Post Spokeo: Two recent cases split on the nature of data breach injuries

In Joan Longenecker-Wells v. Benecard Services, Inc., plaintiffs were employees who learned that their personal information, including date of birth, social security number, addresses, etc. which resulted in fraudulently filed tax returns. The Third Circuit dismissed the Plaintiff’s claims, stating that their negligence claims were barred by the economic loss doctrine. The Third Circuit explains:

The District Court held that because Plaintiffs’ negligence claim sounds only in economic loss resulting from the fraudulent tax returns filed with their information, the economic loss doctrine bars their claim. We agree.

Food for thought. Can we say that a plaintiff, who experiences this grave injustice of losing the benefit of a 5 figure tax return is only sustaining economic loss? The real harm and the risk of ongoing identity fraud is more than economically and emotionally harmful. We must focus on the deeper rooted issue that lies at the heart of data intrusion cases. The fundamental right to privacy that has deep roots in our history now extends to our digital privacy.

In contrast, we have Taylor v. Spherion Staffing LLC, et al. No. 3:15-cv-2299 (N.D. Ohio 2015), Ernst v. Dish Network, LLC, et al. No. 1:12-cv-8794 (S.D.N.Y May 27, 2016); Hillson et al. v. Kelly Services, No. 2:15-cv-10803 (E.D. Mich. June 8, 2016). These cases settled and involved allegations of statutory violations. Keep in mind that Spokeo left open the possibility that a statutory violation may involve a real risk of harm to satisfy the concreteness requirement. Thus, settlement may have presented a more attractive alternative than extended litigation about the sufficiency of alleged harms.

Understanding the value of Privacy is NOT “Privacy Paranoia”

We should care about Privacy because it is a fundamental aspect of living a free, autonomous existence.

We should care about Privacy because it is a fundamental aspect of living a free, autonomous existence.

Why do people not care about Privacy? Some will offhandedly claim, “I have nothing to hide.” Others will say that big data and government surveillance should not concern those who are law abiding and innocent of wrongdoing. But the problem with this response is that it reveals a lack of understanding regarding the value of privacy. Privacy is not a mere shield or wall to hide certain details about us from others. The concept is not reducible to single acts of intrusion or violation of one’s personal sphere. To think about Privacy in terms of someone peering into your window to watch you with your family is to focus on only one tiny strand of tapestry or one grain of sand in a beach.

Think of the value of Privacy this way: If you drank one glass of lead-laden water from Flint, would you see a quick path to cancer or any other potentially deadly disease? Probably not. But the problem for those in Flint was that they drank water contaminated with lead for years. The cumulative effect, the acts taken in the aggregate were what caused so many in Flint to suffer irreversible health problems.

This is the same way the Privacy violations harm each of us and our society as a whole. The information collection, aggregation, insecurity, increased accessibility and decisional inferences/interference (“decisional interference” was coined by Prof. Daniel Solove).

While nebulous, Privacy is important because it affords individuals a basic amount of autonomy and control over facts and details that make each unique. In the aggregate, “big data” seems harmless. But as we have seen, there are many ways to hack and identify personally identifiable information (PII). When the PII and/or valuable data sets of individuals get in the wrong hands, one loses control over their finances and their digital existence. One of my data breach clients suffered and continues to see fraudsters obtain lines of credit, obtain a Washington State driver’s license, and so on. Folks: This is NOT Privacy Paranoia. It is a well informed fact that we need to care about how our PII is disclosed and safeguarded.

Most people do not realize how their data is getting sold in myriad forms either legally or illegally. I will talk about this more in future posts. That private data has value in virtually every imaginable industry. If it matters to others, it certainly should matter to you. At the very least, to value your Privacy is to value control over the information that is accessible about you. If you don’t care about having that minimal amount of control, then feel free to broadcast your SSN along with all of your family’s SSNs and dates of birth.

Walmart, Home Depot and banks are suing for data breach class action lawsuits

Walmart, Home Depot and Wendy's are some of the companies filing lawsuits for data breaches.

Consumer class action lawsuits are not a company’s worst nightmare, when they experience a massive data breach. Nope. It’s the lawsuits that Walmart, Home Depot and Wendy’s are filing for data breaches that can result in more massive losses for the breached company.

Headlines about the latest data breach continue to surface on the news about as frequently as we hear about Trump’s campaign travails. Interestingly, when Walmart,Home Depot or Wendy’s sues Visa and MasterCard for their data breach issues, those lawsuits don’t make the front pages. Did you know that banks got together and filed a class action lawsuit against Target for the much publicized data breach? The consumer class action lawsuits against the health insurance behemoths like Anthem and Premera have garnered a lot of attention. In the meanwhile, some of the Goliaths are suing the other Goliaths for their class action was certified late last year.

