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On November 9, 2020 the FTC entered into a consent agreement with Zoom Video Communications, Inc. to address concerns over the videoconferencing platform’s security practices. With the onset of the COVID-19 pandemic, the need for a reliable, online videoconferencing and meeting platform skyrocketed. Zoom met that need. It advertised its platform as a secure space with various safety measures to protect user data, including “end-to-end” 256-bit encryption. In short order, individuals, businesses, and organizations quickly flocked to the user-friendly communications platform; and, by the end of April 2020 Zoom’s user base was booming.

Then came a backlash of sorts. The FTC began investigating Zoom’s security practices, and private plaintiffs brought class-action lawsuits alleging violations of the California Consumer Privacy Act and failure to adhere to Zoom’s terms of service. The FTC’s complaint alleged several concerns with Zoom’s advertising and security promises, concluding that Zoom made misleading claims about the strength of its encryption and security of its platform that gave customers a false sense of security. The five-count complaint alleged that Zoom:

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Continue Reading FTC “Zooms” Into Settlement Agreement with Communications Company Over Concerns with its Security Practices

On October 13. 2020, White Castle System, Inc. petitioned the United States Court of Appeals for the Seventh Circuit for permission to seek an interlocutory appeal pursuant to 28 U.S.C. § 1292(b).  This petition arises out of the United States District Court for the Northern District of Illinois’ opinion on White Castle’s motion for judgment on the pleadings issued on August 7, 2020.  The matter hinged on whether repeated collection of the same biometric information from an employee without prior consent constituted separate violations of the Illinois Biometric Information Privacy Act (BIPA).

Summary of District Court’s Cothron v. White Castle Opinion

In the district court’s opinion, Judge Tharp held that “[a] party violates Section 15(b) [of the BIPA] when it collects, captures, or otherwise obtains a person’s biometric information without prior informed consent.”  Judge Tharp continued, “[t]his is true the first time an entity scans a fingerprint or otherwise collects biometric information, but it is no less true with each subsequent scan or collection.”  Similarly, Judge Tharp held that BIPA requires that dissemination of information without consent, even if to the same third party as previously disseminated, is an additional violation of the BIPA.

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Continue Reading Does Continued Collection of The Same Biometric Information Increase BIPA Violations? The Seventh Circuit (or Illinois Supreme Court) Has An Opportunity to Clear the Air

On October 12, 2020, the California Attorney General provided public notice of a new Proposed Third Set of Modifications to the Regulations under the California Consumer Privacy Act (the “CCPA”).  You will be forgiven if you assumed that “final approval” of the existing Regulations back in August meant the Regulations were final—or at least we hope so because we made the same assumption.

Since August, however, it appears the AG was working behind the scenes to resurrect previously withdrawn Sections 999.306(b)(2) (covering offline notice of opt-out if a business substantially interacts with consumers offline); 999.315(c) (minimum standards for opt-out requests); and 999.326(c) (specific requirements for authorized agents).  The AG describes the newly proposed rules as follows:

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Continue Reading Spooky: Presumed-Dead CCPA Regulations Come Back to Life

Monetary penalties are the attention-grabbing headline when the FTC or any regulator brings an enforcement action against a company.  They are the looming threat to incentivize and influence compliance.  Over the summer, FTC Chairman Joseph J. Simons (“Chairman Simons”) issued a statement in connection with a settlement that Chairman Simons believes “the goal of a civil penalty should be to make compliance more attractive than violation.  Said another way, violation should not be more profitable than compliance.”
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Continue Reading FTC Fines: FTC Chairman Reminds Companies That Fines Are the FTC’s Strategic Tool To Deter Noncompliance

On September 17, 2020, four Republican Senators (Roger Wicker – Mississippi, Chairman, John Thune – South Dakota, Deb Fischer – Nebraska, and Marsha Blackburn – Tennessee) introduced sweeping federal privacy legislation entitled: Setting an American Framework to Ensure Data Access, Transparency, and Accountability (“SAFE DATA”) Act. This proposed comprehensive national privacy law has three main components:

  1. Provides consumers with more choice and control over their data
  2. Directs business to be more transparent and accountable
  3. Strengthens the FTC’s enforcement power

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Continue Reading Federal Data Privacy Legislation: Will it Help the US Remain Competitive in the Global Marketplace?

