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Data Privacy

Uber Criminal Complaint Raises the Stakes for Breach Response

by Todd McClelland, Austin Mooney and McDermott Will & Emery | Sep 3, 2020 | Big Data, Cybersecurity, Data breach, Data Privacy, Enforcement, Mobile Apps

On August 20, 2020, a criminal complaint was filed charging Joseph Sullivan, Uber’s former chief security officer, with obstruction of justice and misprision of a felony in connection with an alleged attempted cover-up of a 2016 data breach. These are serious charges for which Mr. Sullivan has the presumption of innocence.

At the time of the 2016 data breach, Uber was being investigated by the US Federal Trade Commission (FTC) in connection with a prior data breach that occurred in 2014. According to the complaint, the hackers behind the 2016 breach stole a database containing the personal information of about 57 million Uber users and drivers. The hackers contacted Uber to inform the company of the attack and demanded payment in return for their silence. According to the complaint, Uber’s response was to attempt to recast the breach as a legitimate event under Uber’s “bug bounty” program and pay a bounty. An affidavit submitted with the complaint portrays a detailed story of deliberate steps undertaken by Mr. Sullivan to allegedly conceal the 2016 breach from the FTC, law enforcement and the public.

Contemporaneous with the filing of the complaint, the Department of Justice (DOJ) submitted a press release quoting US Attorney for the Northern District of California David L. Anderson:

“We expect good corporate citizenship. We expect prompt reporting of criminal conduct. We expect cooperation with our investigations. We will not tolerate corporate cover-ups. We will not tolerate illegal hush money payments.”

The press release also quoted Federal Bureau of Investigation (FBI) Deputy Special Agent in Charge Craig Fair:

“Concealing information about a felony from law enforcement is a crime. While this case is an extreme example of a prolonged attempt to subvert law enforcement, we hope companies stand up and take notice. Do not help criminal hackers cover their tracks. Do not make the problem worse for your customers, and do not cover up criminal attempts to steal people’s personal data.”

Collectively, the case and statements from the DOJ are probably a unicorn based on, if the facts as alleged are true, a case involving a deliberate cover-up of a data breach in the course of an active FTC investigation. However, many of the statements from the DOJ and the specific allegations in the complaint appear to have potentially far-reaching implications (for companies, their executives and cybersecurity professionals) that breach response counsel must seriously consider in future incidents.

A common question when responding to a ransomware or other cyberattack is whether and when to inform law enforcement. The criminal complaint has the potential to make this an even more difficult decision for future cyberattack victims. Further, while the alleged conduct at issue may seem particularly egregious, the DOJ’s statements could cause a blurring of the lines between what the government may contend is illegal concealment of a security incident and activities generally thought to be legitimate security incident risk and exposure mitigation. We explore these and other key takeaways from the criminal complaint in more detail below.

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The Toughest Problem Set: Navigating Regulatory and Operational Challenges on University Campuses

by Jennifer S. Geetter and Michael W. Ryan | Aug 27, 2020 | Data Privacy, Mobile Apps, Workplace Privacy

When the academic year ended in the spring of 2020, many US university students assumed that a return to campus would be straightforward this fall. However, it is now clear—at least in the near term—that a return to the old “normal” will not be possible. Some universities have concluded that their best course of action is to offer only distanced learning for the time being. Other universities, however, are welcoming students back onto campus, and into residence and dining halls, classrooms, labs and libraries. Each of those universities is developing its own approach to retain the benefits of on-campus student life while reducing risk to the greatest extent possible; nevertheless, some have had to adjust their plans to pivot to remote learning when faced with clusters of positive cases on campus. One thing is clear: The fall semester will be a real-time, national learning laboratory.

Because widespread, rapid testing remains unavailable in many locations, universities have had to find innovative ways to implement testing, tracing and isolation protocols to reduce the risk of transmission among students, faculty and staff. There is no one perfect protocol—all universities are in unchartered waters. But there are a few key components university administrators may want to consider and address:

Apps: Symptom checkers, contact tracing and other apps can be useful in identifying and focusing attention on the onset of symptoms, fostering accountability and identifying high-risk exposure. In considering whether to incorporate apps and related technologies into their back to campus plans, universities must anticipate and address considerations related to privacy, security and reporting of results, and will need to consider how such apps are hosted (for example, through Apple’s App Store) and whether any third parties will have access to the personal data collected.

