosting a customer’s data. However, in more recent years, much to the chagrin of small start-up software licensors of on-premise software, security terms and guarantees are now an expected part of the deal, even if the terms tend to be shorter in length and more limited in scope. Given the increasing importance – and inherent risks – of storing data, customers are understandably still concerned with data privacy and security even where a vendor is not actually hosting or storing their data. Continue Reading Why Security Matters Even More for On-premise Software Vendors
In recent months, there has been increased chatter about “dark patterns” in user interfaces, and it’s only getting louder. When we think of dark patterns, we often think of features that make it more difficult to cancel subscriptions, or that (mis)lead us to sign up for a product or service despite our best intentions. However, dark patterns also impact data privacy in a number of ways. Continue Reading How Dark Patterns May be Chipping Away at Your Company’s Privacy Compliance Efforts
The Commonwealth of Virginia is on the verge of becoming the second state with a consumer data protection law. The Consumer Data Protection Act (“CDPA”), which awaits signature by Governor Northam (who is expected to sign the bill into law), would go into effect on January 1, 2023. Like California’s CCPA (and CPRA, also set to take effect January 1, 2023), the CDPA establishes a “comprehensive” framework for the collection and use of personal data of Virginia residents while also (and ironically) not applying to companies across the board. The CDPA would apply “to persons that conduct business in the Commonwealth or produce products or services that are targeted to residents of the Commonwealth and that (i) during a calendar year, control or process personal data of at least 100,000 consumers or (ii) control or process personal data of at least 25,000 consumers and derive over 50 percent of gross revenue from the sale of personal data.” Unlike CCPA, the CDPA does not contain an “annual revenue” threshold. Continue Reading States Are “Stepping Up” to the Privacy Plate. Who’s Next? Virginia.
Online advertising – or “adtech”, as it is often referred to – does not mix well with many privacy laws, beginning with the GDPR. In recent years since GDPR went into effect, privacy advocates have increased their demands on EU regulators to more deeply scrutinize targeting practices and how data is shared within the advertising ecosystem, in particular when it comes to real-time bidding (RTB). Complaints have been filed by many privacy-minded organizations, and all of them allege that, by its very nature, RTB constitutes a “wide-scale and systemic” breach of Europe’s privacy laws. This is because RTB relies on the massive collection, accumulation and dissemination of detailed behavioral data about individuals who use the internet. Continue Reading Key Takeaways from the Recent Grindr Decision and “Tentative” $11M Fine
Happy new year from our team at Hopkins & Carley! With each new year comes a host of bright new intentions. As each of us knows all too well, some will stick and others will quickly be forgotten. As a reminder to stay the course when it comes to data privacy and security, this year we kick off our 2021 to-do (and not-to-do) list. Rather than focus on privacy and security predictions for 2021, we wanted to share a list of action items based on some of the hard-learned lessons from 2020, as well as trends that we expect to continue into 2021. 2020 was a very busy and tumultuous year in the privacy and security world, and this will certainly also be the case in 2021. Companies that handle personal information must juggle an increasing number of laws, regulations, business-mandated requirements and risks. With that, here are a few things to keep in mind as we enter 2021: Continue Reading Our Privacy & Security 2021 To-Do (and Not-To-Do) List: Lessons Learned From a Year Like No Other
We saw a few developments on the privacy and security front these past few weeks, so rather than our usual approach of focusing on one issue, this post will highlight a few noteworthy stories.
Data retention. It’s not something that excites and invigorates businesses. But it is a necessary cost of doing business, not only to ensure one retains certain data for as long as each applicable law requires, but also as an increasingly important risk mitigation strategy.
Determining how long to retain a type of data or record depends on several factors. Various laws and regulations mandate that businesses retain certain records and data for minimum time periods. Statutes of limitation on certain types of claims also guide businesses as to how long to retain certain data. Conversely, privacy laws have always included a component of data minimization requiring businesses not to “hoard” data. Taken as a whole, these different rules require businesses to strike the right balance between retaining data for at least the properly mandated period and not retaining it for longer than necessary. Now, getting this right is even more important with the increasing risks of class action lawsuits for data security breaches. Quite simply, the more data you have, the more data you can lose. Having bastions of data will further complicate the tracking of data that may have been accessible to or taken by an unauthorized third party. This is one reason why, despite requirements to promptly notify individuals that their data was accessed in a security breach, businesses may take months to provide the notifications to individuals. Continue Reading Data Retention – More than Meets the Eye
With the adoption of more stringent privacy laws across the globe, we have seen an exponential increase in privacy technology (or “tech”) vendors offering automated privacy compliance solutions. Among other things, privacy tech vendors provide software and services to assist companies with a whole range of services, including data inventory and mapping, privacy assessments, compliance reports and risk management, as well as policies, individual rights automation and other records that may be required as part of an organization’s compliance obligations. Many privacy tech vendors pitch their solutions to organizations as designed to “easily” assist with ongoing global compliance with the aid of automation and/or algorithms. Depending on the price that you are willing to pay, relying on these solutions can indeed be helpful to automate certain aspects of privacy compliance, including data mapping, consent mechanisms, records of processing or individual rights management. However, in their marketing materials, many privacy tech vendors – big or small, paid or free – caution companies that using legal professionals for privacy compliance will simply be too costly. Based on our experience, this is misleading at best, and a recent situation really reveals just that. Continue Reading Lessons on Hidden Costs of Privacy Tech Vendors