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The Data Breach Monster, Establishing Trusting Relationships and other PPS Takeaways

I had the pleasure this week of attending our Practical Privacy Series event in New York City. The program featured three tracks: Data Breach, Financial Services and Online Marketing. Though I didn’t get a chance to attend every session, each day was packed with professional and practical insight for privacy pros. I’ve attempted to put together some—just some—of the highlights. This barely scratches the surface of all that was covered. But, as you’ll see, we have included many of the speaker PowerPoint presentations for those wanting to delve further into the facts and figures.

The Big Bogeyman: The Data Breach

As Wilson Sonsini Goodrich Attorney Gerry Stegmaier, CIPP/US, put it, “Information is the asset class of the 21st century.” And nothing compromises that asset more than a data breach.

But determining what is an incident versus an actual breach is key. An incident is simply a matter of fact that must be assessed. Must I notify? Should I notify? Whereas a breach is a matter of legal obligation of notification, he said.

And that’s why internal logging is so important. Based on his experience working with companies that have suffered a breach, Stegmaier said, organizations often could have had better logging processes. It not only helps with breach forensics, but, when dealing with a regulator, logging allows you to quickly demonstrate the extent to which internal systems have been violated, often avoiding a more expansive investigation from said regulator.

Stegmaier aptly put it this way: “Have you ever seen a fire investigator run into a building when it’s on fire? There is a fine balance between investigating an incident and announcing a breach. You can only let the cat out of the bag once.”

And once it’s been determined a breach has occurred, internal and external communications are really important. “People don’t want to hear from lawyers,” Stegmaier pointed out. It might make more sense to get your marketing or communications teams on board.

RAND Corp.'s Sasha Romanosky discussing his research on breach litigation

As I reported this week, regulators will appreciate timely, proactive self-reporting, so report soon, but only after a breach has been defined. And remember, law enforcement isn’t necessarily going to help a company deal with their breach problem. Expect interview requests and have forensics data available to help tell your story.

And for the payment card industry, watch out for blacklisting. If merchants breach agreements with their processors and subsequently refuse to pay the fines or penalties from them, they face the prospect of being blacklisted, not only from that processor, but from others as well.

In the healthcare industry, according to Stegmaier, the focus for an organization shouldn’t be “whether I’m a business associate or not,” but “what are we doing to safeguard data that may be sensitive?”

RAND Corporation Associate Policy Researcher Sasha Romanosky recently conducted research on breach litigation and some of the results may be of note. Offering credit reporting often helps prevent litigation, according to the study. And, surprisingly perhaps, RAND’s research suggests that breach defendants may be settling their cases too soon.

But no matter what, it’s clear that regulators—both at the state and federal levels—do not take kindly to poor data protection practices. They’re not going to bust an organization for the tiniest of violations, but if you’re not keeping up with known industry best practices, or injecting privacy considerations in from the beginning of system, process or product design, you’re walking a razor-thin line. As one regulator plainly said, encrypt your data, and you’re essentially “off the hook.” FTC Consumer Protection Bureau Deputy Director Daniel Kaufman also said that appropriate employee training and ensuring that the CPO is not sitting in an isolated corner somewhere will help an organization meet good privacy standards.

Christopher Wolf moderating a panel on Emerging Trends in Cross-Border Transfer

For considerations outside the scope of the U.S., Morrison & Foerster Partner Miriam Wugmeister presented the slew of non-U.S.-based breach notification obligations. If you’re doing business in South Korea, pay attention!

Trust, Trust and More Trust

Developing trusting relationships was a major theme throughout the event, particularly during the Financial Services track. One attendee asked privacy researcher Larry Ponemon, CIPP/US, where organizations should allocate budgets in order to cultivate trust. Ponemon said consumer education and outreach is hugely important and giving consumers tools to opt out are good areas in which to invest.

The recent Snowden disclosures have significantly eroded trust between many nations (particularly those in the EU) and the U.S., thus making the already-challenging cross-border transfer frameworks much more challenging. Keep an eye on the state of Safe Harbor and the U.S.-EU trade negotiations.

For businesses introducing new technology, particularly in the mobile landscape, simple moves such as just-in-time disclosures, easy-to-read notification and tools for opting out of tracking will help drive trust.

And according to a recent survey, privacy is beginning to be considered a top ten risk for an organization. Privacy pros have their work cut out for them, but (as our CEO Trevor Hughes is fond of saying from the podium at our events) at least there’s some job security there.

Written By

Jedidiah Bracy, CIPP/E, CIPP/US


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