Category Archives: Cybersecurity & Cybercrime

Lessons from the iCloud Celebrity Hack

The highly publicized hacking of the iCloud accounts of dozens of celebrities was disclosed over Labor Day weekend and has raised larger, more serious concerns regarding the security of personal and corporate data held in the cloud.

Several explanations for how the hack was achieved have been offered, with some initial pointing the finger at potential flaws in Apple’s security system. In a press release on Tuesday, Apple denied that the hacking stemmed from “any breach in any of Apple’s systems,” and pointed to “a very targeted attack on user names, passwords and security questions,… More

New COPPA Safe Harbor Added By iKeepSafe

Last week, the FTC announced approval of a new Safe Harbor Program under the Children’s Online Privacy Protection Act (COPPA), called iKeepSafe. The program was created by the Internet Keep Safe Coalition, a nonprofit organization that describes its goal as the “creation of positive resources for parents, educators and policymakers who teach youths how to use new media devices and platforms in safe and healthy ways.”

The COPPA Rule affords some flexibility in compliance through use of a safe harbor provision, 16 C.F.R. § 312.10. The provision allows that operators – that is, persons who operate… More

State Securities Regulators in Massachusetts and Illinois Survey Investment Advisors on Cybersecurity Practices

Picking up on the SEC’s initiative to assess cybersecurity preparedness discussed here previously, state securities regulators in Massachusetts and Illinois sent to investment advisors registered in their respective states a survey on their cybersecurity practices.

The Massachusetts surveys were sent on June 3 and a response is due on June 24. William F. Galvin, Secretary of the Commonwealth, whose jurisdiction includes the Massachusetts Securities Division, was quoted saying: “With the almost universal reliance on computer trading and communication, it is essential that investors can be confident that their financial data is secure from unauthorized intrusion from whatever source…. More

The SEC’s Power to Take Enforcement Action Against Cybersecurity Violators

To buttress the SEC’s initiative to assess cybersecurity preparedness in its risk alert discussed here previously , the SEC also has the power to bring enforcement actions against registered entities that fail to meet cybersecurity requisites. Specifically, the SEC may bring an enforcement action against registered entities that violate the safeguards rule of Regulation S-P (17 CFR § 248.30(a)) (commonly referred to as the “Safeguards Rule”).

Under the Safeguards Rule, all registered entities must have written policies and procedures “designed to:

(a) Insure the security and confidentiality of customer records and information;

(b) Protect against… More

SEC Issues Risk Alert on Cybersecurity Initiative for Investment Advisers

Our colleagues Catherine M. Anderson and Jennifer M. Macarchuk have summarized the recent SEC Risk Alert regarding its initiative to assess cybersecurity preparedness and threats in the securities industry, including examinations of more than 50 SEC-registered investment advisers and broker-dealers.

The full text of the Risk Alert is available here.

SEC-registered investment advisers should review the Risk Alert, assess their current level of preparedness for cybersecurity threats, and consider whether any changes need to be made to their current cybersecurity policies and procedures. The Risk Alert includes an appendix containing 28 sample information requests that the SEC may… More

FTC Provides Guidance on Heartbleed

I usually do not re-post directly from the FTC, but given the timeliness of the subject, the wide impact of the problem and the technical nature of the issue, I thought it was warranted to re-post the FTC’s guidance on Heartbleed.  Talk to your IT folks about this sooner rather than later:

By Nicole Vincent Fleming

April 11, 2014 – 4:23pm

If you’re thinking “Heartbleed” sounds serious, you’re right. But it’s not a health condition. It’s a critical flaw in OpenSSL, a popular software program that’s used to secure websites and other services (like… More

SEC Hosts Cybersecurity Roundtable

Cybersecurity remains a hot topic for regulators, including the Securities and Exchange Commission (SEC).  On March 26, 2014, the SEC hosted a roundtable to discuss cybersecurity and the issues and challenges it raises for market participants.  The roundtable addressed cybersecurity concerns for investment advisers, broker-dealers and public companies, and provided a forum to share information as to how they are addressing those challenges. This roundtable follows hard on the heels of the Financial Industry Regulatory Authority (FINRA) sending targeted sweep letters in January-February 2014 to broker-dealers querying their approaches to managing cybersecurity risks.

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Rare Massachusetts Superior Court Decision Interpreting the CFAA Takes the Narrow View Without Squarely Addressing the Broad

This is a cross-post from our sister blog, Massachusetts Noncompete Law:

Judge Peter M. Lauriat of the Massachusetts Superior Court decided late last year that an employee who takes confidential documents from her employer’s electronic document system to use in a discrimination lawsuit against her employer is not liable to the employer under the Computer Fraud and Abuse Act (CFAA), especially when the employer knew about the lawsuit but nonetheless did not restrict the employee’s access to those documents while she was working for the employer.  In so deciding, Judge Lauriat had to grapple with two… More

Sony Class Action Has A Few Lives Left; Most of Plaintiffs’ Claims Dismissed But Certain Consumer Claims Remain

On January 21, 2014, U.S. District Judge Anthony Battaglia issued a 97 page orderthat dismissed the majority of the claims in a putative class action against various Sony entities, claims relating to the 2011 hack into the computer network system that Sony used to provide online gaming and Internet connectivity through PSP handhelds and PS3 game consoles.

