Democrats and Republicans Introduce Competing COVID-19 Data Privacy Bills

Responding to widespread calls for uniform rules and restrictions regarding the collection and use of individuals’ COVID-19-related health information, Congressional Republicans and Democrats have each recently introduced their own versions of federal COVID-19 data privacy bills.  Although both parties’ bills share the same big-picture goal of protecting individuals’ COVID-19 information, the Democrats and Republicans have each taken slightly different approaches, resulting in some crucial distinctions between the dueling bills.

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Posted in Legislation, Privacy, Regulations

The European Data Protection Board Issues Updated Guidelines on Consent

On May 4, 2020, the European Data Protection Board adopted updated guidelines on what does and does not constitute consent under the General Data Protection Regulation (GDPR) in certain situations.  Consent is one of the lawful bases to process personal information under GDPR.  To be valid, consent must be freely given, specific, informed, and unambiguous.  Consent is freely given only where a data subject has a genuine choice.

First, the Board made is clear that consent cannot be freely given where the choice for the data subject is between using the services of one controller and using the services of a different controller.  Therefore, if a controller gives data subjects the choice of “consent or don’t use my services,” it cannot point to choice in the marketplace generally as a means to prove that data subjects using its service have provided valid consent.  Such an argument, according to the Board, would require that controllers monitor developments in the market to ensure such choice still existed among its competitors.  It would also constantly raise the question of whether the competitors’ services were genuinely equivalent to controller’s services. 

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Posted in Privacy

The Children’s Online Privacy Protection Act and Online Learning

With schools across the nation closing their physical locations and moving to an online learning environment, it is important for school officials to understand their obligations under the Children’s Online Privacy Protection Act (COPPA).  COPPA regulates the collection of personal information from children, who are defined as individuals under the age of 13.  Generally speaking, the law prohibits operators of commercial websites or online services from collecting personal information from children without first obtaining verifiable parental consent.  A more detailed description of the law’s requirement is located here.       

When it comes to online learning, there are a few things to keep in mind.  First, COPPA applies to operators of commercial websites and online services.  It does not apply to non-profit organizations or educational institutions directly.  It, however, does apply to third-party technology companies through which many schools deliver on-line learning.  Importantly, when an operator provides a website or online service solely for the educational purpose of the school, and not for a commercial purpose, the school can provide the verifiable consent that is normally required from parents.  In this scenario, the school essentially stands in the shoes of parents for purposes of consent.

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Posted in Privacy, Uncategorized

Does the CCPA Apply to Financial Institutions?

Despite the global pandemic, the California Attorney General will begin enforcing the California Consumer Privacy Act on July 1 as planned, so even in this new work-from-home environment, businesses must continue to work towards compliance and resolve any open issues. One question we’ve been asked is whether the CCPA provides a complete exemption for financial institutions. We address that question below.

The CCPA imposes new requirements on businesses that collect and maintain the personal information of California consumers. It is meant to apply broadly to nearly every type of business that meets certain thresholds, even those, such as financial institutions, that are already regulated by federal privacy law. The Gramm-Leach-Bliley Act regulates the collection and disclosure of much of the same type of personal information that is regulated by the CCPA, and imposes strict requirements on financial institutions to protect customer data and provide notice to customers about the information they collect and maintain. Under the GLBA, financial institutions are required to assess and implement controls for risks to customer information, with a focus on areas that are particularly important to information security, including employee training and management, information systems, and preventing and responding to attacks and system failures.

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Posted in CCPA, Legislation, Privacy, Regulations

Cybersecurity Best Practices in the Remote-Working Environment

In the wake of the COVID-19 crisis, much of the workforce has shifted to working remotely, with many workers operating out of makeshift “offices” they created in their homes with little or no warning. Along with this remote work comes an increased cybersecurity threat. We recently issued a client alert to raise awareness about and help companies overcome these evolving challenges. The full alert can be found here. For the sake of brevity, however, we offer some quick tips below:

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Posted in Data Security, Policies and Procedures, Privacy, Uncategorized

Eight Best Practices for Avoiding Data Breaches

As data breaches are on the rise, the old adage rings true: it’s not a question of if, but when. More companies are experiencing crippling breaches and the statistics are alarming:  According to IBM Security’s Cost of a Data Breach Report 2019, the average cost of a data breach is $3.9 million and the average cost per record lost is $150. There was a time when organizations argued (perhaps correctly) that they could not have anticipated being breached or, even if they were, the size and scope of the compromised data. Such arguments no longer hold water and, increasingly, regulators are examining the reasonableness of the data security practices that were in place at the time of the breach, which can lead to fines and penalties tacked on to an already costly situation.