Contact Tracing: In addition to the issues noted above, contact tracing efforts also present other challenges, including managing reliability, over/under inclusiveness and liability (for both false positives and false negatives). In addition, the effectiveness of contact tracing is closely tied to its speed and comprehensiveness; to implement a successful contact tracing program, universities will need to balance effectiveness with privacy and autonomy.

CLIA: The Clinical Laboratory Improvement Act (CLIA) will require that many of the tests be performed in CLIA-certified (and state-licensed, where required) space. Universities will need to consider how best to handle building out additional compliant space, creating additional “point of care” testing or specimen collection sites if needed to test students, faculty and staff where they are and validating the test(s) being offered. Tests that are not yet validated likely cannot be used to return patient-specific results that inform student and staff care or be used to prompt “official” testing.

FDA/Emergency Use Authorizations (EUA): In general, the Food and Drug Administration (FDA) expects developers of molecular, antigen and (in the case of test kit manufacturers) antibody tests to obtain an EUA. However, under FDA enforcement policies during the pandemic, many of these same tests—if validated and offered with appropriate agency-mandated disclaimers—can be offered before [...]

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Schrems II Special Report: What Does the CJEU’s Decision Mean for Transfers From the EEA to the US?

by Romain Perray and McDermott Will & Emery | Aug 7, 2020 | Consumer Protection, Cybersecurity, Data Privacy, Data Transfers/Safe Harbor/Privacy Shield

For our Schrems II Practical Guidance special report, members of McDermott’s internationally recognized Global Privacy & Cybersecurity group have outlined practical guidance and next steps to ensure your business is prepared for what’s next following the final ruling in Data Protection Commissioner v. Facebook Ireland Limited, Maximillian Schrems.

As your organization navigates the post-Schrems II landscape following the CJEU’s recent decision, consider McDermott your first point of call. We have deep experience advising global clients on compliance with the complex array of privacy and cybersecurity obligations affecting data that crosses borders or relates to foreign employees and individuals.

Practical Guidance for Businesses (US Edition)

Practical Guidance for Businesses (Global – EEA/UK Edition)

Key Issues We’re Tracking as CCPA Enforcement Nears

by Amy C. Pimentel, Austin Mooney and McDermott Will & Emery | Jun 29, 2020 | Consumer Protection, Data Privacy

Although 2020 has already provided more than its share of surprises for businesses, one thing appears to remain unchanged: the California attorney general’s commitment to enforcing the California Consumer Privacy Act beginning July 1, 2020. As companies work to ensure compliance with this legislation, we explore several key issues.

No one will disagree that a lot has happened since the California Consumer Privacy Act (CCPA) went into effect on January 1, 2020. Despite the Coronavirus (COVID-19) pandemic, the invasion of murder hornets and a number of other not-entirely pleasant surprises that 2020 has brought us thus far, it appears that the California attorney general is still committed to enforcing the CCPA starting on July 1, 2020. As your business prepares for CCPA enforcement, there are a number of issues to keep in mind:

1. The CCPA regulations still have not been finalized and are unlikely to take effect until October 2020.

The attorney general’s regulations, which aim to interpret and implement the important provisions of the CCPA, still have not been finalized. March 27, 2020, marked the end of the comment period for the current draft regulations (which was the second set of modifications released by the attorney general). We are now waiting to see whether the attorney general will issue yet another set of proposed modifications, or submit the current version to the California Office of Administrative Law (OAL) for approval. For the regulations to take effect July 1, the OAL would need to receive and approve the final regulations by May 31, which appears to be an unlikely scenario. Accordingly, the regulations likely will not take effect until October 1, and could potentially be delayed until 2021. As a result, companies should be prepared for CCPA enforcement to begin before the regulations take effect.

2. We’ve started to see the effects of the private right of action.

California consumers have begun to file lawsuits seeking to enforce their (purported) rights under the CCPA. The cases present a first opportunity for courts to examine the private right of action created by the law. One case, in particular, presents a potentially unanticipated theory of harm, and could prove fundamental in establishing the extent of liability for businesses subject to the CCPA. We describe these lawsuits in greater detail here. Because these lawsuits will begin to define the contours and scope of the CCPA, businesses subject to the CCPA should keep a close eye on their progress.

3. The Office of the Attorney General lacks enforcement resources.

As we wrote in a previous article, despite significant enforcement expenditures by the Office of the Attorney General (OAG), it is still an agency with limited resources. This is even more true now that more of the OAG’s resources are likely devoted to COVID response and related urgent priorities. Many expect that the OAG will only be able to pursue a limited number of CCPA enforcement actions, particularly if, as expected, it takes on large and well-funded companies. Media reports continue to indicate that the attorney [...]

