Computer networking giant Cisco says the recent WannaCry and Petya/NotPetya incidents signal the advent of a new generation of cyberattacks that is aimed more at mass disruption than financial gain. The new breed of “Destruction of Service” attacks will only grow more sophisticated and potent, the company says in its Cisco 2017 Midyear Cybersecurity Report.

The report warns that cybercriminals “now have the ability—and often now, it seems, the inclination—to lock systems and destroy data as part of their attack process.” The report, released July 20, also lays out new threats posed by the growing network of connected devices known as the “Internet of Things” and examines’ hackers’ continued use of Business Email Compromise (BEC) attacks, which it says accounted for $5.3 billion in cybertheft between 2013 and 2016.

Venerable insurer Lloyd’s of London says a global cyber attack on a major provider of cloud services could carry costs of up to $53 billion, reports Data Breach Today.

That’s a hefty price tag that explains the rising demand for cyber insurance. It also sheds light on why insurers are proceeding extremely carefully. The costs of a major data breach can be significant and difficult to predict.

To help define the level of exposure, Lloyd’s worked with cyber consultant Cyence to produce a new report that outlines the direct economic costs of two types of global cyber attacks and estimates the portion of the loss in each scenario that would covered by insurance. In the case of a cloud services attack, only 17 percent of the loss would be insured, Lloyd’s estimates. In the case of a global attack exploiting a software vulnerability, only 7 percent of the estimated loss of up to $28 billion would be assured.

Analysts estimate the cyber insurance market is worth up to $3.5 billion today and could grow to $7.5 billion by 2020.

Cybersecurity workforce
Copyright: Tawatdchai Muelae / 123RF Stock Photo

Cybersecurity positions are increasingly difficult to fill and the long-term prospects for the industry don’t appear to be getting any brighter, Ericka Chickowski warns at the blog DARKReading. More than 25 percent of organizations take six months or longer to fill priority positions, she reports in “Desperately Seeking Security: 6 Skills Most In Demand.”

By 2022, Chickowski notes, there will be a global shortfall of cybersecurity workers of 1.8 million people, according to the Global Information Security Workforce Study conducted by Frost & Sullivan.

Read more at DARKReading

Acting Federal Trade Commission (FTC) Chairman Maureen K. Ohlhausen made it clear that she expects the FTC’s enforcement role in protecting privacy and security to encompass automated and connected vehicles. In her opening remarks at a June 28, 2017 workshop hosted by the FTC and National Highway Traffic Safety Administration (NHTSA), she said the FTC will take action against manufacturers and service providers of autonomous and connected vehicles if their activities violate Section 5 of the FTC Act, which prohibits unfair and deceptive acts or practices.

Such concern is warranted as new technologies allow vehicles to not only access the Internet, but also to independently generate, store and transmit all types of data – some of which could be very valuable to law enforcement, insurance companies, and other industries. For example, such data can not only show a car’s precise location, but also whether it violated posted speed limits, and aggressively followed behind, or cut-off, other cars.

Acting Chairman Ohlhausen noted that the FTC wants to coordinate its regulatory efforts with NHTSA, and envisions that both organizations will have important roles, similar to the way the FTC and the Department of Health and Human Services both have roles with respect to the Health Insurance Portability and Accountability Act (HIPAA).

Traditionally, NHTSA has dealt with vehicle safety issues, as opposed to privacy and data security. Thus, it may mean that the FTC will have a key role on these issues as they apply to connected cars, as it already has been a major player on privacy and data security in other industries.

Acting Chairman Ohlhausen also encouraged Congress to consider data breach and data security legislation for these new industries, but speakers at the workshop (video available here and embedded below) noted that legislation in this area will have difficulty keeping up with the fast pace of change of these technologies.

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Specific federal legislation, or even laws at the state level, may be slow in coming given the many stakeholders who have an interest in the outcome. Until then, the broad mandate of Section 5 may be one of the main sources of enforcement. Companies who provide goods or services related to autonomous and connected vehicles should be familiar with the basic FTC security advice we have already blogged about here, and should work with knowledgeable attorneys as they pursue their design and manufacture plans.