Ann-Marie Luciano and Jawaria Gilani of our firm’s State Attorneys General Practice analyzed recent state Attorney General and FTC enforcement actions to identify eight data security best practices that companies can adopt to mitigate the likelihood of a breach. Their findings are summarized on the infographic that can be accessed here:

Both our State Attorneys General and Privacy & Data Security Practice Groups are available to assist and take a deeper dive into the issues summarized above.

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Posted in Data Breach, Data Security, Policies and Procedures, Standards

Plaintiffs Allege Security Promises Ring False

John and Jennifer Politi, purchasers of several Ring products, have filed a putative class action lawsuit against Ring, LLC arising out of Ring’s alleged failure to implement industry standard security features into its products.  The case has been consolidated with a similar case that was filed in the U.S. District Court for the Central District of California in December 2019.

The allegations in the class action complaint are certainly disturbing.  The Plaintiffs allege that they purchased various Ring products, including a video doorbell and outdoor and indoor video surveillance cameras.  They allege that Ring’s advertisements include statements that these products bring the purchaser “peace of mind.”  They also allege that Ring represents to its customers that privacy and security is “at the top of [Ring’s] priority list” and that Ring takes measures “to help secure Ring devices from unauthorized access.”

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Posted in Internet of Things, Litigation

What Is A “Reasonable Link” Under CCPA?

On February 7, 2020, California Attorney General Xavier Becerra published modified regulations for the California Consumer Privacy Act after reviewing the public comments received on the initial draft regulations.  While the modified regulations provide some much-needed clarity, they also leave some notable gaps.  One of those gaps is the lack of clear guidance on what it means for a piece of data to meet the definition of “personal information” because it can be “reasonably linked” to a particular consumer or household.

The question is an important one.  The Act applies only to those entities that do business in California, collect consumers’ personal information, determine the purposes and means of processing that information, and meet one of three thresholds.  One of those thresholds is that the business “annually buys, receives for the business’s commercial purposes, sells, or shares for commercial purposes, alone or in combination, the personal information of 50,000 or more consumers, households, or devices.”

Given the magnitude of internet activity, that threshold may not be as high as it initially appears.  Businesses routinely collect the IP addresses of visitors to their websites and can tell when those IP addresses are associated with a California user.  If those IP addresses meet the definition of “personal information” and the business uses them for a commercial purpose, then, on average, only 140 Californians per day need to access the website for the business to meet the 50,000-consumer threshold.  Yet the business may collect further personal information, such as a name and shipping address, from a much more limited subset of those visitors.  For example, an e-commerce business may log hundreds of thousands of visits to its website from unique California IP addresses, but complete very few sales to California consumers.  Consequently, whether the Act applies to that business may turn on whether the IP address information meets the definition of “personal information” under the Act.     

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Is Privacy Profitable?

It is evident that a company must invest in its privacy practices to meet legal requirements if it wants to avoid investigation costs and potential civil penalties.  But can investment in privacy, data security, and data management bring benefits to the organization beyond those of bare legal compliance?  A recent Data Privacy Benchmark Study by Cisco suggests that it can.  According to the study, the organizations surveyed realized healthy returns on their privacy spend.  And interestingly, organizations with more robust privacy programs generally got a better return on further investment.  The survey is admittedly subjective and imprecise.  For example, it simply asked survey participants to estimate the value of the return they received on their investment in privacy.  Nevertheless, at the very least the survey gives some valuable insight into some areas that organizations believe investing in privacy and data management has broader benefits.

Operational Efficiencies

Investments in privacy and data management can bring operational efficiencies to an organization.  As a company grows, its data management practices must grow with it.  For example, a small organization may be able to get along just fine with an ad hoc approach to data management that is not formalized, documented, or systematic.  As the business and its data inventory grow, however, such informal systems can become unwieldy and wildly inefficient.  Yet inertia or a failure to prioritize can lead to neglecting investment in privacy and data management.  Therefore, renewed focus and investment in a company’s data management practices can lead to less duplication, improved workflows, and cost reductions.  A well-planned approach is also more scalable, so that the organization can continue to reap the benefits of increased efficiency even as it continues to grow. 

Preventing & Mitigating Data Security Incidents

Investments in privacy and data management can also help companies avoid the costs associated with data breaches and other data security incidents.  Of course, investments in new technologies can help an organization keep its data secure.  But investment costs should go beyond technology as well.  Investments in training programs can ensure that all employees know the content and importance of the company’s privacy practices.  Training can also help employees avoid becoming victims of social engineering attacks that may compromise company data systems.  By investing in training and technologies that will help to prevent data security incidents, companies can save the costs of breach notification, customer ill will, litigation, investigations, and fines.    

Additionally, companies with robust privacy and data security practices can more quickly and efficiently respond to and recover from data security incidents should they occur.  An updated, comprehensive, and rehearsed incident recovery plan can help a company avoid extensive revenue loss by quickly getting critical systems back online after a data security incident.  This is truly a case where an ounce of prevention is worth a pound of cure and continuing investment now can save a company countless dollars later. 