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Importance of CCPA Compliance Highlighted by First Round of Private Actions

by Jonathan Ende and McDermott Will & Emery | Jun 26, 2020 | Consumer Protection, Data breach, Data Privacy

The first wave of California Consumer Privacy Act litigation has begun to roll in, and the complaints are already raising interesting questions about the scope of CCPA’s private right of action. The actions assert a variety of claims under numerous theories and present a broad range of potential risks to businesses subject to CCPA. In light of the many questions that surround CCPA’s private right of action, the extent of possible liability from private litigation is still largely unknown and potentially significant.

The first wave of private lawsuits filed under the California Consumer Privacy Act (CCPA) has begun to roll in, and the complaints are already raising interesting questions about the scope of CCPA’s private right of action. The recent explosion in popularity of video conferencing and social media software in response to the COVID-19 pandemic—and the technical issues some of these products have experienced—has inspired its own wave of litigation, with several cases alleging violations of CCPA along with other laws. The flurry of litigation activity makes clear the importance of CCPA compliance, particularly in the current challenging business environment. Although it’s too early to tell how these lawsuits will play out, some themes are emerging.

Refresher on CCPA Private Right of Action

Businesses are now familiar with the long list of privacy obligations imposed by CCPA and enforceable by the California attorney general. Although CCPA contains a private right of action, that right is applicable only to CCPA’s sole data security provision. Cal. Civ. Code § 1798.150 authorizes consumers to institute a civil action against a business whose failure to implement and maintain reasonable security procedures resulted in the unauthorized access and exfiltration, theft or disclosure of the consumer’s nonencrypted and nonredacted personal information. The definition of “personal information” in the context of § 1798.150 is narrower than the expansive definition applicable to other CCPA provisions, applying only to an individual’s name together with an identifying data element, such as a Social Security number, driver’s license number or medical information. A plaintiff may seek injunctive or declaratory relief, actual damages or statutory damages in an amount not less than $100 and not greater than $750 per consumer, per incident. Before seeking statutory damages, however, the consumer must provide the business 30 days’ written notice to cure the alleged violation. The “notice and cure” provision is the subject of some controversy, because CCPA does not explain how a violation that resulted in a data breach can be “cured.” CCPA also explicitly prohibits consumers from using alleged violation of its provisions “to serve as the basis for a private right of action under any other law,” thus, in theory, prohibiting a plaintiff from alleging that a CCPA violation constitutes a violation of the California Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200, et seq. or other statutes. That hasn’t stopped plaintiffs from trying, as described below.

Theme #1: Suits Brought as Class Actions

Most, if not all, of the lawsuits brought under CCPA thus far have been brought as [...]

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New California Privacy Ballot Initiative Would Expand the CCPA

by Amy C. Pimentel, Austin Mooney and McDermott Will & Emery | Jun 26, 2020 | Consumer Protection, Data Privacy

A proposed ballot initiative in California known as the California Privacy Rights Act, which is likely to pass if placed on the 2020 ballot, would both clarify and expand the existing California Consumer Privacy Act. Companies doing business in the state should closely monitor these developments and prepare for compliance, as we outline in this article.

A California ballot initiative known as the California Privacy Rights Act (CPRA) would clarify and expand the California Consumer Privacy Act (CCPA), granting significant new rights to consumers and imposing additional liability risks on companies doing business in the state. The CPRA is an update to the California Privacy Rights and Enforcement Act (CPREA) ballot initiative, which was proposed in late 2019 by the Californians for Consumer Privacy, which also sought to broadly amend and prevent changes to the CCPA that would undermine its consumer protections.

The proposed ballot initiative, submitted by the architects of the CCPA, garnered 900,000 signatures, far more than the roughly 625,000 necessary for certification on the 2020 ballot. Early polling reportedly shows strong support for the measure, so assuming the signatures are approved and the CPRA is placed on the ballot, it is considered likely to pass and to take effect on January 1, 2023.

The CPRA proposes a myriad of changes, and this article will not address them all. What follows is a discussion of the most significant changes for businesses and consumers in California, followed by enforcement and implementation considerations.

