Category: cybersecurity

ANOTHER TRILLION DOLLAR CASE:? TikTok Hit in MASSIVE CIPA Suit Over Its Business Model of Profiting from Advertising by Collecting and Monetizing User Data

Data privacy lawsuits are EXPLODING and one of our country’s most popular mobile app — TikTok’s privacy issues keep piling up.

Following its recent $92 million class-action data privacy settlement for its alleged violation of Illinois Biometric Information Privacy Act (BIPA), TikTok is now facing a CIPA and Federal Wire Tap class action for collecting users’ data via its in-app browser without Plaintiff and class member’s consent.

The complaint alleges “[n]owhere in [Tik Tok’s] Terms of Service or the privacy policies is it disclosed that Defendants compel their users to use an in-app browser that installs JavaScipt code into the external websites that users visit from the TikTok app which then provides TikTok with a complete record of every keystroke, every tap on any button, link, image or other component on any website, and details about the elements the users clicked. “

Despite being a free app, TikTok makes billions in revenue by collecting users’ data without their consent.

“The world’s most valuable resource is no longer oil, but data.”

While we’ve discussed before, many companies do collect data for legitimate purposes with consent. However this new complaint alleges a very specific type of data collection practice without the TikTok user’s OR the third party website operator’s consent.

TikTok allegedly relies on selling digital advertising spots for income and the algorithm used to determine what advertisements to display on a user’s home page, utilizes tracking software to understand a users’ interest and habits. In order to drive this business, TikTok presents users with links to third-party websites in TikTok’s in-app browser without a user  (or the third party website operator) knowing this is occurring via TikTok’s in-app browser. The user’s keystrokes is simultaneously being intercepted and recorded.

“Specifically, when a user attempts to access a website, by clicking a link while using the TikTok app, the website does not open via the default browser.  Instead, unbeknownst to the user, the link is opened inside the TikTok app, in [Tik Tok’s] in-app browser.  Thus, the user views the third-party website without leaving the TikTok app. “

The Tik-Tok in-app browser does not just track purchase information, it allegedly tracks detailed private and sensitive information – including information about  a person’s physical and mental health.

For example, health providers and pharmacies, such as Planned Parenthood, have a digital presence on TikTok, with videos that appear on users’ feeds.

Once a user clicks on this link, they are directed to Planned Parenthood’s main webpage via TikTok’s in-app browser. While the user is assured that his or her information is “privacy and anonymous,” TikTok is allegedly intercepting it and monetizing it to send targeted advertisements to the user – without the user’s or Planned Parenthood’s consent.

The complaint not only details out the global privacy concerns regarding TikTok’s privacy practices (including FTC investigations, outright ban preventing U.S. military from using it, TikTok’s BIPA lawsuit, and an uptick in privacy advocate concerns) it also specifically calls out the concerns around collecting reproductive health information after the demise of Roe v. Wade this year:

“TikTok’s acquisition of this sensitive information is especially concerning given the Supreme Court’s recent reversal of Roe v. Wade and the subsequent criminalization of abortion in several states.  Almost immediately after the precedent-overturning decision was issued, anxieties arose regarding data privacy in the context of commonly used period and ovulation tracking apps.  The potential of governments to acquire digital data to support prosecution cases for abortions was quickly flagged as a well-founded concern.”

Esh. The allegations are alarming and the 76 page complaint can be read here: TikTok.

In any event, the class is alleged as:

“Nationwide Class: All natural persons in the United State whose used the TikTok app to visit websites external to the app, via the in-app browser.

California Subclass: All natural persons residing in California whose used the TikTok app to visit websites external to the app, via the in-app browser.”

The complaint alleges California law applies to all class members – like the Meta CIPA complaint we will have to wait and see how a nationwide class can be brought related to a CA statute.

On the CIPA claim, the Plaintiff – Austin Recht – seeks an unspecific amount of damages for the class but the demand is $5,000 per violation or 3x the amount of damages sustained by Plaintiff and the class in an amount to be proven at trial.

We’ll obviously continue to keep an eye out on this.

Article By Puja J. Amin of Troutman Firm

For more communications and media legal news, click here to visit the National Law Review.

© 2022 Troutman Firm

“Red Flags in the Mind Set”: SEC Sanctions Three Broker/Dealers for Identity Theft Deficiencies

In 1975, around the time of “May Day” (1 May 1975), which brought the end of fixed commission rates and the birth of registered clearing agencies for securities trading (1976), the U. S. Securities and Exchange Commission (“SEC”) created a designated unit to deal with the growth of trading and the oversight of broker/dealers. That unit, the Office of Compliance Inspections and Examinations (the “OCIE”), evolved and grew over time. It regularly issued Risk Alerts on specific topics aimed at Broker/Dealers and/or Investment Advisers, expecting that those addressees would take appropriate steps to prevent the occurrence of the identified risk, or at least mitigate its impact on customers. On Sept. 15, 2020, the OCIE issued a Risk Alert entitled “Cybersecurity: Safeguarding Client Accounts against Credential Compromise,” which emphasized the importance of compliance with SEC Regulation S-ID, the “Identity Theft Red Flags Rule,” adopted May 20, 2013, under Sections of the Securities Exchange Act of 1934 (the “34 Act”) and the Investment Advisers Act of 1940, as amended (the “40 Act”). See, in that connection, the discussion of this and related SEC cyber regulations in my Nov. 19, 2020, Blog “Credential Stuffing: Cyber Intrusions into Client Accounts of Broker/Dealers and Investment Advisors.”

