Over recent months, numerous state regulators, including in Massachusetts, Texas, and New Jersey, have been exercising greater oversight of cryptocurrency businesses.[1]  On April 17, 2018, the office of the New York Attorney General Eric Schneiderman (“NYAG”) launched the Virtual Markets Integrity Initiative, which will seek information from various platforms that trade cryptocurrencies to better protect consumers.  The initiative responds to concerns that cryptocurrency trading platforms may not provide consumers with the same information available from traditional exchanges.  As part of the initiative, the NYAG’s Investor Protection Bureau sent thirteen major cryptocurrency trading platforms questionnaires relating to internal policies, controls, and best practices.  The Bureau intends to consolidate and disseminate to consumers the information it receives. Continue Reading New York Attorney General Becomes Most Recent State Regulator To Foray Into Cryptocurrency Oversight

Earlier this week, the U.S. District Court for the Northern District of California (Hon. James Donato) held in Patel v. Facebook Inc.,[1] that plaintiffs had standing to pursue a putative data privacy class action against Facebook alleging that the company had “collected users’ biometric data secretly and without consent.”[2]  The decision is the latest to weigh in on the injury allegations necessary for standing purposes under the Illinois Biometric Information Privacy Act[3] (“BIPA”), which regulates the collection and storage of biometric information, and provides a private right of action to a “person aggrieved by a violation.”  In finding that standing was met, the Facebook decision arguably applied a lower injury threshold than other courts have interpreted to be the outer boundaries for pleading an Article III injury under BIPA.  Continue Reading Data Privacy Class Action Against Facebook Survives Motion To Dismiss

Earlier this year, U.S. Customs and Border Protection (“CPB”) revealed that, in 2017, it searched the electronic devices of approximately 50 percent more travelers than it had in the previous year. The same day, it announced that it was issuing new search guidelines for the first time since August 2009. Continue Reading New Rules for Searching Electronic Devices at the U.S. Border

In the wake of recent high-profile data breaches and in the absence of federal data protection legislation, states continue to propose new laws aimed at protecting the personal data of their residents.  On January 23, 2018, the Senate Judiciary Committee of South Dakota approved and forwarded for consideration by the full senate a bill that would require companies and individuals who operate and collect personal data in South Dakota to report data breaches affecting residents of the state within 60 days of discovery and, if more than 250 residents are affected by a data breach, to the Attorney General and consumer reporting agencies as well.  Following a number of comments received from state business associations, the Senate Judiciary Committee added to the proposed bill a threshold for risk of harm such that if, pursuant to “an appropriate investigation” and following notice to the Attorney General, a company reasonably determines that a breach is not likely to result in harm to an affected South Dakota resident, then notice to such resident is not required.  Failure to comply with the breach notification law could constitute a “deceptive act or practice” under state law enforceable by the Attorney General, who is also empowered under the law to recover civil damages not to exceed $10,000 per violation per day.  The bill will next be considered by the full senate and if passed, would leave Alabama as the sole U.S. state without a consumer data breach notification law. Continue Reading South Dakota and Colorado are Latest States to Propose New Data Privacy Laws

On January 18, the Federal Trade Commission (“FTC”) released its Privacy & Data Security Update: 2017, describing its activities in the areas of consumer privacy and data security during the past year.

The report highlights the breadth of the FTC’s enforcement actions, both under Section 5 of the FTC Act, which prohibits unfair or deceptive practices in the marketplace and is the FTC’s primary tool with respect to consumer privacy and data security, and under various sector specific laws, such as the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act (the Safeguards Rule, Privacy Rule and Regulation P), the Children’s Online Privacy Protection Act and the Telemarketing Sales Rule (Do Not Call provisions).  The report also describes the FTC’s efforts to enforce international privacy frameworks, including the FTC’s first three enforcement actions under the EU-U.S. Privacy Shield framework.  Finally, the report highlights the FTC’s efforts in other areas, such as advocacy, consumer education, business guidance and policy development.

The full report can be found here.

Over the last year, the existential risk posed by cyberattacks and data security vulnerabilities has become one of the top concerns for boards of directors, management, government agencies, and the public.

This memo surveys some of the key cybersecurity and data privacy developments of 2017, including the major data breaches and cyberattacks, regulatory and legislative actions, and notable settlements and court decisions, with an eye towards what may be in store in 2018.

The new mandatory personal data breach notification regime introduced by the GDPR should be a key area of focus for organizations seeking to put in place GDPR compliance programs.  Personal data breaches are not only increasingly frequent and on the front pages, they are also one of the most likely causes of complaints being made by individuals against an organization and most likely subjects of investigation by data protection authorities (“DPAs”).  Regardless of whether an organization is at fault in allowing a breach to occur, its response will materially affect the impact of the breach on data subjects, and therefore the potential consequences for the organization itself.  Personal data breach management – of which breach notification forms a large part – should therefore be a priority area in any organization’s compliance efforts, including with respect to the GDPR.  Continue Reading Notification of data breaches under the GDPR – 10 Frequently Asked Questions

On December 27, 2017, the New York Secretary of State sent a demand letter to Equifax Inc.’s interim CEO requesting additional information to aid the Division of Consumer Protection’s efforts “to investigate, mediate and/or mitigate identity theft complaints from consumers generally” as well as its investigation into the data breach disclosed by Equifax, Inc. on July 29, 2017, in which the personal data of approximately 143 million individuals (including 8.4 million New York residents) was compromised.  The letter demands that Equifax, Inc. provide a direct contact to respond to consumer concerns and requests information in 10 categories, including (a) a summary of the credit reporting agency’s plan (if any) to make affected New York residents “whole” following the breach, (b) a copy of the forensic review prepared by the cybersecurity firm Mandiant, (c) New York-specific data for those consumers whose credit card details or dispute documents containing personally identifiable information were exposed in the breach and (d) the number of children 15 years old and younger affected by the breach, nationwide as well as within New York, and the “long-term protection response” (if any) created for such affected children.  The demand was made pursuant to emergency regulations adopted by the Department of State in December 2017 that require credit reporting agencies to respond to requests made by the Division of Consumer Protection within 10 business days.  A company spokesperson for Equifax, Inc. confirmed on January 4, 2018 that the credit reporting agency intends to respond to the demand letter within the required time period.  This demand is the latest development in a plethora of investigations by various law enforcement agencies and regulators into the breach and follows requests for information from all 50 state attorneys general as well as a subpoena from the New York Department of Financial Services (“DFS”). Continue Reading New York Regulator Demands Additional Information from Equifax

A recent decision by an intermediate Illinois appellate court, Rosenbach v. Six Flags Entm’t Corp.,[1] suggests that state courts—which are not bound by federal Article III standing limitations in entertaining suits—will not necessarily provide a more plaintiff-friendly forum for data privacy suits than their federal counterparts.

Earlier this month, we wrote about the Second Circuit’s summary order in Vigil v. Take-Two Interactive Software, Inc.[2]  There, the court affirmed the dismissal of a class action lawsuit brought in the Southern District of New York under the Illinois Biometric Information Privacy Act[3] (“BIPA”) for want of Article III standing because the plaintiffs had failed to allege an injury-in-fact, but remanded the case with instructions to amend the judgment and enter a dismissal without prejudice.[4]  The district court had ruled that the BIPA’s limitation of the private right of action to a “person aggrieved by a violation” meant that the plaintiffs’ failure to allege an injury-in-fact was also fatal to their claims as a matter of state law, meaning that the case should be dismissed with prejudice for failure to state a claim.[5]  The Second Circuit vacated that portion of the ruling on jurisdictional grounds, which left the door open for the plaintiffs to attempt to bring their claims in state court without any allegation of actual harm. Continue Reading Illinois Appellate Court Holds That Mere Technical Violations Of Data Privacy Statute Are Insufficient To State A Claim

In late November, the Second Circuit issued a summary order in Vigil v. Take-Two Interactive Software, Inc,[1] which affirmed the dismissal of a class action lawsuit brought in the Southern District of New York under the Illinois Biometric Information Privacy Act (“BIPA”) for lack of standing.[2]  In doing so, the court followed established Second Circuit precedent and highlighted the continuing difficulties plaintiffs face in establishing standing for certain technical violations of data privacy statutes, when those violations are unaccompanied by allegations of a breach or likelihood of improper access.  The case also serves as a reminder that as states pass statutes covering new types of technology and data, companies will need to remain vigilant in protecting a wider range of information than before. Continue Reading Second Circuit Issues Order Affirming Dismissal of Data Privacy Class Action Suit