According to Judge Battaglia, “The fifty-one claims alleged in the FACC can be categorized into nine sub-groups: (1) negligence; (2) negligent misrepresentation; (3) breach of express warranty; (4) breach of implied… More

Are You a “Target”? Business Implications of the Target Breach

Now that the initial media blitz about the massive Target breach has passed, it is time to look ahead at the implications:

Legislation:  In the past, we have seen major breaches drive legislative change.  But now that most states have data security statutes, it seems unlikely that much will happen at the state level.  And action at the federal level has been long promised, but remains a distant vision. Law enforcement:  While the actual hackers may remain elusive, Target is an easy target.  Expect significant investigations, record-setting financial penalties and a burdensome compliance agreement for Target.  And, of course,… More

Federal Judge Rules NSA Phone Record Collection Likely Unconstitutional

In a 68 page order issued earlier today, a federal district court judge ruled in favor of five plaintiffs challenging the NSA’s collection of phone record information, finding that the plaintiffs:

“have standing to challenge the constitutionality of the Government’s bulk collection and querying of phone records metadata”; “have demonstrated a substantial likelihood of success on the merits of their Fourth Amendment claim”; and “will suffer irreparable harm absent preliminary injunctive relief.”

This is by no means the last stop for this litigation; rather, it is just the end of the beginning.  While granting the requested injunction against the NSA… More

Check Your Technology at the Door

Recent news of government monitoring of phone calls and emails, both within the U.S. and abroad, has caused some to reexamine their technological companions.  Many are beginning to ask, when highly confidential and sensitive information is being discussed, should our seemingly indispensable technology be checked at the door?

This month, the British government began banning the presence of iPads at certain Cabinet meetings over concerns that the devices could contain viruses that would allow third parties to take control of the microphone and transmit recorded audio.  Ministers in sensitive U.K. government departments were also issued soundproof lead-lined boxes, in… More

iPhone’s Fingerprint Scanner Raises Privacy and Security Concerns

Apple’s latest iteration of the iPhone (the iPhone 5S) went on sale last Friday.  The phone contains a new feature called Touch ID, which allows iPhone owners to unlock and purchase content from Apple’s online store using a fingerprint reader housed in the iPhone’s home button.  As expected, Apple’s use of biometric authentication has raised a number of security and privacy concerns among the public.  For example, Senator Al Franken sent a letter to Apple stating that “important questions remain about how this technology works, Apple’s future plans for this technology, and the legal protections that Apple… More

More on President Obama’s Executive Order on Cybersecurity

On February 12, 2013, President Obama signed an executive order entitled “Improving Critical Infrastructure Cybersecurity.”  The Order has two key components.

First, the Attorney General, the Secretary of Homeland Security and the Director of National Intelligence must ensure timely production of unclassified reports of cyber threats and must rapidly disseminate the reports to the targeted entities.

Second, the National Institute of Standards and Technology (“NIST”), which is part of the Commerce Department, must develop a Cybersecurity Framework.  The Cybersecurity Framework will be a set of standards, methodologies and procedures to help owners and operators of critical infrastructure to reduce… More

Administration Rolls Out Its New Cybersecurity Policy

Yesterday President Obama signed an executive order directing federal agencies to develop voluntary best cyber security practices for key industry sectors and to create a system for broader public-private information sharing, and today administration officials have been speaking at an event highlighting the order. The Order places primary responsibility for managing cyber security in the hands of the Department of Homeland Security. Under the Order, the government will also be identifying baseline data and systems requirements for the government to allow the exchange of information and intelligence, and will be producing and disseminating unclassified cyber threat reports. The Order also… More

Pentagon to Increase Cybersecurity Force More than Five Times Current Size

In a recent article, the Washington Post reported that “The Pentagon has approved a major expansion of its cybersecurity force over the next several years, increasing its size more than fivefold to bolster the nation’s ability to defend critical computer systems and conduct offensive computer operations against foreign adversaries.”

The Pentagon’s plan would create three types of forces under the Cyber Command:

“national mission forces” to protect computer systems that undergird electrical grids, power plants and other infrastructure deemed critical to national and economic security; “combat mission forces” to help commanders abroad plan and execute attacks or other… More

Should You Trust Your Network to a Chinese Company?

A recent article in The Economist questions whether it is safe and secure to trust a company’s computer network to a Chinese company. The specific concern in that The Economist article related to “a Chinese company with connections to the Chinese government and the People’s Liberation Army (PLA)” that would be providing services inside the corporate firewall.  An unnamed former member of the U.S. Joint Chief of Staffs minced no words about this: “We’d be crazy to let [that Chinese company] on our networks, just crazy!”

Assuming that these fears are justified, what do you do if you can’t avoid (or don’t know if you can avoid) working… More

White House States Support for Sen. Lieberman’s Cybersecurity Act of 2012

The Obama Administration officially put its weight behind Sen. Lieberman’s Cybersecurity Act of 2012, with the issuance of the following Statement of Administration Policy:

STATEMENT OF ADMINISTRATION POLICY

S. 3414 – Cybersecurity Act of 2012

(Sen. Lieberman, I-CT, and 4 cosponsors)

The Administration strongly supports Senate passage of S. 3414, the Cybersecurity Act of 2012. While lacking some of the key provisions of earlier bills, the revised legislation will provide important tools to strengthen the Nation’s response to cybersecurity risks. The legislation also reflects many of the priorities included in the Administration’s legislative proposal.

The Administration particularly… More

A Few Thoughts from Deputy Undersecretary for Cybersecurity, Mark Weatherford, Department of Homeland Security

On May 16, Deputy Undersecretary for Cybersecurity, Mark Weatherford, spoke to the Advanced Cyber Security Center about DHS’s cyber security priorities: Information Sharing, R&D, and the Advanced Persistent Threat.

On Information Sharing:  This is a continuing challenge, in part because of the way the federal government shares information.  At present, the federal government provides cyber threat information to private sector organizations, but prohibits discussion between those very organizations. His Office at DHS is working to address this unintended siloing of information, so as to allow for greater cooperation and collaboration.

On Research and Development:  He views cyber security… More

Governments Hire Hackers to Work for Them

Interesting article in Forbes, "The Zero-Day Salesmen," about "government agencies who purchase such “zero-day” exploits, or hacking techniques that use undisclosed flaws in software, with the ­explicit ­intention of invading or disrupting the computers and phones of crime suspects and intelligence targets."

