Posts in Cybersecurity.
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On May 14, 2024, the UK National Cyber Security Centre (“NCSC”) and three major UK insurance associations (Association of British Insurers (“ABI”), British Insurance Brokers’ Association (“BIBA”) and International Underwriting Association (“IUA”)), published joint guidance on the approach to ransom payments (the “Guidance”). The Guidance was prepared for businesses experiencing a ransomware attack with the aim of reducing the overall impact of the incident on the business. The Guidance is intended, among other things, to reduce the number of ransoms paid by ransomware victims in the UK, and the size of the ransoms paid in cases where the victims do elect to pay. 

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On March 27, 2024, the U.S. Cybersecurity and Infrastructure Agency (“CISA”) released an unpublished version of a Notice of Proposed Rulemaking (“NPRM”), as required by the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (“CIRCIA”). The NPRM will be officially published on April 4, 2024, and comments are due by June 3, 2024. Pursuant to the proposed rules, “covered entities” would be required to report (1) “qualifying cyber incidents,” (2) ransom payments made in response to a ransomware attack, and (3) any substantially new or different information discovered related to a previously submitted report to CISA. Covered entities are required to notify CISA within 72 hours in the event of a qualifying cyber incident and within 24 hours, in the event that payment is made in response to a ransomware attack.

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On March 20, 2024, the U.S. House of Representatives passed legislation that will prohibit data brokers from transferring U.S. residents’ sensitive personal data to foreign adversaries, including China and Russia. The House bill HR 7520 (the “Bill”), also known as the Protecting Americans’ Data from Foreign Adversaries Act of 2024, marks a significant development in executive and legislative action related to foreign access to U.S. data. The Bill follows a similarly groundbreaking Executive Order and Department of Justice Notice of Proposed Rulemaking issued at the end of February that will establish strict protective measures against data exploitation by countries considered national security threats for U.S. sensitive personal data and U.S. government-related data. The Bill also comes after the House overwhelmingly passed HR 7521, (the Protecting Americans from Foreign Adversary Controlled Applications Act) resulting from concerns that the Chinese government would compel TikTok (or other foreign adversary-controlled apps) to turn over U.S. data. HR 7521 would effectively require TikTok to divest from parent company ByteDance in order to avoid a ban in the U.S.

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After potential warning signs spanning several years, on March 14, 2024, the Federal Trade Commission brought an enforcement action against two entities selling virus protection software to consumers via online and telemarketing sales. According to the FTC’s complaint, for several years the entities, Restoro Cyprus Limited and Reimage Cyprus Limited, received excessive chargebacks on purchases, numerous consumer complaints made directly to the entities, and various indirect consumer complaints made to vendors, telecoms service providers and others. 

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On February 28, 2024, President Biden released an Executive Order (“EO”) “addressing the extraordinary and unusual national security threat posed by the continued effort of certain countries of concern to access Americans’ bulk sensitive personal data and certain U.S. Government-related data.” In tandem with the EO, the Department of Justice’s (“DOJ’s”) National Security Division is set to issue an advance notice of proposed rulemaking (“ANPRM”) pursuant to the EO, which directs the DOJ to “establish, implement and administer new and targeted national security programming” to address the threat. The DOJ regulations will identify specific categories of “data transactions” that are prohibited or restricted due to their “unacceptable risk to national security.” 

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On February 26, 2024, the National Institute of Standards and Technology (“NIST”) announced the release of Version 2.0 of its voluntary Cybersecurity Framework (“CSF”).

The first iteration of the CSF was released in 2014 as a result of an Executive Order, to help organizations understand, manage, and reduce their cybersecurity risks. The original CSF was developed for organizations in the critical infrastructure sector, such as hospitals and power plants, but has since been voluntarily implemented across various sectors and industries, including throughout schools and local governments.

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On February 21, 2024, the U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) entered into a resolution agreement and corrective action plan with Green Ridge Behavioral Health LLC (“GRBH”) stemming from the organization’s failure to comply with the Privacy and Security Rules of the Health Insurance Portability and Accountability Act (“HIPAA”) and subsequent failure to protect against a 2019 ransomware attack that impacted the personal health information (“PHI”) of more than 14,000 patients. This marks the second such settlement with a HIPAA-regulated entity for violations that were discovered following a ransomware attack, according to HHS.

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As we pass the two-month anniversary of the effectiveness of the U.S. Securities and Exchange Commission’s (“SEC’s”) Form 8-K cybersecurity reporting rules under new Item 1.05, this blog post provides a high-level summary of the filings made to date.

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On February 16, 2024, the U.S. Department of Health and Human Services' Office for Civil Rights (“OCR”) and the National Institute of Standards and Technology (“NIST”) published a final version of Special Publication 800-66 Revision 2, “Implementing the Health Insurance Portability and Accountability Act (“HIPAA”) Security Rule: A Cybersecurity Resource Guide.” The publication features guidance and recommendations for cybersecurity measures for HIPAA covered entities to consider in the development of their information security programs, a ...

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Recent developments in the Shanghai Pilot Free Trade Zone to facilitate cross-border data transfers are expected to provide greater flexibility in exporting data from China, which has been stymied by the Cyberspace Administration of China (“CAC”)’s strict cross-border data transfer regulations proposed in December 2023. In recent years, the legal framework and practical enforcement for cross-border data transfers in China have undergone significant developments, especially with respect to the CAC’s cross-border data transfer security reviews and standard contractual clauses. The lack of clarity around the CAC’s strict rules for security assessment reviews appears to have caused significant delays in the approval process for cross-border data transfers and concern among international companies who regularly transfer data outside of China. However, it appears that the Shanghai government is likely to permit international companies to transfer data offshore by leveraging its sprawling free trade zones. Shanghai, for example, has recently unveiled new measures aimed at accelerating cross-border data transfers.

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On February 1, 2024, the Federal Trade Commission announced a proposed settlement with Blackbaud Inc. (“Blackbaud”) in connection with alleged security failures that resulted in a breach of the company’s network and access to the personal data of millions of consumers. As part of the settlement, Blackbaud will be required to comply with a variety of obligations, including deleting personal data that the company does not have a need to retain.

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On January 24, 2024, the UK National Cyber Security Centre (“NCSC”) announced it had published a report on how AI will impact the efficacy of cyber operations and the cyber threats posed by AI over the next two years. The report concludes that AI “will almost certainly increase the volume and heighten the impact of cyber attacks over the next two years.” The report also notes that all types of cyber threat actors, including state and non-state, and of varying skill level, already use AI to some degree. The report further notes that AI provides capability uplift in reconnaissance ...

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On January 23, 2024, the UK government announced that it published a draft Code of Practice on cybersecurity governance (the “Code”). The guidelines in the Code are intended to “help directors and senior leaders shore up their defences from cyber threats.” The Code has been designed in partnership with industry directors, cyber and governance experts, and the UK National Cyber Security Centre (NCSC), with a key focus to ensure that organizations have detailed plans in place to respond to and recover from any potential cyber incidents. While it is acknowledged that “there ...

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On January 18, 2024, the European Data Protection Board published a thematic one-stop-shop (“OSS”) case digest titled, “Security of Processing and Data Breach Notification” (the “Digest”). The Digest analyzes a selection of decisions adopted by EU data protection authorities on data security and data breaches. 

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On January 12, 2024, the New York State Department of Financial Services (“NYDFS”) announced a consent order with virtual currency company Genesis Global Trading, Inc. (“Genesis”) for “significant” failings in Genesis’ Anti-Money Laundering and cybersecurity compliance frameworks. According to the NYDFS, Genesis’ failure to comply with the NYDFS’ virtual currency and cybersecurity regulations left the company vulnerable to cybersecurity risks and related unlawful activity. 

