When Has Privacy of Credit Card or Social Security Numbers been Compromised?
Security Incident Response and Information Protection Law
Many states now have data breach notification laws modeled on or inspired by California's SB 1386. Usually, under 1386, an enterprise holding private information (name plus social security number, driver’s license number or financial account number + password) in electronic form about a California resident must promptly notify the resident if the enterprise suspects a breach in security.
In all these data notification laws, a key issue is the definition of what constitutes a breach of data security. Just because a hacker accesses data related to a credit card account does not mean that the account has in fact been compromised (or, in the alternative, that the data has been compromised in any meaningful way). The credit card system features many layers of security beyond simply the purported confidentiality of a person's name + credit card number + card security code.
Thus a corporation holding data might detect that a hacker accessed card data, but still conclude (based on other controls in the industry) that none of the card data in question had in fact been "compromised". The other controls I speak of can include monitoring of card activity, telephoning cardholders to confirm transactions and much more.
Confusing and Unnecessary Notices
|To send unnecessary breach |
notice is unethical.
When the public hears too many announcements that data has been "BREACHED," it becomes like the villagers who grew insensitive to the boy's cries of "WOLF". For that reason, I argue enterprises are legally and ethically justified to expect that a reasonably high threshold be crossed before they send out notices of a "data security breach."
I published most of the foregoing in 2007 and 2008. Fortunately, in 2013 a leading authority has reviewed this issue carefully and instituted reform. The U.S. Department of Health and Human Services now says that a breach notice is required only after a sophisticated risk assessment has determined a notice is justified. See my analysis of HHS's new regulation on data security breach notice.
Attorney Wright teaches the law of data security and investigations at the SANS Institute.
Update July 2008: Anton Chuvakin makes an interesting observation. If dataholders maintain good system logs, then in the event of a security breach they can examine the logs carefull to determine with precision which particular data files (if any) were compromised. That would allow them to notify only the people affected, rather then everyone on whom they hold data.
For more on this topic, see my other article on data security breach.
Update Summer 2008: See my analysis of a breach notification where data on stolen laptop are encrypted, and my examination of the definition of "private" data.
(Reminder: Nothing I publish is legal advice to anyone and not a substitute for advice from a lawyer.)