data security

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On April 30, 2018, the U.S. Federal Trade Commission (FTC) released for public comment an administrative complaint and proposed consent agreement with mobile phone manufacturer BLU Products Inc. and its owner and president. Although the FTC has entered into many settlements relating to privacy and data security, this proposed settlement is particularly noteworthy for two reasons: (1) the FTC allegation that a company’s failure to implement appropriate security procedures to oversee a vendor’s security practices (including a lack of vendor due diligence) can violate Section 5 of the Federal Trade Commission Act; and (2) the proposed remedy includes a separate notice and affirmative opt-in consent relating to collection, use, and sharing of certain consumer information. BLU does not admit or deny any of the FTC’s allegations.

On January 10, 2017, the EU Commission published a package of documents on the EU’s data economy strategy, including e-privacy, data protection and the “European Data Economy.” The Commission documents,  published in the context of the Commission’s digital single market (“DSM”) initiative announced in May 2015, illustrate again the strong links between the EU’s digital regulatory strategy, data protection, intellectual property and antitrust policy, notably including the Commission’s preliminary report on its sector inquiry on e-commerce, also launched in May 2015.

Last week, the Hollywood Presbyterian Medical Center was able to successfully negotiate the release of a collection of system resources and data files that had been encrypted and held hostage by ransomware attackers. Ransomware is a peculiar type of malware that is not designed or intended to steal personal or confidential information. Rather, ransomware is built to exploit the inherent value assigned to data security and control, by taking it away from the user. It does this by combing for critical system files and potentially valuable user data (word documents, excel spreadsheets, pdf files, outlook messages, and the like).  As these target files are identified, a strong encryption algorithm is applied to prevent infected computer systems from properly functioning while inhibiting bewildered users from accessing their own files, unless and until the attackers are paid to provide the decryption key.

On December 15, the Civil Liberties Committee (LIBE) of the European Parliament issued a press release announcing a provisional political agreement between the European Parliament and Council negotiators on the texts of both the General Data Protection Regulation and the Police & Judicial Cooperation Data Protection Directive.  Formal approval by the Council is expected shortly and by the European Parliament in early 2016, after which the legislation will be published in the Official Journal.  The new provisions will apply two years later, in the first quarter of 2018.

On June 11, 2015, Connecticut Governor Dannel Malloy signed Senate Bill 949  (“S.B. 949”) into law.  This new law imposes a various new requirements relating to data breach response and notification, including imposing a hard 90-day deadline for data breach reporting and requiring that entities regulated by the Connecticut Insurance Department to implement and maintain a “comprehensive information security program” to protect personal information.  The various sections of  S.B. 949  take effect in stages, with some having taken effect on July 1, 2015, and others becoming effective as late as October 1, 2017.