Category Archives: Identity Theft

Target Data Breach Cases Progress, But Plaintiffs Face Uphill Battle

As previously discussed here, Target suffered a massive data breach at the end of last year that compromised the information of 70 million or more consumers. Within days of the announcement, class action lawsuits were filed against Target around the country, including in California, Massachusetts, Minnesota, Ohio, and Utah. These class actions fall into three general categories: (1) those brought by consumers whose information was compromised; (2) those brought by financial institutions such as banks and credit unions that service these consumers; and (3) derivative actions brought by Target shareholders.

In April,… 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

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."

Massachusetts Reports on Data Breaches for 2007-2011

The Massachusetts Office of Consumer Affairs and Business Regulation has issued its first annual report on data breaches. Since Massachusetts has one of the more strict state laws on data security and breach reporting, this report bears close attention for trends across the nation. Some of the highlights in this summary, which covers 2007-2011:

Through September 30, 2011, the largest share of breaches was not in the financial sector, but in the retail and healthcare industries, along with government. Since the Data Security law, c. 93H, went into effect, the Office of Consumer Affairs and Business… More

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.

Phyisican Medical Identify Theft — A Growing Problem?

A recent issue of the Journal of the American Medical Association takes on the issue of physician medical identify theft; here’s the abstract: 

It took several months for one physician to learn that she was a victim of medical identity theft. This realization occurred after patients reported that her name was on their Medicare Summary Notices although they had never seen her. A fraudulent clinical practice had enrolled in Medicare using her name without her knowledge. Another physician had retired from clinical practice but decided to work part-time. Nearly 2 years after sending out job applications, he… More

More Consumer Data Security and Privacy Legislation Introduced

The latest legislator to enter into the federal data security and privacy sweepstakes is Senator Richard Blumenthal (D-CT) who introduced legislation, S. 1535, on September 8.  This bill, if passed, would require companies dealing with consumers to strengthen their data security and privacy policies.  In particular, Senator Blumenthal’s bill, “The Personal Data Protection and Breach Accountability Act,” would required businesses that collect the personal information of over 10,000 customers to employ specific privacy and security measures, including risk assessment, regular testing of system controls, and paying for two years of credit monitoring for any customer whose data is breached. If adopted, this bill would permit the… More

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

If You Haven’t Changed Your Password Since Our Last Blog Entry About Passwords, It’s Time You Did

In January, we provided some helpful hints about passwords, in our entry:  Is Your Password Still "123456"? If So, It’s Time for a Change.

It’s been nearly a year, so it’s time to change your password again.  In case you need some help, we liked the guidance provided by the public radio program, Marketplace, in a recent broadcast.  Ironically, these recommendations come from an expert whose company’s password databases had just been hacked.  

If you want to test the strength of your password, the expert recommended sites like Lastpass or 1Password.

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

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

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

RECAP Joins The Fight Against PACER — But Do We Want Its Help?

It just became a little cheaper and a little easier to access public court filings through PACER (the Public Access to Court Electronic Records), thanks to RECAP, an open-source Firefox plug-in designed to create a free secondary archive of PACER materials.

Court filings contained in PACER are public documents, and are, in theory, open to the public. But, in the past, the fact that these materials were either maintained in individual courthouses or, once digitized, were behind password-protected log-ins and per-page charges generally prevented them from being widely disseminated. Open society advocates have long criticized PACER for charging the public itemized… 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

Social Security Numbers (SSNs) Can Be Predicted Using Basic, Widely-Available Public Data. Social Security Administration Not Surprised, and Continues to Offer Detailed SSN Information to the Public

As has been recently reported, researchers from Carnegie Mellon University have announced that they have uncovered a method to accurately predict the Social Security Numbers (SSNs) of individuals by simply knowing two of the most basic and widely-available facts about people today: their dates of birth, and their States of birth. In their paper titled “Predicting Social Security Numbers from Public Data” (.pdf), researchers Alessandro Acquisti and Ralph Gross warn that they have uncovered a distinct and identifiable statistical pattern across SSNs of deceased persons – that, ironically, are made publicly available by the… 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

Bill Seeks Changes Massachusetts Data Security Law

With the deadline for complying with the Massachusetts identity theft law just six months away, at least one state senator is still seeking changes to that law.  In Senate Bill S173, which until now  has received little public notice, State Senator Michael Morrissey proposes to make it easier for small businesses to comply, by requiring the state’s regulations to take account of a business’s resources as it requires compliance:  "[S]aid department shall create separate regulations for small businesses covered by this chapter that reflect said small businesses unique situation and resources."  This type of language is reminiscent of the HIPAA security rules… More

FTC and Other Agencies Issue Frequently Asked Questions (With Answers) on Red Flags Rules

On June 11, 2009, six federal agencies issued answers to a set of frequently asked questions (FAQ) (.pdf) to “assist financial institutions, creditors, users of consumer reports and card issuers in complying with the final rulemaking” on identity theft.  The agencies behind the FAQ are those that originally promulgated the Red Flags Rules (and issued Guidelines to assist covered entities in designing compliance programs): the Federal Trade Commission (FTC), the Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), and the… More

FTC Releases “Template” Identity Theft Prevention Program for Red Flags Rules Compliance

On Wednesday, May 13, 2009, the FTC released a "template" identity theft prevention program (.pdf) to guide businesses subject to a "low risk" of identity theft through the process of complying with federal Red Flags Rules.  The FTC template was first announced on May 1, 2009 when the agency postponed enforcement of the general purpose Red Flags Rules until August 1, 2009 (see our posting here or our more detailed client alert here).

The FTC template is divided into two parts.  The first section outlines how businesses should evaluate whether they are at low risk for identity theft.  Under the FTC’s guidance, low… More

Last Minute Reprieve: FTC Postpones Deadline for Red Flags Compliance Until August 1, 2009 – Will Release “Template” For Compliant Identity Theft Prevention Program

On Thursday, April 30, 2009, the day before federal Red Flags Rules were set to go into effect for a wide range of businesses, the FTC published a notice on its website indicating that it is postponing the deadline (yet again) until August 1, 2009. Importantly, this delay appears to be imposed so that the FTC can provide businesses, many of which are confused about how to comply, a “template” identity theft prevention program. “For entities that have a low risk of identity theft, such as businesses that know their customers personally, the Commission will soon release a template to help them comply with the law.” The FTC indicates that it will make the template available through their website.

Cracking Down: FTC Fines Credit Research Firm $500,000 For Lax Security, Obtains Court Order Requiring Company to Develop “Comprehensive Information Security Program”

On Thursday, March 5, 2009, the FTC announced that it had reached a settlement with financial research firm Rental Research Services, Inc. (RRS) and its managing officer, Lee Mikkelson, to resolve the FTC’s claims that the firm had failed to provide adequate security for sensitive consumer information provided to identity thieves posing as legitimate users. This case provides a number of key lessons for businesses who have not considered whether their security practices amount to “unfair or deceptive acts or practices” under federal and state laws.

Data Breach: Not Only Can Happen to You, and Your Competitors (but Now It’s Being Publicly Reported)

As state data breach reporting regimes develop, we are going to be seeing more reporting of breaches to law enforcement authorities. If you want to see what this abstract concept of “reporting” looks like (and how your own reports might be listed for the public to see), go to the web site of the New Hampshire Attorney General. On that site, you can read about 20 New Hampshire breaches that have been reported thus far in 2009 for that modestly sized state. And if you want to get a feel for the national scope of data breaches, check out the Identify… More

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

The FTC Strikes Back: (Essentially) Everyone Should Be Complying With Red Flags Rules, Especially The Healthcare Industry

In a recent letter (.pdf) to the healthcare industry, the Federal Trade Commission (“FTC”) has issued its clearest pronouncement yet on which entities must comply with federal “Red Flag Rules” — the identity theft regulations that will go into effect for many businesses on May 1, 2009 (and have been in effect for banks and financial institutions since November 1, 2008). This latest guidance strongly suggests that if you are wondering whether the new federal regulations apply to you — then they probably do. In this post, we will recap the FTC’s recent guidance on who should be complying with the Rules.

Cracking Down: FCC Initiates Enforcement Action Against Hundreds of Telecommunications Carriers For Failing to Certify Compliance With Customer Privacy Rules

On Tuesday, February 24, 2009, the Federal Communications Commission (FCC) issued an Omnibus Notice of Apparent Liability alleging that more than 600 telecommunications carriers have violated Section 222 of the Communications Act which "imposes the general duty on all telecommunications carriers to protect the confidentiality of their subscribers’ proprietary information" and the EPIC Customer Proprietary Network Information (CPNI) Order (22 FCC Rcd 6927), which requires each carrier to certify compliance with the regulations governing customer information.  FCC Chairman Michael J. Copps issued a public statement addressing the enforcement action and highlighting that the FCC "continued to mconsumer privacy protection a top priority.  The FCC seeks… More

Identity Theft Tops FTC’s Chart of Top Consumer Complaints (Again)

On Thursday, February 26, 2009, the FTC released its list of top consumer complaints and for the ninth year in a row, identity theft was the number one issue for consumers.  See here for the FTC’s release.  Out of 1,223,370 complaints made to law enforcement organizations, identity theft accounted for 313,982 complaints, around 26% or all consumer complaints in 2008.  This represents a 20% increase in identity theft complaints since 2007. 

If the FTC’s report is any indication of things to come, it could suggest that the FTC will be moving forward with aggressive plans to enforce federal identity theft regulations on May 1, 2009, as… More

Adding to the Patchwork: HITECH Act Sets New “Floor” for Data Breach Notification of Certain Patient Information

On Tuesday, February 17, 2009, President Obama signed into law the widely-debated federal economic stimulus package, officially titled the American Recovery and Reinvestment Act of 2009, and with it, enacted the Health Information Technology for Economic and Clinical Health Act (HITECH Act). Much of the media attention on the HITECH Act has focused on the policies promoting health information technology a topic that President Obama touted throughout his campaign. However, the HITECH Act also contains myriad regulations that expand the security and privacy provisions of the Health Information Portability and Accountability Act of 1996 ("HIPAA"), and generally extends some of those regulations… More

ALERT: Massachusetts Gives Businesses Until January 1, 2010 to Adopt Information Security Programs To Comply With Recent Identity Theft Regulations

On Thursday, February 12, 2009, the Massachusetts Office of Consumer Affairs and Business Regulation (OCABR) issued a public statement indicating that it is extending the May 1, 2009 deadline to comply with recent Massachusetts identity theft regulations until January 1, 2010. 

The Massachusetts identity theft regulations affect entities that own, license, store or maintain personal information, including social security numbers, state identification numbers and financial account information, about any Massachusetts residents. Under amended regulations filed Thursday, individuals and businesses covered by the regulations must evaluate existing security measures and implement written information security programs on or before… More

A bad week for the government – data breaches at federal organizations on the rise

 It has been a bad week for the federal government’s own information security track record.

The first story comes from the FAA where hackers broke into the agency’s computer systems and stole personal information on some 45,000 individuals. The second story comes from Los Alamos National Laboratory, which confirmed the theft of 67 computers, 13 in the past year alone. In both instances the American people appear to have dogged a bullet. The electronic intrusion into the FAA appears to have been limited to a raid of personal information and did not interfere with air traffic control systems.  Also, the physical thefts… More

Trends in Data Breach Incidents, Part 2: Avoiding Accidental Exposure

According to the Identity Theft Resource Center’s (ITRC) recently released report (.pdf) on data breaches in 2008, one of the top five causes of data breaches are what the ITRC labels “accidental exposure.”   [For our earlier coverage on the ITRC’s report see this link.] The ITRC reports that accidental exposure amount to 95 of the 656 data breaches in 2008.

ITRC considers “accidental exposure” to be those breaches caused by “inadvertent internet/web posting.” For example, consider the accidental exposure the ITRC labels as “ITRC20080709-02”. In this highly publicized case, an employee at Wagner Resource Group installed the peer-to-peer file sharing… More

Economy Delivers A Perfect Storm In Information Security: Data Crimes Rising As Economy Stumbles

According to a recently-released report from McAfee, the downturn in the economy is creating a “perfect information security risk storm.” The report, entitled “Unsecured Economies: Protecting Vital Information,” can be found here [Note: MacAfee requires registration to downloade the report]. McAfee bases its findings on a worldwide survey of 1,000 IT decision makers.

The McAfee Report makes four key findings:

Increasingly, important digital information is being moved between companies and across continents and is being lost. The global economic crisis is increasing pressure on companies to cut spending across the board, including spending on data security, which leads to increased opportunities from outside… More

FTC Says “Dumpster Wrong Place for Consumers’ Personal Information”

By Stacy Anderson and Gabriel M. Helmer.

Anyone required to comply with the FTC’s Disposal Rule [the text of the rule can be found here], which requires companies to take reasonable steps to dispose of information contained in consumer credit reports, should take note of a recent FTC enforcement action in federal court from the District of Nevada. On December 30, 2008, the FTC filed a complaint against Las Vegas businessman Gregory Navone alleging that he violated the Disposal Rule and the Fair Credit Reporting Act (FCRA) when he discarded forty boxes of documents into a public dumpster behind… More

Do The Red Flags Regulations Apply to Me? — Understanding Whether You Are A “Creditor” Under Federal Law

If you are confused about whether you, your company or your clients are subject to federal identity theft regulations, you are not alone. When the Federal Trade Commission (FTC) announced on October 22, 2008 that they were delaying enforcement of the new Red Flags regulations by six months, until May 1, 2009 (which we reported here and here), the FTC admitted that the primary reason for the delay was that many businesses, even whole industries, were “confused” about whether they are governed by the new regulations. (See the FTC’s October 2008 release and Enforcement Policy statement.)

