Data Breach. Cause for Alarm or a Big Yawn?

By August 2008, there were more publicly disclosed data breaches among U.S. businesses than for all of 2007. More information is created, flowing and stored by commercial enterprise than ever; more clever schemes are being hatched by criminals for hacking or disrupting information; employees don’t appreciate the value of assets you can’t feel; and consumers are befuddled by a maze of privacy notices, data theft notices, credit report advertisements, and scare tactics launched by advocacy groups—well intentioned though they may be. More than 40 U.S. states have laws requiring disclosure of data breaches. If these were intended to create incentives to prevent data breaches and reduce occurrence, how do we explain the steady rise? Are the laws ineffective? Are businesses accountable beyond some adverse publicity, once they provide legally mandated disclosure? Have we become jaded by news reports, privacy and breach notices as just so much junk mail? In the credit card world, consumers generally have a maximum $50 liability if a card is lost or stolen. In situations where there are no real time approvals, credit card companies take the risk. In that environment, a business decision is made to accept certain loses because the potential revenue generated by the business model yields a greater reward. In the world of consumer privacy and personally identifiable information disclosure, who is taking what risk? Studies for years indicate IT professionals appreciate that digital crime—theft of intellectual property, piracy, theft of trade secrets, customer data or employee information—is a problem. Many companies may not even know their security is breached and others have little incentive to solve the problem. Need more information? Come to my web page, contact me and tell me what you think. Call if you need help with a policy, a position or an understanding of your legal rights and obligations. We can help.