Data-Security Laws Sprout In Wake Of Breaches - InformationWeek
IoT
IoT
Business & Finance
News
5/13/2005
05:20 PM
50%
50%
RELATED EVENTS
How to Talk to Your Management about IT Security
Aug 30, 2017
This webinar will bring you some new methods for describing and measuring your cybersecurity initi ...Read More>>

Data-Security Laws Sprout In Wake Of Breaches

Federal-agency data-security guidelines for financial-service firms could be extended to other industries.

Laws at the federal and state levels are altering the landscape for sharing and protecting sensitive customer information, just as widely publicized breaches at companies like Bank of America, ChoicePoint, DSW Shoe Warehouse, and LexisNexis have focused attention on the problem of ID theft.

Several states, including Arkansas, Georgia, Montana, and North Dakota, have implemented ID-theft laws patterned after a law in California, and many other states have legislation pending. Observers say a national ID-theft-protection bill also is likely to be enacted.

In March several federal agencies--the Federal Reserve System, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the Office of Thrift Supervision--jointly issued the Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice. The guidelines state that financial institutions should implement a response program to address security breaches involving customer information, including procedures to notify customers about incidents of unauthorized access to customer information that could result in substantial harm or inconvenience to the customer.

The guidelines also provide that when a financial institution becomes aware of an incident of unauthorized access to sensitive customer information, it should conduct a reasonable investigation to determine whether the information has been or will be misused.

The interagency guidelines apply only to financial institutions or businesses that are regulated by the agencies that issued them. Morgan Stanley's Discover Card division, for example, is covered, while its broker-dealer business isn't, said Howard Lipper, executive director of the technology, intellectual property, and E-commerce group at Morgan Stanley. Lipper spoke at an information security session hosted by law firm Steptoe & Johnson in New York on Friday.

The Securities and Exchange Commission, however, is likely to adopt the guidelines verbatim, Lipper said. Brokerage firms are likely to "face some very tough questions on information security practices during their next audit."

The Federal Trade Commission is likely to adopt many provisions of the interagency guidelines as it seeks to extend data-privacy protection across all industries. "The FTC wants to be the traffic cop on information security, but the problem is a traffic cop can't be everywhere," said Emily Hancock, an attorney in Steptoe & Johnson's Washington office. She noted that California and Arkansas are the only states so far to have adopted provisions requiring both notification of breaches and "reasonable security" to prevent breaches.

A patchwork of state and federal laws, each with different standards of notification, could raise the compliance costs without providing corresponding increases in data security, said Mark MacCarthy, senior VP of public policy at Visa U.S.A. "Simply passing a new bill isn't going to make these things go away." He suggested that market forces, such as the impact on a company's reputation, would compel companies to adopt tighter security procedures.

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
IT Strategies to Conquer the Cloud
Chances are your organization is adopting cloud computing in one way or another -- or in multiple ways. Understanding the skills you need and how cloud affects IT operations and networking will help you adapt.
Video
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll