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By: David Cole & Amy Bender
Tales of data breaches flood our news reports these days. By now, you hopefully are aware that all 50 states have laws requiring persons and organizations that own or maintain computerized data that includes personal information to notify affected individuals, and sometimes the government, in the event of a data breach involving their personal information. (You know those letters you’ve received from hospitals, retail stores, and other companies advising you that they experienced a data breach that may have exposed your personal information? They didn’t notify you out of the goodness of their hearts – it’s the law!)
In the past, these laws have focused solely on notifying affected individuals about compromises to their personal information. Outside of specific industries, such as healthcare or financial services, which are regulated by laws applicable only to them, such as HIPAA and the Gramm-Leach- Bliley Act, respectively, there have not been laws of general applicability regulating the standard of care required for protecting personal information in the first place. Recently, however, a trend has emerged among state legislatures to take this next step in cybersecurity legislation by setting standards for businesses’ protection of consumers’ personal information.
The majority of states now have enacted data security and/or data disposal laws that place affirmative obligations on entities (or, in some instances, certain types of industries) that own or use computer data containing personal information to safeguard and/or dispose of or encrypt that data. Below is a current list of states that have adopted these laws:
(Click here for our discussion of the significant and comprehensive data security law California passed last year.)
Unfortunately, there is not one universal standard for how to secure and destroy data containing personal information, but rather, the standard varies by state. Organizations that operate in multiple states thus may have to comply with multiple and differing requirements. In addition, many of these laws only provide general, and often vague, guidelines that do not specify particular technologies or data security measures that should be implemented. For instance, many laws only require that businesses implement “reasonable” administrative, physical, and/or technical safeguards to protect personal information from unauthorized use or disclosure, and then describe “reasonable” measures as those “appropriate based on the size of the business and the nature of information maintained.” That may be clear as mud, but at least it’s a start and enough to put businesses on notice that doing nothing is not an option.
For these reasons, we recommend that businesses work with legal counsel to understand the laws of the states where they do business and to conduct a security risk assessment to evaluate the information they maintain, the potential risks to it, and the current measures in place to protect it. Working with legal counsel, businesses should then work with an experienced cybersecurity provider to translate that risk assessment into an actionable plan for improving data security and privacy within their organization. The legal standards still might be vague, but going through a process like this will put businesses in the best position to demonstrate good faith and reasonable efforts to meet their legal obligations if and when an incident occurs or a claim is made by a third party.
Please contact David Cole, Amy Bender, or one of the other members of our Data Security, Privacy & Technology team at FMG for additional questions or to discuss conducting a risk assessment for your organization.