Yesterday, a massive ransomware attack now known as “Petya” spread across the globe in a similar fashion to the WannaCry cyberattack in May. In an Alert today, Fox Chief Privacy Officer and Partner Mark McCreary breaks down what we know about the attack, how to address it if your organization falls victim to it, and how to minimize the risks of future attacks:

Yesterday’s worldwide cyberattack once again exploited a vulnerability that has been known to experts for many months. These attacks are sure to continue and the best defense is knowledge. Awareness of how malware works and employee training to avoid the human error that may trigger an infection can prevent your organization from becoming a victim.

This latest ransomware variant, referred to as “Petya,” is similar in many respects to the “WannaCry” ransomware that affected hundreds of thousands of computers in mid-May, using the same Eternal Blue exploit to infect computers. The purpose of this Alert is to provide you some information believed or known at this time.

How Is a Computer Infected?

Experts believe the Petya malware is delivered in a Word document attached to an email. Once initiated by opening the Microsoft Word document, an unprotected computer becomes infected and the entire hard drive on that computer is encrypted by the program. This is notably different from WannaCry, which encrypted only files.

Once Petya is initiated, it begins seeking other unprotected computers in the same network to infect. It is not necessary to open the infected Microsoft Word document on each computer. An infection can occur by the malware spreading through a network environment.

To read Mark’s full discussion of the Petya attack, please visit the Fox Rothschild website.

Mark also notes that “I continue to stress to clients that in addition to hardening your IT resources, the absolute best thing your business can do is train employees how to detect and avoid malware and phishing.  In-person, annual privacy and security training is the best way to accomplish this.”

Eric Bixler has posted on the Fox Rothschild Physician Law Blog an excellent summary of the changes coming to Medicare cards as a result of the Medicare Access and CHIP Reauthorization Act of 2015.  Briefly, Centers for Medicare and Medicaid Services (“CMS”) must remove Social Security Numbers (“SSNs”) from all Medicare cards. Therefore, starting April 1, 2018, CMS will begin mailing new cards with a randomly assigned Medicare Beneficiary Identifier (“MBI”) to replace the existing use of SSNs.  You can read the entire blog post here.

The SSN removal initiative represents a major step in the right direction for preventing identity theft of particularly vulnerable populations.  Medicare provides health insurance for Americans aged 65 and older, and in some cases to younger individuals with select disabilities.  Americans are told to avoid carrying their social security card to protect their identity in the event their wallet or purse is stolen, yet many Medicare beneficiaries still carry their Medicare card, which contains their SSN.  CMS stated that people age 65 or older are increasingly the victims of identity theft, as incidents among seniors increased to 2.6 million from 2.1 million between 2012 and 2014.  Yet the change took over a decade of formal CMS research and discussions with other government agencies to materialize, in part due to CMS’ estimates of the prohibitive costs associated with the undertaking.  In 2013, CMS estimated that the costs of two separate SSN removal approaches were approximately $255 million and $317 million, including the cost of efforts to develop, test and implement modifications that would have to be made to the agency’s IT systems – see United States Government Accountability Office report, dated September 2013)

We previously blogged (here and here) about the theft of 7,000 student SSNs at Purdue University and a hack that put 75,000 SSNs at risk at the University of Wisconsin.  In addition, the Fox Rothschild HIPAA & Health Information Technology Blog discussed (here) the nearly $7 million fine imposed on a health plan for including Medicare health insurance claim numbers in plain sight on mailings addressed to individuals.

On June 14, Fox Partner Scott Vernick appeared on live-streaming financial news network Cheddar to provide background information on the European Union’s General Data Protection Regulation, which goes into effect on May 25, 2018. To comply with the new privacy rules, companies that provide online services to residents of the EU will be required to obtain documented “hard consent” from customers before processing and storing their data. For many American companies, this is a significant shift.

Scott L. Vernick, Partner, Fox Rothschild LLPScott outlines the high stakes for companies affected by the GDPR, in the form of a fine for failure to comply of four percent of their worldwide annual turnover (i.e., gross revenue). He also discusses the potential impact on EU-based user experience, and notes that companies will need to account for changes to the GDPR allowed within specific member countries.

We invite you to watch Scott’s informative segment.

On July 23, 2017, Washington State will become the third state (after Illinois and Texas) to statutorily restrict the collection, storage and use of biometric data for commercial purposes. The Washington legislature explained its goal in enacting Washington’s new biometrics law:

The legislature intends to require a business that collects and can attribute biometric data to a specific uniquely identified individual to disclose how it uses that biometric data, and provide notice to and obtain consent from an individual before enrolling or changing the use of that individual’s biometric identifiers in a database.