The SEC was required to adopt Regulation S-ID by a provision in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which amended a provision of the Fair Credit Reporting Act of 1970 (“FCRA”) to add both the SEC and the Commodity Futures Trading Commission to the federal agencies that must have “red flag” rules. That “red flag” requirement for the seven federal prudential bank regulators and the Federal Trade Commission was made part of the FCRA by a 2003 amendment. Until Wednesday, July 27, 2022, the SEC had (despite the Sept. 15, 2020, Risk Alert) brought only one enforcement action for violating the “Red Flag” Rule (in 2018 when customers of the firm involved suffered harm from the identity thefts). In 2017, however, the Commission created a new unit in its Division of Enforcement to better address the growing risks of cyber intrusion in the U.S. capital markets, the Crypto Assets and Cyber Unit (“CACU”). That unit almost doubled in size recently with the addition of 20 newly assigned persons, as reported in an SEC Press Release of May 3, 2022. There the Commission stated the Unit “will continue to tackle the omnipresent cyber-related threats in the nation’s [capital] markets.” Also, underscoring the ever-increasing role played by the SEC in overseeing the operations of broker/dealers and investment advisers, the OCIE was renamed the Division of Examinations (“Exams”) on Dec. 17, 2020, elevating an “Office” of the SEC to a “Division.”

Examinations of three broker/dealers by personnel from Exams led the CACU to investigate all three, resulting in the institution of Administrative and Cease-and Desist Proceedings against each of the respondents for violations of Regulation S-ID. In those proceedings, the Commission alleged that the Identity Theft Protection Program (“ITPP”), which each respondent was required to have, was deficient. Regulation S-ID, including its Appendix A, sets forth both the requirements for an ITPP and types of red flags the Program should consider, and in Supplement A to Appendix A, includes examples of red flags from each category of possible risks. An ITPP must be in writing and should contain the following:

  1. Reasonable policies and procedures to identify, detect and respond appropriately to relevant red flags of the types likely to arise considering the firm’s business and the scope of its brokerage and/or advisory activities; and those policies and procedures should specify the responsive steps to be taken; broad generalizations will not suffice. Those policies and procedures should also describe the firm’s practices with respect to theft identification, prevention, and response, and direct that the firm document the steps to be taken in each case.
  2.  Requirements for periodic updates of the Program, including updates reflecting the firm’s experience with both a) identity theft; and b) changes in the firm’s business. In addition, the updates should address changes in the types and mechanisms of cybersecurity risks the firm might plausibly encounter.
  3. Requirements for periodic review of the types of accounts offered and the risks associated with each type.
  4. Provisions directing at least annual reports to the firm’s board of directors, and/or senior management, addressing the program’s effectiveness, including identity theft-related incidents and management responses to them.
  5. Provisions for training of staff in identity theft and the responses required by the firm’s ITPP.
  6. Requirements for monitoring third party service providers for compliance with identity theft provisions that meet those of the firm’s program.

The ITPP of each of the three broker/dealers was, as noted, found deficient. The first, J.P. Morgan Securities, LLC (“MORGAN”), organized under Delaware law and headquartered in New York, New York, is a wholly owned subsidiary of JPMorgan Chase & Co. (described by the Commission as “a global financial services firm” in its July 27, 2022, Order Instituting Administrative and Cease-and-Desist Proceedings [the “Morgan Order”]). Morgan is registered with the Commission as both a broker/dealer (since Dec. 13, 1985) and an investment adviser (since April 3, 1965). As recited in the Morgan Order, the SEC found Morgan offered and maintained customer accounts “primarily for personal, family, or household purposes that involve or are designed to permit multiple payments or transactions.” The order further notes that from Jan. 1, 2017, through Dec. 31, 2019, Morgan’s ITPP did not meet the requirements of Regulation S-ID because it “merely restated the general legal requirements” and did not specify how Morgan would identify a red flag or direct how to respond to it. The Morgan Order notes that although Morgan did take action to detect and respond to incidents of identity theft, the procedures followed were not in Morgan’s Program. Further, Morgan did not periodically update its program, even as both the types of accounts offered, and the extent of cybersecurity risks changed. The SEC also found Morgan did not adequately monitor its third-party service providers, and it failed to provide any identity theft-specific training to its staff. As a result, Morgan had violated Regulation S-ID. The order noted that Morgan “has undertaken substantial remedial acts, including auditing and revising … [its Program].” Nonetheless, Morgan was ordered to cease and desist from violating Regulation S-ID, was censured, and was ordered to pay a civil penalty of $1.2 million.