New Clarifications, Rights and Responsibilities

In a number of areas, the CPRA would modify the current CCPA in ways that are likely to be welcomed by companies grappling with the often ambiguous and unclear obligations under the current law:

“Personal information” would no longer include information that is manifestly made public by the individual or the media.
Businesses that receive deletion requests would be expressly permitted to maintain records of these requests for compliance purposes.
Consumers could no longer require a business to generate a list of “the categories of personal information it has collected about that consumer” in response to access requests.
“Service providers” and “contractors” (a new term that appears to replace the “third party” contract provisions) would not need to respond directly to consumer requests to access or delete information.

However, these changes are largely overshadowed by the initiative’s imposition of significant new rights for consumers and responsibilities for businesses subject to the CCPA. These include the following requirements:

Businesses would need to contend with a new opt-out right to “Limit the Use of My Sensitive Personal Information,” which would require enhanced scrutiny of business practices involving certain “sensitive” categories of information. These sensitive categories of information are reminiscent of (but broader than) the categories of information typically regulated by US data breach notification statutes or are considered “special categories” under the EU General Data Protection Regulation. For purposes of the CPRA, “sensitive” categories will include certain government identifiers (Social Security number, driver’s license, state identification card or passport number); a [...]

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Public Backlash Calls Use of Facial Recognition Systems into Question

by McDermott Will & Emery | Jun 25, 2020 | Big Data, Consumer Protection, Data Privacy, Workplace Privacy

In recent weeks and months, legal and technical issues related to use of facial recognition systems in the United States have received national attention, including concerns that the technology lacks accuracy in identifying non-white individuals and that its widespread use by police departments may play a role in racially discriminatory policing. Privacy considerations will play a key role in the ongoing debate over the future of facial recognition technology.

Facial recognition systems (FRS) are automated or semi-automated technologies that analyze an individual’s features by extracting facial patterns from video or still images. FRS use attributes or features of an individual’s face to create data that can be used for the unique personal identification of a specific individual. FRS use has grown exponentially in recent years. In addition to widespread adoption by law enforcement agencies, FRS are also frequently used in retail, banking and security sectors, such as airport screening. Particularly in recent weeks and months, legal and technical issues associated with FRS have come to the forefront, including concerns that the technology lacks accuracy in identifying non-white individuals and that its widespread use by police departments may play a role in racially discriminatory policing.

In response to the global Coronavirus (COVID-19) pandemic, public health agencies and private sector companies have considered ways that FRS might be used in conjunction with proximity and geolocation tracking data to control the disease’s spread. Some foreign governments have implemented extensive biometric and behavioral monitoring to track and contain the spread of the virus, and have used FRS to identify persons who have been in contact with COVID-19-positive individuals and to enforce quarantine or stay-at-home orders. By contrast, use of FRS in the United States already faced opposition because of pre-COVID-19 data privacy concerns, and has encountered increased backlash after the civil rights protests of the past month due to concerns over the technology’s accuracy and accompanying questions regarding its use by law enforcement agencies.

Accuracy Concerns

There are currently no industry standards for the development of FRS, and as a result, FRS algorithms differ significantly in accuracy. A December 2019 National Institute of Standards and Technology (NIST) study, the third in a series conducted through its Face Recognition Vendor Test program, evaluated the effects of factors such as race and sex on facial recognition software. The study analyzed 189 facial recognition algorithms from 99 developers, using collections of photographs with approximately 18 million images of eight million people pulled from databases provided by the US Department of State, the Department of Homeland Security and the Federal Bureau of Investigation. The study found disproportionately higher false positive rates for African American, Asian and Native American faces for one-to-one matching, and higher rates of false positives for African American females for one-to-many matching. The effect of the high rate of false positives for African American females put this group at the greatest risk of misidentification. While law enforcement is encouraged to adopt a high threshold recognition percentage—often 99%—for the use of FRS, in reality police departments exercise [...]

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Future Forward: Data Arrangements During and After COVID-19

by Stephen W. Bernstein | May 12, 2020 | Big Data, Cybersecurity, Data Privacy, Data Transfers/Safe Harbor/Privacy Shield, General Interest, Mobile Apps, Telehealth

The need for speedy and more complete access to data is instrumental for healthcare providers, researchers, pharmaceutical, biotech and device companies and public health authorities as they work to quickly identify infection rates, disease trends, outcomes, including antibodies, and opportunities for treatments and vaccines for COVID-19.

A variety of data sharing and collaborations have emerged in the wake of this crisis, such as:

Requests and mandates by public health authorities, either directly or via providers’ business associates requesting real time information on infections and bed and equipment availability
Data sharing collaborations among providers for planning, anticipating and tracking COVID-19 caseloads
Data sharing among providers, professional societies and pharmaceutical, biotech and medical device companies in search of testing options, treatment and vaccine solutions, and evaluation of co-morbidities

CLICK HERE TO VIEW THE FULL INFOGRAPHIC.