A takeaway from all of these class action is that the victims and plaintiffs in data breach lawsuits  are not only everyday  consumers, they are also retail giants, banks, employees, etc. When an organization fails to exercise due care in safeguarding personal information, it had better get ready to face the wrath of someone…

What’s up with the careless attitude towards inadequate data security?

An increasingly common and relatively easy way for hackers to access sensitive data is through “phishing,” where unwitting recipients of email or texts (SMS phishing or “smishing”) trust the sender with the sought after information. According to Verizon’s new 2016 Data Breach Investigations Report, about 90% of security incidents stem from some form of phishing.  Verizon reports that phishing continues to trend upward and is found in the most opportunistic attacks as well as “sophisticated nation-state tomfoolery.” But president of the Olympia School District chuckles (yes, that’s right, chuckles) at its recent breach resulting from phishing because, according to what he told MyNorthwest reporter, Sara Lerner:

“It happens…it’s an opportunity to have that conversation and move forward with it. You could call it a teachable moment if you want to,” he said, with a chuckle. 

That kind of cavalier attitude is exactly the problem that we have with so many school districts and government agencies. One cannot be careless, when it comes to sensitive data, whether it is at a school district or at the Health Care Authority/Apple Health Data Breach, where an employee’s mishandling and HCA’s insufficient privacy protocols allowed the medical records of 91,000 individuals to get sent to an unauthorized recipient 

As we continue our class action litigation regarding the Anthem data breach as well as the Amerigroup Washington data breach, I learn more about how stolen protected health information (PHI) is marketed on the dark net. To those who want to toss caution to the wind, feel free to do so with your own data. Just not everyone else’s.

BTW: If you were one of those who received a data breach notification from HCA or the Olympia School District, please contact me at Catherine@Stritmatter.com or 206.448.1777. I would like to learn your perspective and story, as well as share the details of how we’re trying to hold these organizations accountable to prevent future data breaches.

Apple’s Strong Stance on Privacy

Bravo Apple for standing up for privacy and data security.

I usually avoid discussing September 11, 2001. But this is relevant. Since 9/11, so many private citizens in this country think it’s ok to give up privacy in the name of homeland security. They will say, “I have nothing to hide,” only those like the terrorists have anything to hide. But valuing our privacy is not about wanting to hide information. It is about having control over what we disclose to whom at the time when we choose. When a governing body has easy access to the minute details of each of us, we have given away so much of ourselves without anything in return (except the sweet promise of catching the bad guys). We have already made it so easy with government surveillance programs.

Trust me: Just thinking about 9/11 still gets me spitting mad at the radicals who claimed to kill in the name of their god. In one of the most horrific ways imaginable (burning innocent people to death, who were trapped in the towers) they stole my brother and best friend from me on his first day at his new job at the 96th floor of the WTC North tower. Many other brothers, sisters, fathers, and mothers were robbed from their families that day as well. If anyone has an inextinguishable desire to rid our world of terrorists, it is me.

But ramming down iPhone security is not the way to go about fighting terrorism. Weakening security that protects each of us from bad actors for the sake of getting a discrete set of information is not the answer.

Each of us need to understand why our personal data and privacy is worth fighting for. If we are ready to throw our privacy out the window for the sake of an investigation, we give in to all that we have fought for since 9/11.

Why care about Data Privacy for your family? #PrivacyAware

Jan. 28, 2016 is Data Privacy Day. Let's do what we can to defend our children's privacy.

Jan. 28, 2016 is Data Privacy Day. Let’s do what we can to defend our children’s privacy. #PrivacyAware

Tomorrow, January 28, 2016, is Data Privacy Day.  Big deal? It actually is: The first Data Privacy Day that occurred in the United States and Canada was in 2008, which was observed as an extension of the Data Protection Day celebration in Europe. Data Protection Day commemorates the Jan. 28, 1981 signing of Convention 108, which was the first legally binding international treaty dealing with privacy and data protection.

Now led by the National Cyber Security Alliance (NCSA), Data Privacy Day has become the signature event promoting privacy awareness. Without committed defenders of privacy, like the Electronics Frontier Foundation, we would not have seen a complaint filed with the FTC against Google for unauthorized collection of school aged children’s information, when they are using Google Apps and Chromebooks in their schools. Google’s unauthorized collection of personal information from school children via Chromebooks and Google Apps for Education (GAFE)—caught the attention of Senator Al Franken, a ranking member of the Senate Judiciary Subcommittee on Privacy, Technology and the Law. Franken responded by writing a letter to Google CEO Sundar Pichai asking for information about GAFE’s privacy practices.

The first step to ensure that our student privacy campaign succeeds, is to educate ourselves as parents. This way, we can direct our energy and knowledge effectively. On this Data Privacy Day, take the time to check out the resources that the Electronic Frontier Foundation compiled to regain control of your children’s privacy. Please spread the word about student privacy by sharing these and similar resources with other parents!