The second broker/dealer charged was UBS Financial Services Inc.(“UFS”), a Delaware corporation dually registered with the Commission as both a broker/dealer and an investment adviser since 1971. UFS, headquartered in Weehawken, New Jersey, is a subsidiary of UBS Group AG, a publicly traded major financial institution incorporated in Switzerland. In 2008, UBF adopted an ITPP (the “UBF Program”) pursuant to the 2003 amendments to the FCRA. The program applied both to UBF and to other affiliated entities and branch offices in the U.S. and Puerto Rico “which offered private and retail banking, mortgage, and private investment services that operated under UBS Group AG’s Wealth Management Americas’ line of business.” See my blog published on Aug. 22, 2022, “Only Sell What You Know: Swiss Bank Negligence is a Fraud on Clients,” for information about the origins and history of UBS Group AG.

The July 27, 2022, SEC Order instituting Administrative and Cease-and-Desist Proceedings against UBF (the “UBF Order”) stated that UBF made no change to the UBF Program when, in 2013, it became subject to Regulation S-ID, or thereafter from Jan. 1, 2017, to Dec. 31, 2019, other than to revise the list of entities and branches it covered. The Commission found UBF failed to update the UBF Program even as the accounts it offered changed, and without considering if some accounts offered by affiliated entities and branches are not “covered accounts” within regulation S-ID. The UBF Program did not have reasonable policies and procedures to identify red flags, taking into consideration account types and attendant risks, and did not specify what responses were required. The SEC also found the program wanting for not providing for periodic updates, especially addressing changes in accounts and/or in cybersecurity risks. The annual reports to the board of directors “did not provide sufficient information” to assess the UBF Program’s effectiveness or the adequacy of UBF’s monitoring of third-party service providers; indeed, the UBF Order notes the “board minutes do not reflect any discussion of compliance with Regulation S-ID.” In addition, UBF “did not conduct any training of its staff specific” to the UBF Program, including how to detect and respond to red flags.  As a result, the Commission found UBF in violation of Regulation S-ID. Although the Commission again noted the “substantial remedial acts” undertaken by UBF, including retaining “an outside consulting firm to review its Program” and to recommend change, the SEC nonetheless ordered UBF to cease and desist from violating the Regulation, censured UBF, and ordered it to pay a civil penalty of $925,000.

The third member of this broker/dealer trio is TradeStation Securities, Inc. (“TSS”), a Florida corporation headquartered in Plantation, Florida, that, according to the July 27, 2022, SEC Order Instituting Administrative and Cease-and-Desist Proceedings (the “TSS Order”), “provides primarily commission-free, directed online brokerage services to retail and institutional customers.” TSS has been registered with the SEC as a broker/dealer since January 1996. Their ITPP, too, was found deficient. The ITPP implemented by TSS (the “TSS Program”) essentially ignored the reality of TSS’s business as an online operation. For instance, the TSS Program cited only the red flags offered as “non-comprehensive examples in Supplement A to Appendix A” and not any “relevant to its business and the nature and scope of its brokerage activities.” Hence, the TSS Program cited the need to confirm the physical appearance of customers to make certain it was consistent with photographs or physical descriptions in the file. But an online broker/dealer would have scant opportunity to see a customer or a new customer in person, even when opening an account. Nor did TSS check the Supplement A red flag examples cited in the TSS Program when opening new customer accounts. The TSS Program directed only that “additional due diligence” should be performed if a red flag were identified, rather than directing specific responsive steps to be taken, such as not opening an account in a questionable situation. There were no requirements for periodic updates of the TSS Program. Indeed, “there were no material changes to the Program” after May 20, 2013, “despite significant changes in external cybersecurity risks related to identity theft.” At this point in the TSS Order, the Commission cited a finding in the Federal Register that “[a]dvancements in technology … have led to increasing threats to the integrity … of personal information.” The SEC found that TSS did not provide reports about the TSS Program and compliance with Regulation S-ID either to the TSS board or to a designated member of senior management, and that TSS had no adequate policies and procedures in place to monitor third-party service providers for compliance with detecting and preventing identity theft. The order is silent on the extent of TSS’s training of staff to deal with identity threats, but considering the other shortcomings, presumably such training was at best haphazard. The Commission found that TSS violated Regulation S-ID. Although the TSS Order noted (as with the other Proceedings) the “substantial remedial acts” undertaken by TSS, including retaining “an outside consulting firm” to aid compliance, the Commission nonetheless ordered TSS to cease-and-desist from violating the Regulation, censured TSS, and ordered it to pay a civil penalty of $425,000.

These three enforcement actions on the same day, especially ones involving two of the world’s leading financial institutions, signal a new level of attention by the Commission to cybersecurity risks to customers of broker/dealers and investment advisers, with a focus on the risks inherent in identity theft. As one leading law firm writing about these three actions advised, “[f]irms should review their ITPPs placing particular emphasis on identifying red flags tailored to their business and on conducting regular compliance reviews to update those red flags and related policies and procedures to reflect changes in business practices and risk.” That sound advice should be followed NOW, before the CACU comes calling.