— Washington Laws of 2017, ch. 299 § 1.  (See complete text of the new law here).

Washington’s new biometrics act governs three key aspects of commercial use of biometric data:

  1. collection, including notice and consent,
  2. storage, including protection and length of time, and
  3. use, including dissemination and permitted purposes.

The law focuses on “biometric identifiers,” which it defines as

data generated by automatic measurements of an individual’s biological characteristics, such as a fingerprint, voiceprint, eye retinas, irises, or other unique biological patterns or characteristics that is used to identify a specific individual.

— Id. § 3(1).

The law excludes all photos, video or audio recordings, or information “collected, used, or stored for health care treatment, payment or operations” subject to HIPAA from the definition of “biometric identifiers.” Id.  It also expressly excludes biometric information collected for security purposes (id. § 3(4)), and does not apply to financial institutions subject to the Gramm-Leach-Bliley Act.  Id. § 5(1).  Importantly, the law applies only to biometric identifiers that are “enrolled in” a commercial database, which it explains means capturing a biometric identifier, converting it to a reference template that cannot be reconstructed into the original output image, and storing it in a database that links the biometric identifier to a specific individual.  Id. §§ 2, 3(5).

Statutory Ambiguity Creates Confusion

Biometric data
Copyright: altomedia / 123RF Stock Photo

Unfortunately, ambiguous statutory language, combined with rapidly-advancing technology, virtually guarantees confusion in each of the three key aspects of the new law.

Regarding collection, the new law states that a company may not “enroll a biometric identifier in a database for a commercial purpose” unless it: (1) provides notice, (2) obtains consent, or (3) “provid[es] a mechanism to prevent the subsequent use of a biometric identifier for a commercial purpose.”  Id. § 2(1).  Confusingly, the law does not specify what type of “notice” is required, except that it must be “given through a procedure reasonably designed to be readily available to affected individuals,” and its adequacy will be “context-dependent.”  Id. § 2(2).

If consent is obtained, a business may sell, lease or disclose biometric data to others for commercial use.  Id. § 2(3).  Absent consent, a business may not disclose biometric data to others except in very limited circumstances listed in the statute, including in litigation, if necessary to provide a service requested by the individual or as authorized by other law. Id. However, the new law may ultimately be read by courts or regulators as including a “one disclosure” exception because it says disclosure is allowed to any third party “who contractually promises that the biometric identifier will not be further disclosed and will not be enrolled in a database for a commercial purpose” inconsistent with the new law.  Id.

The new law also governs the storage of biometric identifiers.  Any business holding biometric data “must take reasonable care to guard against unauthorized access to and acquisition of biometric identifiers that are in the possession or control of the person.”  Id. § 2(4)(a).  Moreover, businesses are barred from retaining biometric data for any longer than “reasonably necessary” to provide services, prevent fraud, or comply with a court order.  Id. § 2(4)(b).  Here too the law fails to provide certainty, e.g., it sets no bright-line time limits on retention after customer relationships end, or how to apply these rules to ongoing but intermittent customer relationships.

The Washington legislature also barred companies that collect biometric identifiers for using them for any other purpose “materially inconsistent” with the original purpose they were collected for unless they first obtain consent.  Id. § 2(5).  Confusingly, even though notice alone is enough to authorize the original collection, it is not sufficient by itself to authorize a new use.

Interestingly, the new Washington law makes a violation of its collection, storage or use requirements a violation of the Washington Consumer Protection Act (the state analog to Section 5 of the FTC Act).  Id. § 4(1).  However, it specifically excludes any private right of action under the statute and provides for enforcement solely by the Washington State Attorney General, leaving Illinois’s Biometric Information Privacy Act as the only state biometrics law authorizing private enforcement.  Id. § 4(2).

Washington’s new law was not without controversy.  Several state legislators criticized it as imprecise and pushed to more specifically detail the activities it regulates; proponents argued that its broad language was necessary to allow flexibility for future technological advances. Ultimately, the bill passed with less than unanimous approval and was signed into law by Washington’s governor in mid-May.  It takes effect on July 23, 2017.  A similar, but not identical, Washington law takes effect the same day governing the collection, storage and use of biometric identifiers by state agencies.  (See Washington Laws of 2017, ch. 306 here).