Washington State Takes the Lead in CCPA Copycat Legislation Race, Trends Emerge

by Mark E. Schreiber and McDermott Will & Emery | Mar 6, 2020 | Consumer Protection, Data Privacy

Since the California Consumer Privacy Act (CCPA) took effect on January 1, 2020, “copycat” legislation has been introduced at a dizzying pace by state legislatures across the country. Taking their cues from CCPA, at last count 16 states have borrowed language from California’s watershed law regarding consumer notices, data subject rights requests, and definitions of “personal information, “sale” of data and other key items. The likely intent is to provide equal (or, in some cases, greater) protections to the residents of their states.

As a practical matter, however, none of the proposed laws is identical to CCPA (nor to each other); some look to the EU General Data Protection Regulation (GDPR), and each takes a complex approach that requires careful reading. The proposed Washington Privacy Act (SB 6281) has been touted as the most comprehensive data protection law in the United States and combines elements of CCPA and GDPR, adding specific protections for biometric information. Late last week, the Washington House added significant enforcement “teeth” by passing an amendment that would provide a private right of action under the Washington Consumer Protection Act for any violation of the Privacy Act.

Despite the lack of uniformity among the recently proposed bills across the country, three key trends are emerging:

Trend #1 – Increased Push for a Private Right of Action

In Washington, pending legislation would extend the private right of action beyond alleged harm arising from data breaches to any violation of the proposed Washington Privacy Act. While prior versions of the legislation vested exclusive enforcement authority in the Washington Attorney General—with penalties up to $7,500 per violation—late last week, the Innovation, Technology and Economic Development Committee in the Washington House approved an amendment to SB 6281 under which any violation of the Privacy Act would be deemed a per se violation of Washington’s Consumer Protection Act. While it is unclear exactly how damages will ultimately be calculated, a broad private right of action is a significant enforcement mechanism for Washington consumers. Supporters of the amendment argued that without a private right of action, companies would have little incentive to comply with the law because the Attorney General’s office lacks the resources to undertake many enforcement actions.

Recent bills propose legislation that closely tracks the CCPA’s private right of action for individuals who allege that they were harmed by data breaches caused by a business’ failure to implement “reasonable security” measures. Both the Illinois Data Transparency and Privacy Act (SB 2330) and New Hampshire’s proposed privacy law, HB 1680, provide consumers with private right of action where personal information is (i) unencrypted and unredacted; and (ii) subject to exfiltration, theft or disclosure due to failure to implement reasonable data security procedures. Consumers may seek damages the greater of $100 – $750 per consumer, per incident or actual damages.

If Washington or other states enact data privacy laws with such provisions, the potential liability for organizations affected by data breaches or failing to comply with sweeping new privacy obligations could rapidly become [...]

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Privacy and Data Security: 2020 Considerations for the Insurance Industry

by McDermott Will & Emery | Feb 7, 2020 | Consumer Protection, Cybersecurity, Data Privacy

With the California Consumer Privacy Act of 2018 (CCPA) having taken effect on January 1, 2020, the privacy and data security landscape for insurance carriers, producers and insurtech (collectively, “insurers”) continues to grow more complex. A number of states have also recently passed laws regulating data security in the insurance industry, with the first transition period under a number of these laws set to end in 2020. Given the significant amount of sensitive personal information that insurers collect, process and retain, this trend of increased privacy and data security regulation within the insurance industry is likely to continue. To stay ahead of these new privacy and data security requirements, insurers need to take steps now to navigate the increasingly complex regulatory landscape.

How Does the CCPA Impact Insurers?

On January 1, 2020, California became the first state in the United States to enact comprehensive privacy legislation that governs the collection, use and sale of personal information of California residents (i.e., consumers) and households. Personal information is broadly defined as any information that identifies, relates to, describes is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular individual or household. The CCPA applies to “businesses,” which are for-profit entities that determine the purposes and means of processing consumers’ personal information that do business in California and meet certain applicability thresholds.

Insurers operating in California that meet the CCPA applicability thresholds will be deemed “businesses” subject to a number of obligations under the CCPA, including disclosure obligations and requirements related to consumer privacy rights. While these obligations can be quite onerous, the vast majority of personal information that many personal line insurers collect, process and retain will likely fall under an exemption in the CCPA. The CCPA includes exemptions for:

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