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On December 14, 2023, the Court of Justice of the European Union (“CJEU”) issued its judgment in the case of VB v. Natsionalna agentsia za prihodite (C‑340/21), in which it clarified, among other things, the concept of non-material damage under Article 82 of the EU General Data Protection Regulation (“GDPR”) and the rules governing burden of proof under the GDPR.

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As we previously reported, the U.S. Securities and Exchange Commission’s (“SEC”) new Form 8-K rules for reporting material cybersecurity incidents take effect today, December 18, for filers other than smaller reporting companies. The new rules require reporting to the SEC within four business days from the determination of materiality.

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On December 8, 2023, the European Parliament and the Council reached a political agreement on the EU’s Regulation laying down harmonized rules on Artificial Intelligence (the “AI Act”).

The AI Act will introduce a risk-based legal framework for AI. Specifically, the AI Act will state that: (1) certain AI systems are prohibited as they present unacceptable risks (e.g., AI used for social scoring based on social behavior or personal characteristics, untargeted scraping of facial images from the Internet or CCTV footage to create facial recognition databases, etc.); (2) AI systems presenting a high-risk to the rights and freedoms of individuals will be subject to stringent rules, which may include data governance/management and transparency obligations, the requirement to conduct a conformity assessment procedure and the obligation to carry out a fundamental rights assessment; (3) limited-risk AI systems will be subject to light obligations (mainly transparency requirements); and (4) AI systems that are not considered prohibited, high-risk or limited-risk systems will not be under the scope of the AI Act.

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On November 28, 2023, the New York Department of Financial Services (“NYDFS”) announced that First American Title Insurance Company (“First American”), the second-largest title insurance company in the United States, would pay a $1 million penalty for violations of the NYDFS Cybersecurity Regulation in connection with a 2019 data breach. The NYDFS investigated the company’s response to the data breach and alleged that First American knew of a vulnerability in its technical systems that exposed consumers’ non-public information, but failed to investigate or ...

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On November 23, 2023, the UK government’s National Cyber Security Centre (“NCSC”) and the Republic of Korea’s National Intelligence Service (“NIS”) issued a joint advisory detailing techniques and tactics used by cyber actors linked to the Democratic People’s Republic of Korea (“DPRK”) that are carrying out software supply chain attacks. The publication follows the recent announcement of a new Strategic Cyber Partnership between the UK and the Republic of Korea where the two nations have committed to work together to tackle common cyber threats.

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On November 27, 2023, the UK government announced the first global guidelines to ensure the secure development of AI technology (the “Guidelines”), which were developed by the UK National Cyber Security Centre (“NCSC”) and the U.S. Cybersecurity and Infrastructure Security Agency (“CISA”), in cooperation with industry experts and other international agencies and ministries. The guidelines have been endorsed by a further 15 countries, including Australia, Canada, Japan, Nigeria, and certain EU countries (full list here).

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Glass Lewis & Co. recently published its updated Benchmark Policy Guidelines for 2024 (the “Policy”), which reflect investors’ continuing focus on corporate disclosure and board oversight of cyber risks. The Policy indicates that Glass Lewis may recommend “against” directors following a cybersecurity incident if it finds the board’s risk oversight or its post-incident response to be insufficient. The Policy also provides guidance on what Glass Lewis expects companies to disclose after such an incident.  

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Patrick Gunning from King & Wood Mallesons reports that, on November 2, 2023, the Australian Information Commissioner filed proceedings in the Federal Court of Australia against Australian Clinical Labs Limited seeking a civil penalty (i.e., a fine) in connection with the company’s response to a data breach that occurred in February 2022. The case is significant because: (1) it is only the second time that the Australian regulator has brought court proceedings of this kind despite having the power to do so since 2014; and (2) it signals the regulator’s priority in ensuring that cybersecurity incidents are responded to swiftly. The Australian legislature increased maximum penalties for ‘serious’ contraventions of the Privacy Act with effect from December 2022 to at least A$50 million. However, the maximum penalty available in this case will be A$2.2 million because the company’s conduct occurred prior to December 2022.