The U.S. Department of Health and Human Services Office for Civil Rights (OCR) reached a settlement for $1,500,000 and entered into a substantial corrective action plan with Athens Orthopedic Clinic (AOC) as a result of AOC’s alleged systemic noncompliance with the Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules. AOC, located in Georgia, provides a wide range of orthopedic services to approximately 138,000 patients a year.

Problems began for AOC in June 2016, when the practice was notified by a journalist that AOC patient records may have been posted for sale on the internet. Shortly thereafter, AOC was contacted by a hacker demanding payment for the stolen patient records. It was later determined that the hacker had accessed AOC’s electronic medical records using a vendor’s credentials on June 14, 2016, and continued to access protected health information (PHI) until July 16, 2016. AOC filed a breach report with OCR on July 29, 2016, revealing that the names, dates of birth, social security numbers, and other PHI of over 200,000 patients had been compromised by this breach.

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Continue Reading Hacked Patient Records Land Athens Orthopedic Clinic in Hot Water with OCR

On July 21, the New York Department of Financial Services (NYDFS) filed charges against First American Title Insurance Company (First American) for violating multiple sections of the New York Cybersecurity Regulation,  23 NYCRR 500.00, et seq.  The significance of the NYDFS enforcement action cannot be overemphasized.  This is the first action filed under the Cybersecurity Regulation, signaling a more aggressive enforcement stance by the regulator.  The good news is the filings provide important guidance on best practices and red flags to avoid agency sanctions.

The NYDFS Statement of Charges alleges that First American knowingly exposed tens of millions of documents containing consumer sensitive personal information (e.g., bank account numbers, bank statements, mortgage records, Social Security numbers, wire transaction receipts, drivers’ license images, etc.). The charges further allege that for almost 5 years (from October 2014 through May 2019) these records were available on First American’s public-facing website to anyone with a web browser.  The fact that First American failed to remediate the vulnerability, even after it was discovered by a penetration test in December 2018, was particularly troublesome for the regulators.  The charges state that, “Remarkably, [First American] allowed unfettered access to the personal and financial data of millions of its customers for six more months. . .”   Clearly, the NYDFS found this treatment of sensitive consumer data unconscionable and that First American demonstrated a total disregard for the Cyber Regulations.

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Continue Reading NYDFS State of Mind: Regulator Focus and Enforcement Trends

On August 14, 2020, the California Attorney General announced final approval of the California Consumer Privacy Act Regulations by the Office of Administrative Law.  The Regulations take effect immediately.

While the revisions made to the Final Regulations mostly consist of “non-substantive changes” to correct grammatical errors or clarify the wording of various provisions, business should be aware of the “global modifications” made in a few key areas.  These are summarized below along with our take on what they may mean for businesses:

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Continue Reading Finally Final: CCPA Regulations Take Effect

The EU’s General Data Protection Regulation (“GDPR”) contains the much-publicised right of subject access, which gives an individual the right to access a copy of all the personal data a controller holds in relation to him or her.

Under the GDPR, anything that can identify a living individual is personal data. Obvious examples include names, dates of birth, and addresses. Less obvious examples include photographs, identification numbers, or statements of opinion or fact about a person.

The GDPR also has extra-territorial scope, which means that it applies to organisations and businesses outside the borders of the EU if they meet certain criteria. Organisations based outside the EU could therefore find themselves on the receiving end of a subject access request (“SAR”) from an employee, customer or any other individual whose data they process.

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Continue Reading Subject Access Requests and Cross-Border Privilege: Tips for In-House Counsel

Earlier this year, U.S. Senator Sherrod Brown of Ohio released a draft discussion bill that if implemented would drastically alter corporations’ ability to collect and use personal information from consumers.

According to Sen. Brown, “We need legislation now more than ever that empowers Americans to control their personal information. No person should have to worry about being spied on, just as no one should worry about their information being bought and sold or stolen.” Brown believes that his bill would “change the fundamental framework of privacy in this country” by shifting the burden of privacy protection from consumers to corporations. Brown’s new bill is critical of the current consent-based framework that requires customers to agree to privacy policies in order to use specific online service.

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Continue Reading Senator Brown Proposes New Privacy Bill