Random Cyberattackers Versus the Advanced Persistent Threat

What do cyberattackers want?  According to a recent article in the Wall Street Journal, it depends.  And the most dangerous ones are the ones that really know what they want:  the Advanced Persistent Threat (APT).  They APT isn’t easily defined, but think of APTs as professional thieves, going after high-value targets and using sophisticated techniques.  They are Thomas Crown to the every Eddie Coynes of the world.  There’s more discussion of APTs on the Advanced Cyber Security Center’s website.

Good Advice that Bears Repeating: Toughen Up Your Passwords!

In an article that repeats a common theme in this space, this week’s Economist talks about how researchers are trying to help ordinary people toughen up their passwords.  But despite the efforts of these researchers, the article’s conclusion is a gloomy one:

The upshot is that there is probably no right answer. All security is irritating (ask anyone who flies regularly), and there is a constant tension between people’s desire to be safe and their desire for things to be simple. While that tension persists, the hacker will always get through.

Lessons from the Chinese Hacking of Nortel for IT Security, Due Diligence

Recent press reports of massive Chinese-sponsored hacking at the one-time telecom giant Nortel might cause you to throw up your hands and say, what chance do I have against such forces?  A closer look suggests that there is much that can be done, and should be done, both in IT security and in the sale and acquisition of assets.

Apparently Nortel found and investigated the breach in question, but did not try to determine if its products were compromised. Nortel’s internal structure also provided little barrier to hackers; according to a Wall Street Journal interview of a former employee, "Once you were… More

Jail Time for Man Who Accessed Computer of a Competing Medical Practice

An Atlanta, Georgia man was sentenced earlier this month to one year and one month in prison for intentionally accessing a computer of a competing medical practice, and taking personal information of the patients.  The individual made this improper access in order to send marketing materials to patients at the other practice.

The individual worked as an information technology specialist for a perinatal medical practice in Atlanta.  He separated from employment from the first practice and joined a competing perinatal medical practice, located in the same building.  He then used his home computer to hack into his former employer’s patient database.  He downloaded the names, telephone numbers, and addresses… More

HHS Reports on Breaches of Unsecured Protected Health Information

In its recent Annual Report to Congress on Breaches of Unsecured Protected Health Information, the Office of Civil Rights of the Department of Health and Human Services, we see confirmation of certain trends– bigger breaches and breaches involving theft of electronic media:

Between January 1, 2010 and December 31, 2010, breaches involving 500 or more individuals also made up less than one percent of reports, yet accounted for more than 99 percent of the more than 5.4 million individuals who were affected by a breach of their protected health information. The largest breaches in 2010, like 2009,… More

“Performing Due Diligence Before Signing a Cloud SLA”

My overview of some of the major issues involved in signing a cloud computing agreement can be found in searchcloudcomputing, "Performing Due Diligence Before Signing a Cloud SLA."

                                                                     *  *  *

No one is certain of all the legal risks associated with enterprises storing confidential or proprietary information outside the corporate firewall — in the cloud. However, there is growing consensus about what companies should ask cloud vendors to maintain a secure IT environment and avoid potential legal risks associated with the cloud. 

General areas of concern surrounding the cloud are… More

Is Public-Private Information Sharing Needed to Respond to the Massive Increase in Cyber Attacks?

Interesting article in Friday’s Wall Street Journal on potential cybersecurity legislation to improve information sharing between industry and government.  Perhaps the best part of the article is the citation of statistics from Symantec’s annual Internet Security Threat Report:  Trends for 2009 and 2010 on how many customer has updates Symantec sent out to address new attacks customers were facing:

2002:  20,254 updates 2003:  19,159 updates 2004:  74,981 updates 2005:  113,081 updates 2006:  167,069 updates 2007:  708,742 updates 2008:  1,691,323 updates 2009:  2,895,802 updates 2010:  10,000,000 updates

“Foreign Spies Stealing US Economic Secrets in Cyberspace”

With an inflammatory title like “Foreign Spies Stealing US Economic Secrets in Cyberspace,” the Office of the National Counterintelligence Executive’s “Report to Congress on Foreign Economic Collection and Industrial Espionage, 2009-2011″ is tough to ignore.

The Report’s conclusions are equally notable for their candor about the recent actions of the Chinese and Russian governments:

“Chinese actors are the world’s most active and persistent perpetrators of economic espionage. US private sector firms and cybersecurity specialists have reported an onslaught of computer network intrusions that have originated in China, but the IC cannot confirm who was responsible.” “Russia’s intelligence services are conducting… More

“SEC’s Corp Fin Staff Attacks Cyber-Security Disclosure”

I was interviewed and quoted as part of a Compliance Week article on the new SEC guidance on disclosures of cyber security incidents:

Colin Zick, a partner at law firm Foley Hoag, says the guidance is too general and that companies will have to think hard when assessing what information to disclose. “There are a lot of cyber-incidents, and there are lots of ways how these will affect your business,” he says. When companies are contemplating the definition of cyber-incidents, they should think expansively, he adds. “Think of data breach, data loss, and denial of… More

Report Says Libya Nearly Subjected to U.S. Cyber-Attacks

In a story in the October 17 online edition of the New York Times, it was reported that the United States considered engaging in cyber-warfare against Libya early in the campaign to unseat Colonel Qaddafi. 