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On November 1, 2023, New York Governor Hochul announced that the New York State Department of Financial Services (“NYDFS”) amended its Cybersecurity Regulation applicable to covered financial institutions. Our previous blog post covered key proposed changes to the Cyber Regulation.

The NYDFS, which regulates financial institutions including insurance companies, mortgage brokers and banks, adopted the original Cybersecurity Regulation in 2017. The new amendments strengthen the initial framework and require NYDFS-regulated entities to adhere to a number of ...

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On October 30, 2023, the U.S. Securities and Exchange Commission (“SEC”) announced charges against SolarWinds Corporation and its Chief Information Security Officer (“CISO”), Timothy G. Brown, for fraud and internal control failures relating to allegedly known cybersecurity risks and vulnerabilities. The SEC’s complaint alleges that, from SolarWinds’ October 2018 initial public offering through its December 2020 8-K filing, the company was the target of a massive, nearly two-year long cyberattack, known as SUNBURST, and defrauded investors by overstating its cybersecurity practices and understating or failing to disclose known risks. The SEC has alleged that SolarWinds (1) mislead investors by disclosing only generic and hypothetical risks when the company and Brown allegedly knew of specific deficiencies in SolarWinds’ cybersecurity practices; (2) issued public statements about its cybersecurity practices and risks that were allegedly at odds with its internal assessments; and (3) discussed internally in 2019 and 2020 questions regarding the company’s ability to protect its critical assets from cyberattacks; and (4) made an incomplete disclosure about the SUNBURST attack in the company’s Form 8-K filing on December 14, 2020. In addition, the SEC alleged that Timothy Brown was aware of SolarWinds’ cybersecurity risks and vulnerabilities but did not resolve the issues or sufficiently raise them further within the company.

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On October 30, 2023, the G7 leaders announced they had reached agreement on a set of International Guiding Principles on Artificial Intelligence (AI) and a voluntary Code of Conduct for AI developers, pursuant to the Hiroshima AI Process. The Hiroshima AI Process was established at the G7 Summit in May 2023 to promote guardrails for advanced AI systems at a global level.

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On September 28, 2023, the Cyberspace Administration of China (“CAC”) released the “Provisions on Regulating and Facilitating Cross-Border Data Flows” for public comment (the “Proposal”). The deadline for public comment on the Proposal was October 15, 2023.

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On October 5, 2023, Blackbaud Inc., a software provider for the philanthropy, healthcare, and education sectors, has resolved claims that the District of Columbia and 49 U.S. states raised. The claims stem from a ransomware attack that impacted Blackbaud in 2020. The company was affected by a ransomware attack that exposed user information to unauthorized third parties. The breach not only impacted approximately 13,000 Blackbaud customers, but the customers’ own clients and donors as well.

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On August 8, 2023, the Massachusetts Gaming Commission approved 205 CMR 257: Sports Wagering Data Privacy, a set of regulations designed to create new rights and obligations with respect to sports betting operators’ use of patrons’ Confidential Information or Personally Identifiable Information. The regulations took effect on September 1, 2023.

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On September 12, 2023, the UK Information Commissioner, John Edwards, and the Chief Executive of the National Cyber Security Centre (NCSC) of the UK, Lindy Cameron, signed a joint Memorandum of Understanding (MoU) that sets forth a framework for cooperation and information sharing between the ICO and the NCSC. The MoU states the general aims “are to codify and enhance working” between the ICO and NCSC so as to “assist them in discharging their functions.”

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On August 29, 2023, the California Privacy Protection Agency (“CPPA”) Board issued draft regulations on Risk Assessment and Cybersecurity Audit (the “Draft Regulations”). The CPPA Board will discuss the Draft Regulations during a public meeting on September 8, 2023.