Increased Sales

Privacy is becoming a key touchpoint with consumers.  This is evident in Apple’s recent push to tout the privacy features of its latest iPhone.  This benefit, however, is not limited to companies that look to market privacy overtly.  Both consumers and the law increasingly demand that companies are transparent about their privacy practices.  No company wants to disclose privacy practices that show it is woefully behind its competitors or standard practices.  A commitment to privacy, on the other hand, is likely to result in better sales, brand recognition, and customer loyalty. 

Companies that act as vendors or service providers can also benefit substantially from investments in privacy.  Clients of these companies do not want to risk their own reputations by engaging vendors or service providers with questionable privacy practices.  Due diligence with respect to privacy and data security is increasingly becoming a key part of vendor management.  These companies, therefore, must ensure that their privacy practices meet or exceed industry standards, or else they risk losing key contracts and relationships with their clients. 

Here, investment in privacy certifications can play a key role.  Certifications such as EU-US and Swiss-US Privacy Shield, APEC Cross-Border Privacy Rules (CBPR), and ISO/IEC 27001 or ISO/IEC 27701 can serve as important proxies for signaling an organization’s commitment to privacy.  Investment in gaining and maintaining such certifications can reduce transaction costs by giving potential customers an easily and quickly recognizable sign that a company’s privacy and data management practices are in line with industry standards and best practices.      

Increased Investment

Investing in privacy and data management can make an organization more attractive for investment.  Well informed investors may scrutinize a public company’s privacy practices when deciding whether to invest.  The Securities and Exchange Commission has issued interpretive guidance on disclosure of cybersecurity risks and incidents, recognizing that these subjects can materially affect investment decisions.  Senators have introduced a bill that would require publicly traded companies to disclose cybersecurity expertise at the board level.  In such an environment, a public company that lags behind on its investments in privacy and data security risks leaving investor money on the table. 

Similarly, companies in the mergers and acquisitions market should view investment in privacy and data security as essential to maximizing the company’s value.  Acquiring companies are putting increased emphasis on the privacy practices of target companies in due diligence.  After all, no one wants to purchase a company that is at risk of becoming a financial burden due to costs associated with prior data breaches or sloppy data management practices.  In addition, the more developed a company’s data management practices are, the more cleanly the acquiring company can integrate them into its own systems and operations.  Simply put, organizations that have invested the time and money to ensure their privacy practices are solid and up to date make more enticing targets than those that have not.

Successful businesses are those that properly determine where they should deploy their limited funds to get the best return on investment.  Recent trends show that investment in privacy and data security are an important part of that conversation.  

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Posted in Data Security, Privacy

In Search Of A Federal Data Privacy Law

In the absence of a comprehensive federal data privacy and data security law, states continue to fill the gap. The California Consumer Privacy Act took effect on January 1, 2020, and several other states have similar laws under consideration. Nevertheless, in search of a federal solution, two data privacy laws, one from each side of the aisle, are spurring debate in the Senate. Senator Maria Cantwell (D-WA) and several of her Democratic colleagues have introduced the Consumer Online Privacy Rights Act (COPRA), while Senator Roger Wicker (R-MA) has unveiled the United States Consumer Data Privacy Act (CDPA). Both bills share many similarities, but the differences between them are significant as well.

What Entities Are Covered?

COPRA would apply to any entity that is subject to the Federal Trade Commission Act and processes or transfers covered data. CDPA would cover those entities as well, along with common carriers and non-profit organizations. Both bills have exceptions for small businesses, and both bills define a small business as one that over the preceding 3 years, on average, had annual gross revenues of $25,000,000 or less, processed the covered data of less than 100,000 individuals or devices, or derived less than 50 percent of its revenue from transferring covered data. While COPRA excludes these small businesses completely, CDPA excludes them only from the right to access, correction, deletion, and portability provisions along with data minimization requirements.

What Data Is Covered?

Both bills make a distinction between “covered data” and “sensitive covered data.” Both bills similarly define covered data generally as information that identifies or is linked or reasonably linkable to an individual or consumer device. The COPRA definition, however, also specifically includes “derived data,” which it defines as data that is derived from other information sources about an individual, household, or device. Both bills exclude deidentified data, employee data, and publicly available information from the definition of “covered data.” CDPA also excludes aggregated data from its definition of covered data.

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About Cyber Law Monitor
In the new digital world, individuals and businesses are almost entirely dependent on computer technology and electronic communications to function on a daily basis. Although the power of modern technology is a source of opportunity and inspiration—it also poses huge challenges, from protecting privacy and securing proprietary data to adhering to fast-changing statutory and regulatory requirements. The Cyber Law Monitor blog covers privacy, data security, technology, and cyber space. It tracks major legal and policy developments and provides analysis of current events.
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