For some… More

Isn’t There Already A Federal Standard Governing Information Security? — Re-Examining the Gramm-Leach Bliley Act

By Stacy Anderson and Gabriel M. Helmer.

As an ever-increasing number of states enact legislation governing identity theft, customer data and personal information, pressure for clear federal legislation governing information security has mounted. For example, in December 2008, the FTC joined the growing number of voices calling on Congress to enact a legislation to create a single federal standard for the handling of personal information. (See our report here.) As we see movement towards a unifying federal standard, we are also observing a growing insistence that such legislation be consistent with the customer data security requirements of the Gramm-Leach Bliley Financial Modernization Act… More

Trends in Data Breach Incidents, Part 1: Identity Theft Resource Center (ITRC) Reports Breaches Up 47% in 2008, Hackers Only Responsible for 13.9% of All Incidents

On January 2, 2009, the Identity Theft Resource Center (ITRC) released its report(.pdf) on data breaches in the United States in 2008 (you can read the Washington Post’s primer on the ITRC’s findings here). The raw numbers are headline grabbing — 656 data breaches in 2008, a 47% increase from 2007. The sharp increase in numbers from 2007 to 2008 could be a result of an increase in data breach incidents, and most of the reporting on the ITRC’s report take this view, but it could also be due to increased media interest, new mandatory reporting laws, and a… More

Senator Feinstein Introduces Two New Security/Privacy Bills

On January 6, 2009, Senator Dianne Feinstein (D-Cal.) introduced two bills related to data breaches and protection of social security numbers. Bill S. 139, entitled the "Data Breach Notification Act," would require any federal agency or business entity to notify an individual of a security breach involving personal information “without unreasonable delay.” The proposed bill defines “reasonable delay” as including “any time necessary to determine the scope of the security breach, prevent further disclosures, and restore the reasonable integrity of the data systems and provide notice to law enforcement when required.” In addition to requiring notice to the affected individual(s), the bill requires that… More

FTC Chief Privacy Officer Mark Groman Presents At The Boston Bar Association

On Wednesday, January 14, 2009, the Boston Bar Association’s Privacy Law Committee hosted FTC Chief Privacy Officer Mark Groman for a brown bag lunch presentation entitled “The View from the Federal Trade Commission’s Chief Privacy Officer.” Here are a couple of highlights from the presentation:

 Mr. Groman views law firms as businesses subject to FTC Red Flags regulations (“we regulate you, too”), so law firms should be developing identity theft prevention programs to comply with the regulations by the May 1, 2009 deadline.  To comply with FTC’s Red Flags regulations, companies need to use a “risk-based process” to evaluate potential threats… More

FTC Issues Guidance to Businesses on How To Handle Social Security Numbers

Anyone mystified by what practices the FTC wants businesses to improve on or abandon in response to federal “Red Flags” regulations received some specific guidance in December, when the FTC released the report Security in Numbers – SSNs and ID Theft. For anyone subject to new federal and state identity theft regulations, the Report helps identify some specific steps they should consider implementing by May 1, 2009, the deadline for businesses to adopt compliant identity theft prevention programs.

ALERT: Massachusetts Gives Businesses Until May 1, 2009 to Adopt Comprehensive Information Security Programs To Comply With Recent State Identity Theft Regulations

On Friday, November 14, 2008, Massachusetts regulators announced that they will give affected businesses until May 1, 2009 to comply with new identity theft regulations. This move parallels the October announcement by the Federal Trade Commission that it is delaying enforcement of federal identity theft regulations until the same day.

ALERT: FTC Gives Businesses Until May 1, 2009 to Adopt Identity Theft Prevention Plans that Comply With Recent FTC “Red Flags” Regulations

On Wednesday, October 22, 2008, the Federal Trade Commission issued an Enforcement Policy Statement that it will delay some elements of enforcement of recent “Red Flags” regulations until May 1, 2009, instead of the original November 1, 2008 date. Citing uncertainty and confusion within many industries over whether they are covered by the new regulations, the FTC indicated that it will not seek to enforce the regulations on November 1, 2008, when all affected businesses were originally required to come into compliance.