I can’t emphasize enough how important it is that parents understand their and their children’s rights. We live in a world where parents may be asked by schools to waive those rights before their youngsters are permitted to use technology in the classroom. Third parties will too often encourage parents to give schools consent to release their children’s information to those very third parties.

Interested in becoming part of the “privacy defender team?” There are many ways in which you can get involved.

 

Medical records data breaches rose over 40% in 2014

In 2014 43% of all stolen data was medical records. Credit: The Economist

In 2014 43% of all stolen data was medical records. Credit: The Economist

I wanted to share the above infographic from The Economist. which illustrates the spike in data breaches since 2005. Most notable: Medical records data breaches rose over 40% last year. Subcontractor and Employee negligence are also on the rise. A couple of positive takeaways is that there is apparently less insider theft and a decreasing percentage of breaches that include social security numbers.

 

Pendulum Swings in Favor of Consumers for Data Breach Cases

I read an interesting post earlier today on one of WSJ’s blogs. It admitted that the pendulum has swung in favor of consumers in data breach cases. While defendant companies continue to get cases bounced on the flawed premise that no its data breach victims have not suffered any “actual harm,” more courts are sympathetic to the consumers.

Two big cases come to mind. One is the Wyndham data breach case (FTC brought the action). This past August, the Third U.S. Federal Circuit Court ruled against Wyndham, finding that the FTC can take action against organizations that adhered to poor IT security practices.

Several weeks before Wyndham was decided, the U.S. Court of Appeals for the Seventh Circuit reinstated a data breach case against Neiman Marcus. Why? It found that the risk of harm was enough to establish standing. The 350,000 affected customers “should not have to wait until hackers commit identity theft or credit-card fraud in order to give the class standing,” the court ruled.

The Seventh Circuit, however, reinstated both types of claims – those who had incurred expenses tied to the Neiman Marcus hack, and those who feared identity theft in the future. Chief Judge Diane Wood pointed out that a breach victim’s fear of hackers in the future is not too “speculative” for a day in court.

Wood asks: “Why else [other than to cause harm] would hackers break into a store’s database and steal consumers’ private information?”

 

Breaking the vow of non-Googleness

Imagine life without Google. It's pretty darn close to impossible.

Imagine life without Google. It’s pretty darn close to impossible.

Can you imagine a world without Google? I can’t.

I have a Droid phone as well as an iPhone. But everything tethers to my Google world — contacts, maps, videos, etc.

It wasn’t always this way, but internet marketers (including Google) have figured out that the key to making money off of content is via online profiling and highly targeted advertising. If you Google something or shop on Amazon, do you notice how your latest online shopping follows you to online news sites, your gmail, yahoo mail, etc? That’s how sophisticated online marketing has grown. (As I mentioned elsewhere, I too used to work in the online marketing/high tech world. We would hear concerns about privacy, but needed to tune them out to figure out how to get the most bang for our clients’ marketing/advertising dollars.)

Finnish security researcher and chief research officer Mikko Hypponen tried to vow a life of unGoogleness. After all, he understood his privacy was threatened every time he broke his vow. But, try as he might, he couldn’t.

Hypponen spoke at a WSJ technology conference, WSJDLive, openly confessed that the Internet has evolved into a privacy nightmare because of the users’ reliance on “free” services. (I will talk more about “free” and sex in an upcoming blog post.)

“I really tried getting rid of Google,” he said. “You can’t avoid Google. We are way beyond that.” True that.

Let me know if you’ve succeeded in upholding the vow of nonGoogleness. I’d love to know how you did it!

Senator demands more details from Experian re T-Mobile Data Breach

Top Democrat Senator Sherrod Brown (D-OH) on the Senate Banking Committee demands that credit agency Experian provide more details about a data breach in which personal information on millions of T-Mobile customers was stolen.

“Protection of this information is of the utmost importance, especially because the scope of the information is vast and virtually no consumer can apply for credit without entering your system,” Brown wrote in a letter sent to Experian today.

Experian said earlier this month hackers had broken into a server containing data on T-Mobile customers. The breach exposed personal information of 15 million customers and possible customers, including Social Security numbers of those who might have applied for T-Mobile cell service between Sept. 1, 2013 and Sept. 16, 2015.

Experian’s main consumer credit database was not broken into, Experian says, and T-Mobile and Experian are providing two years of credit monitoring services and identity theft recovery services for free.

Along with increased disclosure about the breach, Brown also asks Experian to provide “credit freezes” to affected customers for free. Credit freezes allow customers to restrict access to their credit reports in cases of potential identity theft, but typically credit agencies charge for this service. Brown also asked Experian to explain how well its credit monitoring and identity theft protection services work.

Data breaches, identity theft and cyber security have become a priority as more companies have disclosed breaches of their systems. Lawmakers have attempted to legislation to address the issue, including a bill that would require companies to inform their customers about a breach within 30 days of learning about it themselves.

Experian, in a statement, said they had received Brown’s letter, “understand the concerns raised” and will respond accordingly.

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