For more Financial, Securities, and Banking Law news, click here to visit the National Law Review.

©2022 Norris McLaughlin P.A., All Rights Reserved

Biden Administration Expands Public-Private Cybersecurity Partnership to Chemical Sector

On October 26, 2022, the Biden Administration announced that it is expanding the Industrial Control Systems (ICS) Cybersecurity Initiative to the chemical sector. The White House’s fact sheet states that the majority of chemical companies are privately owned, so a collaborative approach is needed between the private sector and government. According to the fact sheet, “[t]he nation’s leading chemical companies and the government’s lead agency for the chemical sector — the Cybersecurity and Infrastructure Agency (CISA) — have agreed on a plan to promote a higher standard of cybersecurity across the sector, including capabilities that enable visibility and threat detection for industrial control systems.”

The fact sheet states that the Chemical Action Plan will serve as a roadmap to guide the sector’s assessment of their current cybersecurity practices over the next 100 days, building on the lessons learned and best practices of the previously launched action plans for the electric, pipeline, and water sectors to meet the needs for this sector. The Chemical Action Plan will:

  • Focus on high-risk chemical facilities that present significant chemical release hazards with the ultimate goal of supporting enhanced ICS cybersecurity across the entire chemical sector;
  • Drive information sharing and analytical coordination between the federal government and the chemical sector;
  • Foster collaboration with the sector owners and operators to facilitate and encourage the deployment of appropriate technologies based on each chemical facility’s own risk assessment and cybersecurity posture. The federal government will not select, endorse, or recommend any specific technology or provider; and
  • Support the continuity of chemical production critical to the national and economic security of the United States. The chemical sector produces and manufactures chemicals that are used directly or as building blocks in the everyday lives of Americans, from fertilizers and disinfectants to personal care products and energy sources, among others.

The ICS Cybersecurity Initiative emphasizes that cybersecurity continues to be a top priority for the Administration.

For more Cybersecurity Legal News, click here to visit the National Law Review.

©2022 Bergeson & Campbell, P.C.

The Do’s and Don’ts of Data Cleaning – Don’t Drown in Bad Data

Bad CRM data can compound exponentially, impacting marketing and business development. It’s essential to understand the scope of  your data problems and follow a plan for regular data cleaning.  

Have you ever heard the saying, “No man ever steps into the same river twice”? Because a river’s water is constantly flowing and changing, the water you step in today will be different from yesterday. The same is true for the data in your CRM system: people are constantly changing roles, relocating, retiring; companies are opening, closing, moving and merging.

On top of that, new data isn’t always entered correctly. As a result, a database with clean, correct information today will not necessarily be accurate tomorrow. Over time, this bad data can compound exponentially, resulting in ineffective marketing, events and communication campaigns because as your data degrades, you reach fewer members of your target audience.

For professional services firms, poor data quality in your CRM system can also translate into a decline in system adoption. Once your professionals see bad data, they won’t trust the system as a whole and ultimately may outright refuse to use it. This is why we stress the importance of ongoing data cleaning.

Data Cleaning Do’s and Don’ts

Simply put, data cleaning involves identifying incorrect, incomplete and/or dated data in your systems and correcting and enhancing it. If you have a large database with thousands, or hundreds of thousands, of records, the data quality process can seem daunting and overwhelming.

While there’s no magic bullet or quick fix for poor data quality, ignoring data problems until there’s a crisis is not a strategy. Good data quality requires ongoing effort that never ends. The good news is that this means you have forever to get better at it. So, start now. Begin by assessing the scope of your data quality issues. Then, because it’s not always cost-effective or even possible to clean all your data, start by focusing on the highest priority projects.

Identify and Prioritize Your Most Important Data

All contact records are not created equal. For instance, client data is typically more important than non-client data. Additionally, individuals who have recently subscribed to your communications or attended an event are more important than those who last interacted with your firm years ago. Whatever segmenting scenario you select, it’s important to find ways to divide your contact data into manageable pieces because it makes the process more manageable and allows you to better measure progress.

Eliminate Stagnant Records

Related to prioritizing your data, don’t be hesitant about removing records that have been inactive for an extended period. Search your system for contacts that have not been updated for a few years, are not related to or known by any of your professionals, are not clients or alumni, and have not opened a communication or invitation in two to three years. Chances are good these records are not only outdated but also may not be worth the resources it would take to update them. Identify these records and consider removing them from the system. Less mess in your database makes cleanup a bit more manageable.

Your Plan Is Your Life Preserver

Once you’ve prioritized subsets or segments of contacts, identifying and prioritizing your most common data errors can help you decide on the best way to tackle ongoing data cleaning. For example, if you have an important email that needs to be sent to clients, you need to focus on email addresses. Identify records that don’t have an email address, have incorrectly formatted email addresses or have bounced recently.

In addition, if there are contacts you haven’t sent a communication or invitation to for an extended period of time, it’s entirely likely that their email may no longer be valid. It’s important to regularly test emails on your lists because not doing so can cause you to be blacklisted by anti-spam entities or have your account blocked by your eMarketing provider.