What seems clear is that this was not a prize worth the price of the precedent such a cyber-attack would create, particularly as it would open the United States to similar, but far more impactful, attacks.  Perhaps those responsible felt as Robert Oppenheimer did upon witnessing the first explosion of an atomic bomb in the New Mexico desert, "We knew the world would not be… More

Microsoft Report Challenges Conventional Wisdom on Cybercrime Losses

It’s a pretty technical read, but this recent Microsoft report, "Sex, Lies and Cyber-crime Surveys" by Dinei Florencio and Cormac Herley tries to support an interesting hypothesis:  cyber-crime surveys that suggest huge losses from hacking and phishing aren’t reliable.  Here’s an excerpt of their thinking:

First, [cyber-crime] losses are extremely concentrated, so that representative sampling of the population does not give representative sampling of the losses. Second, losses are based on unverifed self-reported numbers. Not only is it possible for a single outlier to distort the result, we find evidence that most surveys are dominated by a minority of… More

Advanced Cyber Security Center Launched

As noted in MassHighTech, the Advanced Cyber Security Center was officially launched on September 20.  The program was opened by Massachusetts Governor Deval Patrick and featured a presentation from Attorney General Martha Coakley.  As described by MassHighTech:

Touted as a first of its kind collaborative effort that brings together stakeholders in cyber security from the government, industry and academia, the ACSC is also hosted at the five universities that make up the Massachusetts Green High Performance Computing Center – MIT, Harvard University, Boston University, Northeastern University and the University of Massachusetts.

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Is Teamwork the Answer to Data Security?

Increasingly, alliances are viewed as an important way to improve data security.  The Washington Post reports that the National Security Agency is now working with Internet service providers to thwart cyberattacks against defense firms by foreign adversaries.  We have previously noted two other initiatives:   the Advanced Cyber Security Center (to which Foley Hoag serves as legal counsel).and InfraGuard, a Federal Bureau of Investigation program.  One of the oldest and best examples of successful collaboration is PCI, the credit card industry’s security program.

2011: The Year of the Breach

We are six months into 2011, and it seems destined to be “The Year of the Breach.”  In just the past few months, major American (and multi-national) corporations and institutions have reported that they have been the victims of some kind of security breach:

Epsilon: breach of customer email addresses; RSA: compromise of security tokens (possibly impacting Lockheed Martin); Citigroup: breach of credit card numbers: Sony: multiple thefts of customer data; Sega: customer data theft; and ADP: breach of its benefits-administration business.

What does this mean? First, there are simply more breaches to report. Second, companies are being more open about… More

What Can My Company Do To Fight Cybercrime Collaboratively?

Wondering what your company might be able to do at the local level to help fight cybercrime? There are a growing number of public-private collaborations that are trying to get ahead of the bad guys.

One is the Advanced Cyber Security Center (to which Foley Hoag serves as legal counsel).  The ACSC is a collaborative, cross-sector research facility working to address critical and sophisticated cyber security challenges. Based at the MITRE Corporation campus in Bedford, Massachusetts, the Center takes advantage of  university, industrial and research resources to develop next-generation solutions and strategies for protecting the nation’s public and private IT infrastructure.

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“Pressure Point: Online Privacy — Privacy is Potentially a Costly Workplace Issue”

In the April 22, 2011 Boston Business Journal article, entitled, "Pressure Point: Online Privacy – Privacy is Potentially a Costly Workplace Issue," I was interviewed regarding some of the recent developments in privacy and security law for employers: 

“Most of the time, data breaches don’t come down to a failure of technology or inadequate technology. It comes down to someone doing something stupid,” said Colin Zick, a partner in the Boston office of Foley Hoag. “In the Mass General case, an employee took some records on the Red Line and lost them.”   “When companies are bombarded with… More

Information Security In the Age of WikiLeaks

InformationWeek has published an interesting Analytics Brief on "Information Security in the Age of WikiLeaks."  (Subscription required.)  The brief discusses the following subjects:

Could a Major Security Breach Be on the Horizon? The Smartphone Dilemma What Elements Are Currently Covered in Your Organization’s Security Awareness Program? Security Budgets Fare Well Implementing Risk Management Disciplines Do You Really Know Who Your Friends Are? Denial of Service Attacks: Who’s Next?

In the interest of full disclosure, I am quoted extensively on the prospects for new legislation in the privacy/security space.

White House Releases Framework for National Strategy for Trusted Identities in Cyberspace

On April 15, the White House formally released its National Strategy for Trusted Identities in Cyberspace. As we noted earlier, the “trusted identity” concept is intended to allow the public and private sectors to collaborate in order to raise the level of trust associated with the exposure of the identities of individuals, organizations, networks, services and devices in online transactions:

The goal of NSTIC is to create an “Identity Ecosystem” in which there will be interoperable, secure, and reliable credentials available to consumers who want them. Consumers who want to participate will be able to obtain a single credential–such… More

NIST Launches Web Site for National Strategy for Trusted Identities in Cyberspace

The National Institute of Standards and Technology (NIST), a federal agency within the Department of Commerce, has launched a web site detailing the President Obama’s proposed National Strategy for Trusted Identities in Cyberspace (NSTIC). NSTIC, initially released for public comment in June 2010, was developed in response to the Obama Administration’s 2009 Cyberspace Policy Review, which called for the creation of a “cybersecurity-based identity management vision and strategy that addresses privacy and civil liberties interests, leveraging privacy-enhancing technologies for the Nation.”

Coining a new phrase for a more secure virtual world, known as the Identity Ecosystem, NSTIC seeks to improve upon the passwords currently used to… More

U.S. Supreme Court Upholds NASA Background Checks

In NASA v. Nelson, decided today by the U.S. Supreme Court, the high court rejected a challenge to “a section of a form questionnaire that asks employees about treatment or counseling for recent illegal-drug use . . .  [and] to certain open-ended questions on a form sent to employees’ designated references.”

This particular challenge came from 28 employees of the Jet Propulsion Laboratory (“JPL”).  JPL is staffed exclusively by contract employees.  NASA owns JPL, but Cal Tech operates the facility under a government contract.