Yesterday we witnessed new ransomware spread across the world with incredible speed and success, bringing businesses to their knees and home users learning for the first time about ransomware and why computer backups are so important.

With over 123,000 computers infected, experts believe the “WannaCrypt/WannaCry/WCry” attacks have stopped after researchers registered a domain that the software checks before encrypting.  However, nothing is stopping someone from revising the software to not require that check and releasing it into the wild.  In other words, do not expect the infections to stop.

To battle the malicious software, Microsoft took the highly unusual step of issuing updates for versions of Windows that have reached their end of life and otherwise are not supported (e.g., Windows XP, Windows 8, and Windows Server 2003).  WannaCrypt/WannaCry/WCry did not even try to target Windows 10 machines, but that does not mean Windows 10 machines cannot be affected and encrypted by the ransomeware.  The blog describing Microsoft’s efforts can be found here and is worth reading.  Although your business may normally take a wait and see approach to software updates to avoid conflicts with other programs, this is a situation you should fast track that process.

If there is any silver lining here, it is that it may lead to more organizations to focus harder on computer security and efforts to battle malicious attacks similar to WannaCrypt/WannaCry/WCry.  Having seen first hand from clients the panic and feeling of helplessness caused by WannaCrypt/WannaCry/WCry in mere hours, it seems likely that companies are starting to better understand the risk, loss of productivity and costs that can be associated with a ransomware attack.

Below is a screenshot of the WannaCrypt/WannaCry/WCry software on an infected machine.  (Note the financial aid offer in the last line of the “Can I Recover My Files?” paragraph.  The bad guys must have a public relations firm!)

wannacrypt

In one of the best examples we have ever seen that it pays to be HIPAA compliant (and can cost A LOT when you are not), the U.S. Department of Health and Human Services, Office for Civil Rights, issued the following press release about the above settlement.  This is worth a quick read and some soul searching if your company has not been meeting its HIPAA requirements.

FOR IMMEDIATE RELEASE
April 24, 2017
Contact: HHS Press Office
202-690-6343
media@hhs.gov

$2.5 million settlement shows that not understanding HIPAA requirements creates risk

The U.S. Department of Health and Human Services, Office for Civil Rights (OCR), has announced a Health Insurance Portability and Accountability Act of 1996 (HIPAA) settlement based on the impermissible disclosure of unsecured electronic protected health information (ePHI). CardioNet has agreed to settle potential noncompliance with the HIPAA Privacy and Security Rules by paying $2.5 million and implementing a corrective action plan. This settlement is the first involving a wireless health services provider, as CardioNet provides remote mobile monitoring of and rapid response to patients at risk for cardiac arrhythmias.

In January 2012, CardioNet reported to the HHS Office for Civil Rights (OCR) that a workforce member’s laptop was stolen from a parked vehicle outside of the employee’s home. The laptop contained the ePHI of 1,391 individuals. OCR’s investigation into the impermissible disclosure revealed that CardioNet had an insufficient risk analysis and risk management processes in place at the time of the theft. Additionally, CardioNet’s policies and procedures implementing the standards of the HIPAA Security Rule were in draft form and had not been implemented. Further, the Pennsylvania –based organization was unable to produce any final policies or procedures regarding the implementation of safeguards for ePHI, including those for mobile devices.

“Mobile devices in the health care sector remain particularly vulnerable to theft and loss,” said Roger Severino, OCR Director. “Failure to implement mobile device security by Covered Entities and Business Associates puts individuals’ sensitive health information at risk. This disregard for security can result in a serious breach, which affects each individual whose information is left unprotected.”

The Resolution Agreement and Corrective Action Plan may be found on the OCR website at https://www.hhs.gov/hipaa/for-professionals/compliance-enforcement/agreements/cardionet

HHS has gathered tips and information to help protect and secure health information when using mobile devices:  https://www.healthit.gov/providers-professionals/your-mobile-device-and-health-information-privacy-and-security

To learn more about non-discrimination and health information privacy laws, your civil rights, and privacy rights in health care and human service settings, and to find information on filing a complaint, visit us at http://www.hhs.gov/hipaa/index.html