Initial Cleaning Cycle

The best place to start your data cleaning cycle is with a contact and list verification and cleansing service such as TrueDQ. This service will evaluate your list data, identify potentially harmful “honeypot” email addresses and even automatically update many of your contacts with current, complete contact information. The data can then also be enhanced with additional missing information, such as industries and locations, to help with targeting and segmenting.

Rinse and Repeat

When one segment or list has been cleaned, move on to the next one – bearing in mind that what’s important on the next list may be different from the last one. For example, maybe you need to send a hard copy postal mailing, so it will be important to ensure the accuracy of physical mailing addresses rather than email addresses.

Bounces and Returns

One of the most common data quality failures at law and other professional services firms is ignoring bounced emails and returned hard copy mailings. Bounces and returns are real-time indicators that can help you keep on top of your data quality. Researching and correcting them is important because sometimes they involve important former clients who could potentially hire the firm again at their new company.

Returned hard mail will often include the forwarding address of the recipient, which should be corrected in your CRM. For emails, use a central email address to collect automatic email replies, since these frequently tell you when a recipient no longer works at an organization.

Ideally, data stewards should regularly review all bounces to take the onus off the professionals. However, it can also be helpful to generate reports on bounced communications and circulate them to professionals or their assistants who may be able to provide updated information – or will at least appreciate knowing which of their contacts have moved on or changed roles.

Finally, if your eMarketing and/or CRM system has a process for automatically isolating bounced records, be sure you have a reciprocal process that automatically reinstates bounced records when the email field is updated.

Prevent Invalid Data

There are multiple ways to encourage good data habits, depending on your system and method of contact entry. If your firm relies on manual data entry, implement a firmwide Data Standards Guide to inform users how data should be entered (e.g., does your firm spell out or abbreviate job titles?). It can also be helpful to use system validation rules wherever possible to require certain information in new records such as last name, city and email address to ensure your contacts are relevant.

Finally, regularly review newly added records for consistency and completeness. This process can reveal issues such as users who may require additional training on contact input best practices. It can also help to catch spam or other potentially dangerous entries that can sometimes flow into your database from online forms that are filled out by bots.

Never, Ever Stop

Just as rivers keep flowing, so does the data in your CRM system – and the data will always need cleaning to ensure that it is fresh. While this may feel like a relentless and burdensome task, never stop – just go with the flow –  because when you’re not regularly cleaning the data, your CRM “river” can become stagnant, and the more polluted it becomes, the longer the eventual cleanup will take.

Article By Christina R. Fritsch JD and Rachel Fields of CLIENTSFirst Consulting

For more business of law legal news, click here to visit the National Law Review.

© Copyright 2022 CLIENTSFirst Consulting

Ankura Cyber Threat Intelligence Bulletin: August – September 2022

Over the past sixty days, Ankura’s Cyber Threat Investigations & Expert Services (CTIX) Team of analysts has compiled key learnings about the latest global threats and current cyber trends into an in-depth report: The Cyber Threat Intelligence Bulletin. This report provides high-level executives, technical analysts, and everyday readers with the latest intel and insights from our expert analysts.

Download the report for an in-depth look at the key cyber trends to watch and help safeguard your organization from constantly evolving cyber threats with the latest cyber intelligence, ransomware, and threat insights.

 Our latest report explains the following observations in detail:

Law Enforcement Works with Threat Intelligence to Prosecute Human Traffickers

In the age of high-speed internet and social media, criminals have evolved to use information technology to bolster their criminal enterprises and human traffickers are no different. Whether it be through the clearnet or dark web, human traffickers have leveraged the internet to scale their operations, forcing law enforcement to reevaluate how to best combat this problem. In response to the changes in trafficker tactics, techniques, and procedures (TTPs), governments across the world have responded with legislation and policies in an attempt to better thwart the efforts of these criminals. Researchers from Recorded Future’s Insikt Group have published compelling reports as a proof-of-concept (PoC) for a methodology on how law enforcement agencies and investigators can utilize real-time threat intelligence to leverage sources of data in order to aid in tracking, mitigating, and potentially prosecuting human sex traffickers. Download the full report for additional details on law enforcement efforts to prosecute human traffickers and more on the Insikt Group’s findings.

Emerging Threat Organization “MONTI”: Sister Organization or Imposter Threat Group?

Over the past several weeks a new, potentially imposter, threat organization has mimicked the tactics, techniques, procedures (TTPs), and infrastructure of the Conti Ransomware Group. Tracked as MONTI, this doppelganger organization emerged in the threat landscape in July 2022 after compromising a company and encrypting approximately twenty (20) hosting devices and a multi-host VMWare ESXi instance tied to over twenty (20) additional servers. While the July attack pushed the group into the limelight, analysts believe that attacks from the doppelganger organization go back even further into the early summer of 2022. Similarities discovered between Conti Ransomware and the alleged spinoff Monti Ransomware include attack TTPs alongside the reuse of Conti-attributed malicious payloads, deployed tools, and ransom notes. Additionally, the encrypted files exfiltrated by Monti contain nearly identical encryption, which could indicate code re-usage. Read the full report to find out what CTIX analysts expect to see from this group in the future.