The Supreme Court acknowledge that “[i]n two cases decided more than 30 years ago, this Court referred broadly… More

If You Got a New Smartphone Over The Holidays, Here Are Some Security Issues to Think About

If you got a new smartphone over the holidays, you’ve probably figured out how to use it by now.  The next thing to worry about is security.  The good news is that wireless providers are working to fortify their phones against attacks, as explained in this Wall Street Journal article.

There are some personal actions you should consider as well:

Set a password and make it a strong one. Keep current on your updates. Think of your phone like your computer when it comes to security. Make sure you know how to remotely lock and wipe your phone if it is lost… More

Tracking Protection to be Included in Internet Explorer 9: Is This the Tipping Point?

Microsoft announced yesterday in its IE blog that it will be adding a tracking protection feature to Internet Explorer 9.  In particular, Microsoft promises that:

IE9 will offer consumers a new opt-in mechanism (“Tracking Protection”) to identify and block many forms of undesired tracking. “Tracking Protection Lists” will enable consumers to control what third-party site content can track them when they’re online.

Together with the FTC’s jump into the tracking fray last week, have we reached the tipping point on tracking, so that this is the beginning of the end of it?  Or might this be simply another skirmish in… More

Iranian Journalist Files Suit against Nokia Siemens Networks for Use of Network in Torture

The following item was posted recently on Foley Hoag’s Corporate Social Responsibility and the Law blog, and we thought it would be of interest to our readers. Companies seeking to develop privacy policies that both comply with national laws and respect internationally recognized human rights often face difficult challenges, especially when confronted with specific host government requests. All companies concerned with the human rights implications of their activities are advised to assess the sufficiency of existing policies as well as the company’s capacity to identify and manage potentially challenging scenarios.

Iranian Journalist Files Alien Tort Statute Lawsuit… More

Balancing Privacy and Security in an Age of Instant, Ubiquitous Communications

In a recent article in the New York Times discussed the "growing tension between communications companies and governments over how to balance privacy with national security."  This tension is not limited to that context, however.  Nearly every workplace that uses email faces a similar tension between open access and secure communications.  And this debate splits people.  An ongoing informal survey by The Economist suggests that the number of people who want more control and restrictions over communication are nearly equally balanced by those who chafe at such restrictions.  

So, what’s the right answer?  It would seem that continual balancing and re-balancing between too much/too little privacy and too much/too… More

One More Reason to Secure Your Wireless Network

In a federal court case decided earlier this year, United States v. Ahrndt, the court held that an individual had no reasonable expectation of privacy in the use of an unsecured wireless network. The details of this decision are instructive for those still looking at questions of network privacy and security.

This case had its start in 2007, when a woman referred to as JH was using her personal computer at her home in Oregon. She was connected to the internet via her own wireless network, but when her wireless network malfunctioned, her computer automatically picked up another nearby… More

Ponemon Study Finds Average Cost of Data Breach Was $3.4 million in 2009

Last week, the Ponemon Institute and PGP Corporation released the results of their Global 2009 Annual Study on Cost of a Data Breach (.pdf) [available directly from EncryptionReports].  The highlights of the survey were announced in PGP’s press release.  Ponemon surveyed companies in the U.S., UK, Germany, Australia and France and found that in 2009, the average cost of a data breach was $3.4 million.  That is $142 per customer affected by the breach.

Unfortunately for U.S. businesses, the survey found that data security breaches… More

Albert Gonzalez Gets 20 Years for TJX / Heartland Breaches

Last week was a tough week for Albert Gonzalez, the so-called "leader of the largest hacking and identity theft ring ever prosecuted by the U.S. government."  Gonzalez received a sentence of 20 years of imprisonment in two separate federal cases against him.  The hacker, known variously as "segvec," "soupnazi" and "j4guar17" pled guilty in the New Jersey and Massachusetts cases for his role as mastermind of the two largest financial data breaches ever, those involving TJX and Heartland Payment Systems. 

The federal court sentencing entries states that after Gonzalez serves his 240-month sentence, he will be subject to 3 years… More

Internet Crime Complaint Center (IC3) Releases 2009 Report on Internet Crime

Today, the Internet Crime Complaint Center (IC3), a federal organization run as a partnership between the FBI and National White Collar Crime Center, released its 2009 Internet Crime Report (.pdf).  Highlights include:

IC3 received 336,655 complaints in 2009, an increase of 22% over the prior year. The dollar loss caused by incidents reported to IC3 increased more than 100% to $559.7 million. 146,663 complaints were referred to local, state and federal law enforcement agencies. Complaints were typically not referred to authorities when “there was no documented harm or loss (e.g., a complainant received a fraudulent solicitation email but… More

FTC Tells Businesses, Schools and Local Governments: Stop Sharing Personal Information On Peer-To-Peer Filesharing Networks

The Federal Trade Commission (FTC) announced yesterday that it had notified "almost 100" companies and organizations, including schools and local governments, that sensitive personal information from those entities was being shared across peer-to-peer (P2P) filesharing networks. This has apparently resulted in circulation of customer personal information, health information, Social Security numbers and other sensitive data. 

Poorly supervised use of P2P networks have frequently been the subject of unwanted attention, including from the FTC.  For our coverage on P2P security issues, see our prior posts here ("Congressional Aide Shares Secret Ethics List With The World"), here (More

Incident(s) of the Week: February A Tough Month For Hackers

1.  Arrested: Russian Hacker Responsible for Two Minutes of Roadside Porn 

The hacker who managed to compromise computer servers controlling a large commercial advertising screen in Moscow was arrested recently by Russian authorities.  On January 14, 2010, commuters on Moscow’s Garden Ring Road passed a large-scale video screen and instead of the normal commercial advertisements saw two minutes of hard-core pornography.  The video, as well as the resulting traffic problems, was thanks to a hacker who is described as a 40 year old, unemployed man living in… More

Incident(s) of the Week: Recent Updates from Prior Incidents

1.  The FTC Fines Las Vegas Man $35,000 for Dumping Customer Financial Records In Public Dumpster

This week, the FTC finalized a $35,000 settlement with Gregory Navone, the real estate broker who left 40 boxes of customer tax returns, bank statements, consumer reports and other financial records in a public dumpster behind an office building in Las Vegas.  The defendant agreed to the fine, which amounts to $875 per box, as well as a stipulated order (.pdf) requiring him to adopt a comprehensive written information security program.  We first posted on this case a year ago,… More

Incidents of the Week: Iranian Cyber Army Targets Twitter & $26 Software Application Intercepts U.S. Military Satelite Feeds In Iraq

1.  Iranian Cyber Army Puts Twitter On Hold

Around 10 pm last night, popular social networking site Twitter, was apparently hacked by a group calling themselves the Iranian Cyber Army.  Iran and Twitter have had a rocky relationship since last summer when Iranian citizens spread the protests over Iranian elections to the popular web site.  During that time, links circulated on Twitter that allowed users to participate in DoS (Denial of Service) attacks on Iranian government websites.  Given the name adopted by Twitter’s hackers, it may be no coincidence… More

Incident of the Week: U.S. Law Firms and Public Relations Firms Hit By E-mail Attack

Law firms holding sensitive data for their clients are the targets of a new round of organized cyberattacks, federal authorities cautioned this week.  On Tuesday, the FBI warned that U.S. law firms and public relations firms were being targeted by hackers using “spear phishing” attacks — personalized emails drafted to look like they come from a trusted or reputable source and designed to induce the reader to click an attachment or link that will infect his or her computer with malicious software.  “Hackers exploit the ability of end users to launch the malicious payloads from within the network by attaching… More

Incident of the Week: ChoicePoint Settles FTC Charges That It Failed To Turn On “Key Monitoring Tool”

This week, ChoicePoint, Inc. finalized its settlement with the Federal Trade Commission (FTC) to resolve charges stemming from a 2008 breach that compromised the personal information of 13,750 consumers. This case is notable, even though the size of the breach and the monetary payment involved are relatively modest, because the underlying breach allegedly resulted from the ineffective implementation of security tools.

Incident of the Week: Ever-Growing Breach Involving Passwords for Hotmail, Gmail, Yahoo, AOL, Earthlink and Comcast

What started out as an incident involving the leak of 10,000 user names and passwords for Windows Live Hotmail accounts continues to grow, both in terms of users and companies affected. According to reports from the beginning of the week, more than 10,000 user names and passwords from Hotmail were posted by an anonymous user on the site pastebin.com. The list was limited to accounts starting in A and B, leaving the fear that numerous more accounts had been affected. The original reports speculated that the breach was the result of a hack of Hotmail or a phishing attack. But more information is surfacing that indicates that the breach is much larger than first thought.

Incident(s) of the Week: Double Feature

Incident of the Week: in our first double feature, we report on the recent breach announced at the University of North Carolina and the plea agreement reached with one Massachusetts inmate who hacked the prison computer system while still behind bars.

Massachusetts Attorney General Announces Opening of New Computer Forensics Lab

In a press release issued last week, Massachusetts Attorney General Martha Coakley announced the opening of a "new, state-of-the-art Computer Forensics Lab in Boston" as part of the Attorney General’s Cyber Crime Initiative.  Under the Initiative, the Attorney General’s office received funding from the U.S. Department of Justive to "develop a sustainable cyber crime information sharing program in Massachusetts" for the Massachusetts law inforcement community.

According to the press release, the lab "will expand the office’s forensic capabilities, allowing it to conduct exams on a variety of digital media such as computers, cell phones, laptops, PDAs and GPS devices."  The… More

Informants & Alberto Gonzalez: She Swallowed the Spider to Catch the Fly

In August, Albert Gonzalez was indicted for the theft of credit and debit card information from Hartland Payment Systems, the largest known breach of its kind, while awaiting trial for a similar attack against TJX, the second largest known breach of its kind.  Last week, Gonzalez pleaded guilty to nineteen charges relating to his role in the TJX breach (see Gonzalez’s 2008 indictment (.pdf) for list of the various charges).

One of the most interesting facts that has come out about Mr. Gonzalez in the wake of news that he… More

Incident of the Week: Indictments Issue Against The Individuals Behind RNS, Pirate Site for “Pre-Release” Music

Yesterday, a federal indictment issued charging four individuals for their role in the "Rabid Neurosis" or RNS, an alleged "Internet music piracy group" that distributed copies of music prior to their commercial release.  According to the seven-page indictment (.pdf) filed in the federal court for the Eastern District of Virginia, between 1999 and 2007, RNS obtained and distributed a number of notable albums before they were released, including "Blue Print 2" by Jay-Z, "Encore" by Eminem and "How to Dismantle an Atomic Bomb" by U2. 

The indictment claims… More

Incident of the Week: NCUA Issues Fraud Alert Based On Fake NCUA Fraud Alert (Which Turns Out To Be Part of Security Consultant’s Penetration Testing)

The National Credit Union Administration (NCUA) issued an official NCUA Fraud Alert on August 25, 2009 reporting that someone was sending around a fake NCUA Fraud Alert (.pdf) with CDs purporting to contain security software updates, but instead contained malware.  The NCUA warned “Should you receive this package or a similar package DO NOT run the CDs.”  The NCUA, which regulates federally insured credit unions, was tipped off to the fake Fraud Alert by a single credit union.