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On July 25, 2023, Hunton published a client alert discussing the importance of cyber and directors and officers (“D&O”) liability insurance for companies and their executives to guard against cyber-related exposures. In today’s ever-changing threat landscape, all organizations are at risk of damaging cyber incidents and resulting investigations and lawsuits, underscoring the importance of utilizing all tools in a company’s risk mitigation toolkit, including insurance, to address these exposures. 

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On July 26, 2023, the U.S. Securities and Exchange Commission (“SEC”) adopted long-anticipated disclosure rules for public companies by a 3-2 party-line vote. The final rules apply both to U.S. domestic public companies, as well as any offshore company that qualifies as a “foreign private issuer” under SEC rules due to a strong nexus to the U.S. capital markets. The new rules are effective as soon as December 18, 2023, as detailed further below.

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On June 28, 2023, the New York Department of Financial Services (“NYDFS”) published an updated proposed Second Amendment (“Amendment”) to its Cybersecurity Regulation, 23 NYCRR Part 500. On November 9, 2022, NYDFS published a first draft of the proposed Amendment and received comments from stakeholders over a 60-day period. The updated proposed Amendment will be subject to an additional 45-day comment period.

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On June 6, 2023, the Federal Deposit Insurance Corporation (“FDIC”), the Board of Governors of the Federal Reserve System (“FRB”) and the Office of the Comptroller of the Currency (“OCC”) issued their final Interagency Guidance on Third-Party Relationships (“Guidance”). The Guidance provides principles that banking organizations should consider when developing and implementing risk management practices for all stages in the life cycle of third-party relationships.

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On May 30, 2023, the Cyberspace Administration of China (“CAC) issued the Guideline for Filing the Standard Contract for Cross-border Transfer of Personal Information (“SC”). On June 1, 2023, the SC became an effective mechanism for transferring personal data outside of China. When using the SC as a transfer mechanism, it must be filed with the CAC and the new Guideline provides guidance for doing so. The key elements of the Guideline are summarized below.

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On May 18, 2023, the Federal Trade Commission announced it is seeking comment to proposed changes to the Health Breach Notification Rule (the “Rule”). The Rule requires  vendors of personal health records (“PHR”), PHR-related entities and service providers to these entities, to notify consumers and the FTC (and, in some cases, the media) in the event of a breach of unsecured identifiable health information, including cybersecurity intrusions and other instances of unauthorized access. By clarifying the Rule’s scope and applicability, and by modernizing allowable methods of notice, the proposed amendments seek to update the Rule to account for technological change since the Rule’s issuance, which includes the proliferation of health apps and connected devices, and the emergence of a widespread market for health data.

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On May 4, 2023, the Florida Senate and House of Representatives voted in favor of sending the Florida Digital Bill of Rights (“FDBR”) and other amendments related to government moderation of social media and protection of children in online spaces (S.B. 262) to Governor Ron DeSantis for signature. Unlike the other comprehensive state privacy laws that have been enacted, the FDBR applies to a much narrower subset of entities.

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On May 4, 2023, the Biden-Harris Administration announced new actions to promote responsible American innovation in artificial intelligence (“AI”). The Administration also met with the CEOs of Alphabet, Anthropic, Microsoft and OpenAI as part of the Administration’s broader, ongoing effort to engage with advocates, companies, researchers, civil right organizations, not-for-profit organizations, communities, international partners, and others on critical AI issues. These efforts build upon the steps the Administration has taken so far, including the Blueprint for an AI Bill of Rights issued by the White House Office of Science and Technology Policy (“OSTP”) and the  AI Risk Management Framework released by the National Institute of Standards and Technology (“NIST”). The Administration is also actively working to address national security concerns raised by AI, especially in critical areas like cybersecurity, biosecurity and safety. 