Figure 1: Conti Ransom Note

Figure 2: Monti Ransom Note

Iranian State-Sponsored Threat Organization’s Attack Timeline Targeting the Albanian Government

In July 2022, nation-state Iranian threat actors, identified by the FBI as “Homeland Justice”, launched a “destructive cyber-attack” against the Government of NATO-member Albania in which the group acquired initial access to the victim network approximately fourteen (14) months before (May of 2021). During this period, the threat actors continuously accessed and exfiltrated email content. The peak activity was observed between May and June of 2022, where actors conducted lateral movements, network reconnaissance, and credential harvesting.

This attack and eventual data dumps were targeted against the Albania-based Iranian dissident group Mujahideen E-Khalq (MEK), otherwise known as the People’s Mojahedin Organization of Iran. MEK is a “controversial Iranian resistance group” that was exiled to Albania and once listed by the United States as a Foreign Terrorist Organization for activity in the 1970s but was later removed in late 2012. Albania eventually severed diplomatic ties with Iran on September 7, 2022, and is suspected to be the first country to ever have done so due to cyber-related attacks. For a more detailed analysis of this attack and its ramifications, download our full report.

 Figure: Homeland Justice Ransom Note Image

Banning Ransomware Payments Becomes Hot-Button Issue in State Legislature

There is a debate occurring in courtrooms across the United States regarding the ethics and impacts of allowing businesses to make ransomware payments. North Carolina and Florida have broken new ground earlier this year passing laws that prohibit state agencies from paying cyber extortion ransom demands. While these two (2) states have been leading the way in ransomware laws, at least twelve (12) other states have addressed ransomware in some way, adding criminal penalties for those involved and requiring public entities to report ransomware incidents. Download the full report to discover what experts think of government ransomware payment bans and the potential effects they could have on ransomware incidents.

Threat Actor of the Month: Worok

ESET researchers discovered a new cluster of the long-active TA428 identified as “Worok.” TA428 is a Chinese advanced persistence threat (APT) group first identified by Proofpoint researchers in July 2019 during “Operation LagTime IT”, a malicious attack campaign targeted against government IT agencies in East Asia. Download the full report for an in-depth look at Worok’s tactics and objectives, and insights from our analysts about the anticipated future impact of this group.

New List of Trending Indicators of Compromise (IOCs)

IOCs can be utilized by organizations to detect security incidents more quickly as indicators may not have otherwise been flagged as suspicious or malicious. Explore our latest list of technical indicators of compromise within the past sixty (60) days that are associated with monitored threat groups and/or campaigns of interest.

Article By Ted Theisen and Jason Hale of Ankura

For more data privacy and cybersecurity legal news, click here to visit the National Law Review.

Copyright © 2022 Ankura Consulting Group, LLC. All rights reserved.

First BIPA Trial Results in $228M Judgment for Plaintiffs

Businesses defending class actions under the Illinois Biometric Information Privacy Act (BIPA) have struggled to defeat claims in recent years, as courts have rejected a succession of defenses.

We have been following this issue and have previously reported on this trend, which continued last week in the first BIPA class action to go to trial. The Illinois federal jury found that BNSF Railway Co. violated BIPA, resulting in a $228 million award to a class of more than 45,000 truck drivers.

Named plaintiff Richard Rogers filed suit in Illinois state court in April 2019, and BNSF removed the case to the US District Court for the Northern District of Illinois. Plaintiff alleged on behalf of a putative class of BNSF truck drivers that BNSF required the drivers to provide biometric identifiers in the form of fingerprints and hand geometry to access BNSF’s facilities. The lawsuit alleged BNSF violated BIPA by (i) failing to inform class members their biometric identifiers or information were being collected or stored prior to collection, (ii) failing to inform class members of the specific purpose and length of term for which the biometric identifiers or information were being collected, and (iii) failing to obtain informed written consent from class members prior to collection.

In October 2019, the court rejected BNSF’s legal defenses that the class’s BIPA claims were preempted by three federal statutes governing interstate commerce and transportation: the Federal Railroad Safety Act, the Interstate Commerce Commission Termination Act, and the Federal Aviation Administration Authorization Act. The court held that BIPA’s regulation of how BNSF obtained biometric identifiers or information did not unreasonably interfere with federal regulation of rail transportation, motor carrier prices, routes, or services, or safety and security of railroads.

Throughout the case, including at trial, BNSF also argued it should not be held liable where the biometric data was collected by its third-party contractor, Remprex LLC, which BNSF hired to process drivers at the gates of BNSF’s facilities. In March 2022, the court denied BNSF’s motion for summary judgment, pointing to evidence that BNSF employees were also involved in registering drivers in the biometric systems and that BNSF gave direction to Remprex regarding the management and use of the systems. The court concluded (correctly, as it turned out) that a jury could find that BNSF, not just Remprex, had violated BIPA.

The case proceeded to trial in October 2022 before US District Judge Matthew Kennelly. At trial, BNSF continued to argue it should not be held responsible for Remprex’s collection of drivers’ fingerprints. Plaintiff’s counsel argued BNSF could not avoid liability by pleading ignorance and pointing to a third-party contractor that BNSF controlled. Following a five-day trial and roughly one hour of deliberations, the jury returned a verdict in favor of the class, finding that BNSF recklessly or intentionally violated BIPA 45,600 times. The jury did not calculate damages. Rather, because BIPA provides for $5,000 in liquidated damages for every willful or reckless violation (and $1,000 for every negligent violation), Judge Kennelly applied BIPA’s damages provision, which resulted in a judgment of $228 million in damages. The judgment does not include attorneys’ fees, which plaintiff is entitled to and will inevitably seek under BIPA.

While an appeal will almost certainly follow, the BNSF case serves as a stark reminder of the potential exposure companies face under BIPA. Businesses that collect biometric data must ensure they do so in compliance with BIPA and other biometric privacy regulations. Where BIPA claims have been asserted, companies should promptly seek outside counsel to develop a legal strategy for a successful resolution.

For more Privacy and Cybersecurity Legal News, click here to visit the National Law Review.

© 2022 ArentFox Schiff LLP

AUVSI and DOD’s Defense Innovation Unit Announce Collaboration for Cyber Standards for Drones

The Association for Uncrewed Vehicle Systems International (AUVSI), the world’s leading trade association for drones and other autonomous vehicles, announced a collaboration with the Department of Defense’s (DOD) Defense Innovation Unit (DIU) to further commercial cyber methodologies to design a shared standard. AUVSI’s effort is meant to expand the number of vetted drones that meet congressional and federal agency drone security requirements.

This pilot program would extend relevant cyber-credentialing across the U.S. industrial base and assist the DOD and other government entities in streamlining and accelerating drone capabilities across the board. Overall, this collaboration will help make the drone industry more secure. The program will work with numerous cybersecurity firms to conduct technical cyber assessments before the DIU, DOD, and other government entities conduct additional vetting as necessary.

Currently, the Blue UAS (Unmanned Aircraft Systems) Cleared List has 14 drones on it and 13 more drones are scheduled to be added. The Blue UAS Cleared List is routinely updated and contains a list of DOD-approved drones for government users. These drones are section 848 FY20 NDAA compliant, validated as cyber-secure and safe to fly, and are available for government purchase and operation. However, even with these additions, the demand for additional cleared drones with new capabilities and technology has outpaced the DIU’s ability to scale the program. This collaboration seeks to close that gap and offer cybersecurity certification in close cooperation with the DIU. With off-the-shelf drones serving as critical tools to help conduct diverse government operations, partnership with AUVSI and cybersecurity experts will make it easier for government users to use commercial technology and achieve effective operations in a secure manner.

Article By Kathryn M. Rattigan of Robinson & Cole LLP

For more cybersecurity and data privacy news, click here to visit the National Law Review.

Copyright © 2022 Robinson & Cole LLP. All rights reserved.

White House Office of Science and Technology Policy Releases “Blueprint for an AI Bill of Rights”

On October 4, 2022, the White House Office of Science and Technology Policy (“OSTP”) unveiled its Blueprint for an AI Bill of Rights, a non-binding set of guidelines for the design, development, and deployment of artificial intelligence (AI) systems.

The Blueprint comprises of five key principles:

  1. The first Principle is to protect individuals from unsafe or ineffective AI systems, and encourages consultation with diverse communities, stakeholders and experts in developing and deploying AI systems, as well as rigorous pre-deployment testing, risk identification and mitigation, and ongoing monitoring of AI systems.

  2. The second Principle seeks to establish safeguards against discriminative results stemming from the use of algorithmic decision-making, and encourages developers of AI systems to take proactive measures to protect individuals and communities from discrimination, including through equity assessments and algorithmic impact assessments in the design and deployment stages.

  3.  The third Principle advocates for building privacy protections into AI systems by default, and encourages AI systems to respect individuals’ decisions regarding the collection, use, access, transfer and deletion of personal information where possible (and where not possible, use default privacy by design safeguards).

  4. The fourth Principle emphasizes the importance of notice and transparency, and encourages developers of AI systems to provide a plain language description of how the system functions and the role of automation in the system, as well as when an algorithmic system is used to make a decision impacting an individual (including when the automated system is not the sole input determining the decision).

  5. The fifth Principle encourages the development of opt-out mechanisms that provide individuals with the option to access a human decisionmaker as an alternative to the use of an AI system.

In 2019, the European Commission published a similar set of automated systems governance principles, called the Ethics Guidelines for Trustworthy AI. The European Parliament currently is in the process of drafting the EU Artificial Intelligence Act, a legally enforceable adaptation of the Commission’s Ethics Guidelines. The current draft of the EU Artificial Intelligence Act requires developers of open-source AI systems to adhere to detailed guidelines on cybersecurity, accuracy, transparency, and data governance, and provides for a private right of action.