As it turns out, the credit union was undergoing security penetration testing and the… More

Incident of the Week (Year?): Hacker Responsible for Largest Data Breach in U.S. History Indicted

According to a press release from the United States Attorney’s Office for the District of New Jersey, yesterday an "indictment was returned against three individuals who are charged with being responsible for five corporate data breaches, including the single largest reported data breach in U.S. history."  According to the press release, the indictment describes a scheme whereby Albert "Segvec" Gonzalez and two unnamed Russian defendants (identified as "Hacker 1" and "Hacker 2") stole "more than 130 million credit and debit card numbers together with account information" from Heartland Payment Systems, 7-Eleven, Inc., and Hannaford Brothers Co.," and… More

Incident of the Week: Seattle Man Sentenced To Three Years In Prison For Using Peer-To-Peer Software To Steal Financial Records, Commit Identity Theft

Yesterday, Frederick Eugene Wood of Seattle was sentenced to 39 months in prison for using LimeWire peer-to-peer (P2P) software to obtain Social Security numbers, bank and financial records and tax returns, which he then used to commit identity theft.  The complaint (.pdf) filed in federal court for the Western District of Washington in March alleged that Wood took advantage of the fact that users sometime install LimeWire or other peer-to-peer software on computers without limiting the directories and files made available to the peer-to-peer network. 

Especially when a… More

Incident of the Week: Lativan Internet Service Provider Shut Down After Being Linked to Cybercrime Ring

Earlier this week, Latvian internet service provider Real Host was shut down by its upstream providers Junik and TeliaSonera after security experts linked Real Host to a number of criminal activities.  Among the many activies allegedly conducted through Real Host were the use of malware to steal banking credentials, SPAM email campaigns and the service provider was running command and control servers for the Zeus botnet (i.e., millions of infected computer slaves or "bots" used by cybercriminals to steal information and attack other computers).  The expert who linked Real Host to these activites and who goes by the pseudonym "More

Secret Service and Europe Plan a Cybercrime Task Force

According to recent reports from the Wall Street Journal and Computerworld, on June 30 the United States Secret Service, the Italian police and Italian postal service reached an agreement for the establishment of an international task force to fight cybercrime, including identity theft and computer hacking.   Mark Sullivan, the director of the Secret Service, stated that cybercrime "is not a borderless crime and we believe there needs to be a reaction at an international level."  While it may seem odd at first for the Secret Service, whose most obvious mission is to protect members of the U.S. government and visiting… More

Incident of the Week: French Hacker Compromises Twitter Employee Passwords, Steals Company Documents

This week, Twitter co-founder Evan Williams confirmed that the company has been the victim of an attack that compromised a number of employee personal accounts at Amazon, PayPal and AT&T, employee personal email and Twitter’s internal company documents.  The hacker, who goes by the handle “Hacker Croll,” has apparently emailed a collection of 310 internal Twitter documents to TechCrunch, including a presentation for a proposed reality television show called “Final Tweet” and a February 2009 financial forecast.  Many wait to see what other documents will come to light while TechCruch negotiates with Twitter’s lawyers.

More

U.S. and South Korea Targeted in Ongoing Denial of Service Attacks

On the 4th of July an organized series of Denial of Service (DOS) attacks were launched against a number of U.S. government websites (including the White House, Treasury Department and the Federal Trade Commission websites), as well as several websites associated with the South Korean government and a handful of corporate targets (the Washington Post and Nasdaq stock exchange). [If you are wondering what a DOS/DDOS attack is, brief explanations are available from U.S. Computer Emergency Response Team (CERT) and CNET.]

The U.S. government routinely faces threats like these (note coverage of prior… More

Incident of the Week: FBI Arrests Hacker Posing as Security Guard Who Infiltrated Texas Hospital Days Before “Devil’s Day” Attack

This week, the U.S. Attorney’s Office for the Northern District of Texas announced that the FBI has arrested Jesse William McGraw, a 25 year old contract security guard at the W. B. Carrell Memorial Clinic, a hospital in Dallas, Texas, for hacking the hospital’s computers and air conditioning system. For many businesses, an attack on ventilation systems might be an inconvenience, but the threat could be much more serious for critical care patients in healthcare institutions like the Carrell Clinic. McGraw is charged with violations of the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. sec. 1030.

Conficker Worm Still Lurking, Threat Remains

While the media frenzy surrounding the Conficker worm may have died down over the past several months, recent reports suggest that the computer worm is alive and well, and continues to expose PC users worldwide to the risk of identity theft and other mischief.

FTC Chairman Pushes for Increasingly Specific “Self” Regulation of Behavioral Advertising

In recent weeks, FTC Chairman Jon Leibowitz has encouraged the behavioral advertising industry to adopt increasingly specific "self" regulatory measures to address privacy concerns. Behavioral advertising, which the FTC has described as the practice of  “tracking of a consumer’s activities online . . . in order to deliver advertising targeted to the individual consumer’s interests” is a concern for consumer groups.  Consumers’ concerns range from the transparency of the process to the adequacy of security measures in place to protect information compiled, to the impact of behavioral advertising on vulnerable consumers. In recent statements, Leibowitz has suggested that he remains unsatisfied with industry efforts to address these concerns.

How far do anti-hacking statutes extend?