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On May 5, 2023, New York Attorney General Letitia James released proposed legislation that seeks to regulate all facets of the cryptocurrency industry. Entitled the “Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act,” if enacted the bill would substantially expand New York’s oversight of crypto enterprises conducting business in the Empire State, including as to matters involving privacy and cybersecurity.

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On May 4, 2023, the California Privacy Protection Agency (“CPPA”) Board announced that it will hold a public meeting on May 15, 2023 to discuss California Privacy Rights Act of 2020 (“CPRA”) regulations proposals and priorities, and other CPPA activities.

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On March 22, 2023, Capita PLC (“Capita”) experienced a cyber incident which it announced in a press release on April 3, 2023 and an update on April 20, 2023. Capita identified the incident on March 31, 2023, and confirmed the incident caused disruption to some services provided to individual clients, which has now been resolved. On April 21, 2023, the UK Information Commissioner’s Office (“ICO”) issued a statement confirming that Capita reported the incident and the ICO is investigating. The ICO also noted that other organizations affected by the incident should “consider their position[s]” and, if necessary, submit a breach notification.

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On March 30, 2023, the California Privacy Protection Agency (“CPPA”) announced that California’s Office of Administrative Law (“OAL”) approved the CPPA’s substantive rulemaking package to implement the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (“CPRA”).

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On Monday, March 27, 2023, the Centre for Information Policy Leadership (CIPL) at Hunton Andrews Kurth submitted a response to the California Privacy Protection Agency (CPPA)’s Invitation for Preliminary Comments on Proposed Rulemaking for cybersecurity audits, risk assessments and automated decisionmaking.

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On March 27, 2023, New York Attorney General Letitia James announced that a New York-based law firm (Heidell, Pittoni, Murphy & Bach LLP) had agreed to pay $200,000 in penalties and enhance its cybersecurity practices to settle charges stemming from a 2021 data breach. 

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On March 15, 2023, the Securities and Exchange Commission (“SEC”) proposed three rules related to cybersecurity and the protection of consumer information.

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On March 9, 2023, the U.S. Securities and Exchange Commission (SEC) announced settled administrative charges against Blackbaud Inc. The case stems from disclosures Blackbaud made to investors regarding a 2020 ransomware attack that targeted donor data management software the company provides to non-profit organizations.

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On March 3, 2023, the California Privacy Protection Agency (“CPPA”) Board held a public meeting regarding the Agency’s priorities, budget, the status of the California Privacy Rights Act of 2020 (“CPRA”) rulemaking process and the activities of the CPPA subcommittees. The meeting focused on the following topics:

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On March 7, 2023, the Transportation Security Administration (“TSA”) announced the issuance on an emergency basis of a cybersecurity amendment to the security programs of certain TSA-regulated airport and aircraft operators, as part of the U.S. Department of Homeland Security’s initiatives to improve the cybersecurity of U.S. critical infrastructure. 

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On February 16, 2023, the National Credit Union Administration (“NCUA”) Board unanimously approved a final rule requiring federally insured credit unions (“FICUs”) to notify the NCUA as soon as possible, within 72 hours, after an FCIU “reasonably believes” that a reportable cyber incident has occurred.

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On February 28, 2023, the Colorado Office of the Attorney General announced that revised draft Colorado Privacy Act (“CPA”) rules were adopted for review by the Colorado Attorney General prior to finalization and publication in the Colorado Register.

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On February 21, 2023, the California Privacy Protection Agency (“CPPA”) Board announced that it will hold a public meeting on March 3, 2023 regarding the status of the California Privacy Rights Act of 2020 (“CPRA”) rulemaking process and the activities of CPPA subcommittees.

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On February 14, 2023, the California Privacy Protection Agency (“CPPA”) announced that it had filed its first substantive rulemaking package for the proposed final draft California Privacy Act of 2020 (“CPRA”) regulations with California’s Office of Administrative Law (“OAL”), beginning a 30-day review period.