For more Technology Legal News, click here to visit the National Law Review.
Copyright © 2022, Hunton Andrews Kurth LLP. All Rights Reserved.

‘Work From the Ballpark’—Is the Latest Remote Work Promotion a Foul Ball?

Some professional baseball teams are beginning to promote “Work From the Ballpark” days, encouraging fans to bring their laptops to a weekday afternoon game and work remotely from their seats. Under such promotions, fans can purchase tickets for a special section of the ballpark with access to WiFi, tables, and food so that they could stay logged on at work while enjoying the sights and sounds of the game. Employers are likely accustomed to dealing with employees who play hooky to attend an afternoon baseball game. But with the rise of remote work—and promotions such as these—should employers be concerned with employees logging into work from the ballpark?

While such a promotion might be cheeky marketing to increase attendance for midweek games, it highlights an ongoing concern for employers with remote employees—that instead of diligently working in home offices, employees are working, or attempting to appear to be working, while distracted or in a potentially problematic environment. Indeed, working from a sports stadium could put confidential work communications and information at risk with laptop screens in easy view of onlookers and lead to network security issues with public WiFi.

Employers may want to dust off their remote work policies and evaluate whether they provide clarity around appropriate locations to perform work.

What Can Employers Do About Nontraditional Remote Work Environments?

  1. Clear Remote Work Policies

Employers may want to review their policies to ensure there are clear provisions or guidelines governing what locations are appropriate for working remotely. As an additional element of security and visibility, employers may further want to require that employees performing certain kinds of sensitive work obtain consent to work from a secure location other than home when necessary.

  1. Employee Work Locations

In certain workplaces, employers may want to consider how they monitor employees and their productivity. Many technology tools enable employers to track employees’ online activities or the physical locations of company devices. Of course, employers may want to evaluate employee relations considerations tied to any monitoring program as well as the increasing and myriad state and local laws addressing employer monitoring programs.

  1. Network and Information Security Software

Employers mandating that employees perform any work on employer-provided hardware (e.g., employer-provided laptops) may want to ensure those devices have network and information security and location monitoring software installed and that the technology is up-to-date and sufficient for employees to perform their jobs. Employers that do allow employees to use their own devices (BYOD) may want to require the installation of similar remote work software on those devices. Employers may also want to consider providing employees with internet hotspots for times when employers know employees will be working in public locations to avoid having employees working from shared or open networks. At the same time, employers may want to beware of the risk that such hardware will be lost or stolen.

  1. Security Measures

In addition to hardware requirements, employers may want to consider implementing policies that require employees to take basic security measures on their own while working from a public location. Employers may consider requiring employees to take work phone calls in secure places, require the use of privacy screens over laptop monitors, warn against leaving laptops and other hardware unattended, and mandate other actions to address basic privacy and proprietary information concerns.

  1. Compensation for Time

If an employer does become aware that an employee has performed work at the ballpark or in another location where distractions may have been present, the employer may question whether it must pay the employee for the time the employee logged that day. There are a myriad of federal and state wage-and-hour laws that employers can consult (as well as a review of the employer’s policies) that will answer this question. Usually, however, if employees report that they performed work, the employer may decide to compensate them for their time and evaluate whether there is a separate counseling or disciplinary issue that relates to policy or rule violations to consider.

Key Takeaways

Employees working from home or remotely, at least part of the time, appears to be the future for many workplaces across the United States as technology has made it easier for employees to stay connected with work and complete work tasks. The “Work From the Ballpark” promotion may serve as a reminder for employers that they may want to consider ways to ensure employees are working from appropriate locations to maintain productivity and information security with a remote workforce.

For more Employment Law news, click here to visit the National Law Review.

© 2022, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

Former Uber Security Chief Found Guilty in Criminal Trial for Failure to Disclose Breach to FTC

On October 5, 2022, former Uber security chief Joe Sullivan was found guilty by a jury in U.S. federal court for his alleged failure to disclose a breach of Uber customer and driver data to the FTC in the midst of an ongoing FTC investigation into the company. Sullivan was charged with one count of obstructing an FTC investigation and one count of misprision, the act of concealing a felony from authorities.

The government alleged that in 2016, in the midst of an ongoing FTC investigation into Uber for a 2014 data breach, Sullivan learned of a new breach that affected the personal information of more than 57 million Uber customers and drivers. The hackers allegedly demanded a ransom of at least $100,000 from Uber. Instead of reporting the new breach to the FTC, Sullivan and his team allegedly paid the ransom and had the hackers sign a nondisclosure agreement. Sullivan also allegedly did not report the breach to Uber’s General Counsel.  Uber did not publicly disclose the incident or inform the FTC of the incident until 2017, when Uber’s new chief executive, Dara Khosrowshahi, joined the company.

This case is significant because it represents the first time a company executive has faced criminal prosecution related to the handling of a data breach.

For more Privacy Law news, click here to visit the National Law Review.

Copyright © 2022, Hunton Andrews Kurth LLP. All Rights Reserved.