An appellate court in Ohio was recently called upon to analyze that state’s cybercrime statute, OCR Ann. §2913.04, which criminalizes unauthorized access to protected computers.  In Ohio v. Wolf the court held that a city employee who was using a city computer during work hours to view pornography, visit adult “dating” websites, and solicit sexual activity, had exceeded his authorized access to the computer and was guilty of the felony of “unauthorized use of property; computer, cable, or telecommunication property or service” (or “hacking”). The court concluded that the employee has exceeded his authorized access despite the fact that there… More

Encryption Used By Hackers to Demand Ransom for Virginia Prescription Database

Wikileaks is reported to have published a copy of the ransom note (please pardon the grammar and language in the original): "I have your [expletive] in *my* possession, right now, are 8,257,378 patient records and a total of 35,548,087 prescriptions.  Also, I made an encrypted backup and deleted the original. Unfortunately for Virginia, their backups seem to have gone missing, too. Uhoh :( For $10 million, I will gladly send along the password."  Neither the Wikileaks site nor the Virginia site is not accessible as I write this.  A spokesman for the FBI’s Richmond, Virginia office said… More

Cyberespionage Threats Driving New Military Cybersecurity Command

Coming on the heels of recent cyberespionage news, the Wall Street Journal reported today on Pentagon plans to create a new military command focused on cyberwarfare.  The new command will coordinate both offensive and defensive cyberwarfare efforts, focusing, in the latter case, on assisting the National Security Agency (NSA) and the Department of Homeland Security’s National Cyber Security Division (NCSD), the lead agency for domestic cybersecurity efforts.

This development is not surprising, given that cyberespionage is a rapidly growing and serious threat.  Earlier this month, the Wall Street Journal published a story on cyberespionage attacks originating… More

New Law Would Require ISPs to Retain User Logs and Subscriber Records for Two Years

In February, Senator John Cornyn (R-Tx.) and Congressman Lamar Smith (R-Tx.) introduced the Internet Stopping Adults Facilitating the Exploitation of Today’s Youth ("SAFETY") Act of 2009 (S. 436, H.R. 1076), which contains a proivision that would require Internet Service Providers (ISPs) to keep subscriber data for "at least" two years.  Specifically, Section 5 of the bill requires that ISPs retain "all records or other information pertaining to the identity of a user of a temporarily assigned network address." According to a recent announcement from Senator Cornyn, the new retention provision is needed to enable law enforcement officers to identify individuals… More

Cyberspies Penetrate U.S. Power Grid

According to a recent report from the Wall Street Journal, cyberspies from China, Russia and other countries have penetrated into the U.S. electrical grid and left behind software that could disrupt the system.  According to officials, the spies have not actually damaged the grid or any other key infrastructure, but appear to have been attempting to navigate the electrical system.  More importantly, the intruders could attempt to damage the system during a war or other national security crisis.

Evidently, there have been a growing number of intrusions over the past year, most of which were detected by intelligence agencies and not the companies actually in charge of the… More

New Cybersecurity Legislation Introduced in the Senate

As I noted a few weeks ago, Senators Jay Rockefeller (D-W.Va.), Olympia Snowe (R-Maine) and Bill Nelson (D-Fla.) were drafting new cybersecurity legislation.  Last week the Senators introduced two bills.  The first, S.778 (text of the bill not yet available), would establish an Office of National Security Advisor within the Executive Office of the President.  The second, S.773 (text of the bill not yet available), entitled the Cybersecurity Act of 2009, gives the President the power to limit or shut down Internet traffic to and from any federal government or United States infrastructure network.  The other provisions of the legislation are summarized in… More

Big Bump in Federal Cybersecurity Spending?

The Wall Street Journal reported on Wednesday, March 18, 2009 that, worried about the dangers of attacks launched against the nation’s computer systems, the federal government is likely to spend between $15 and $30 billion on cybersecurity in the next five years. The intelligence experts interviewed by the Journal estimate that U.S. losses from data breaches to be in the billions of dollars annually and that future attacks could cause physical harm or serious financial chaos. 

While future spending levels will not be set until after the White House’s 60-day review of the nation’s information infrastructure is completed,  the potential… More

OPSEC, Data Security and A-Rod

The saga of Yankee superstar Alex Rodriguez (“A-Rod”) and the revelation of his past steroid use already exemplifies the far-reaching implications of information security practices. But the story is far from over. While the media firestorm over A-Rod appears to be dying down, the fate of the identities of 103 other Major League Baseball players who tested positive for steroid use in 2003 remains undecided. And the outcome of a motion now before the United States Court of Appeals for the Ninth Circuit may affect not only those 103 baseball players, but numerous athletes from other sports whose drug test results… More

Man Sentenced to 12 Months of Probation and Community Service for Illegal Access to Obama’s Passport Records

Dwayne F. Cross, the second of three people who have plead guilty to illegally accessing then Presidential Candidate Barack Obama’s passport files was sentenced to 12 months probation and 100 hours of community service on Monday. Mr. Cross admitted to accessing State Department passport records involving over 150 individuals, including celebrities, family members, and personal acquaintances, out of “idle curiosity”. These files contained a wealth of personal information including social security numbers, phone numbers, emergency contact information, and photographs.

Senate Drafting Cybersecurity Law – Seeks To Appoint National “Cybersecurity Czar”

Senators Jay Rockefeller (D-W.Va.), Chairman of the Senate Commerce, Science and Transportation Committee, Olympia Snowe (R-Maine) and Bill Nelson (D-Fla.) are drafting cybersecurity legislation that would establish a permanent national security czar reporting directly to the White House, according to a recent announcement from Senator Nelson and other reports.  The proposed legislation would also

require intelligence and Homeland Security officials to perform vulnerability assessments; create a clearinghouse for information sharing between the government and private sector; and fund scholarships for those interested in cybersecurity.

The proposed legislation follows on the heels of three incidents where computers in Senator Nelson’s office… More

Departing Employees Are Increasingly Stealing Company Information

As discussed by Mike Rosen on Foley Hoag’s Noncompete Blog here, and reported by the Washington Post and CNN, a recently released report by Symantec Corp. and the Ponemon Institute (which can be found here) revealed that 59% of ex-employees who leave their employment are stealing company information, and 67% of those who admitted to stealing company information also admitted that they used that information to leverage a new job.

As I posted back in early February, another recent report, this one from McAfee, concluded that the shrinking economy and growing ranks of unemployed were increasing incentives for… More