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On February 10, 2023, the California Privacy Protection Agency (“CPPA”) issued an Invitation for Preliminary Comments on Proposed Rulemaking on cybersecurity audits, risk assessments and automated decisionmaking, topics that have not yet been addressed by the existing final draft CPRA Regulations.

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On February 1, 2023, the Federal Trade Commission announced that it entered into a proposed order with GoodRx, a telehealth and prescription drug discount provider, for violations of the FTC’s Health Breach Notification Rule stemming from GoodRx’s unauthorized disclosures of consumers’ personal health information to third party advertisers and other companies. This is the first enforcement action taken under the FTC’s Health Breach Notification Rule, which was issued in 2009.

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On January 26, 2023, the National Institute of Standards and Technology (“NIST”) released the Artificial Intelligence Risk Management Framework (“AI RMF 1.0”), which provides a set of guidelines for organizations that design, develop, deploy or use AI to manage its many risks and promote trustworthy and responsible use and development of AI systems.

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On January 25, 2023, Hunton Andrews Kurth’s retail industry team released its annual Retail Industry in Review publication, which provides an overview of key issues and trends that impacted the retail sector in the past year, as well as a preview of relevant legal issues retailers can expect to arise in 2023. This year’s publication highlights key topics including cyber insurance, cybersecurity and privacy accountability, M&A activity, regulation and litigation related to PFAS, labor organizing, developments in ESG disclosure and more.

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On January 23, 2023, the California Privacy Protection Agency (“CPPA”) Board announced that it will hold a public meeting on February 3, 2023 regarding the status of the California Privacy Rights Act of 2020 (“CPRA”) rulemaking process, particularly with respect to the issuance of new draft rules on risk assessments, cybersecurity audits and automated decisionmaking.

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On January 16, 2023, the Directive on measures for a high common level of cybersecurity across the Union (the “NIS2 Directive”) and the Directive on the resilience of critical entities (“CER Directive”) entered into force. The NIS2 Directive repeals the current NIS Directive and creates a more extensive and harmonized set of rules on cybersecurity for organizations carrying out their activities within the European Union. The CER Directive repeals the European Critical Infrastructure Directive and brings with it new, stronger rules for the cyber and physical resilience of critical entities and networks.

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On December 20, 2022, a former employee in Illinois brought a class action suit against Five Guys Enterprises, LLC (“Five Guys”), a burger chain, alleging that Five Guys violated the Illinois Biometric Information Privacy Act (“BIPA”). 

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On December 20, 2022, the English High Court has granted the victim of a cyber attack a permanent injunction against cyber attackers whilst the victim organization maintains its anonymity. Generally, a claimant's identity is public in English court proceedings. Injunctions can be made against unknown and unidentifiable defendants enabling them to be granted against individuals who are acting in breach or threatening to commit a breach. 

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On December 16, 2022, the California Privacy Protection Agency (“CPPA”) Board held a public meeting regarding the status of the California Privacy Rights Act of 2020 (“CPRA”) rulemaking process and other topics, such as the CPPA’s advocacy regarding proposed federal and state privacy legislation.

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On November 30, 2022, the UK government confirmed that the Network and Information Systems (“NIS”) Regulations 2018 (“NIS Regulations”) will be strengthened to protect essential and digital services against cyber attacks. The changes bring providers of outsourced IT and managed service providers (“MSPs”) into scope of the NIS Regulations. The announcement comes in response to a public consultation held in January this year.

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The Cybersecurity and Infrastructure Security Agency (“CISA”) recently released a draft of the agency’s Cross-Sector Cybersecurity Performance Goals (“CPGs”) for critical infrastructure in the United States. The CPGs provide a common set of fundamental cybersecurity practices to guide critical infrastructure entities in measuring and improving their cybersecurity maturity.  

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On November 9, 2022, the New York Department of Financial Services (NYDFS) released its second, proposed amendments to the Part 500 Cybersecurity Rule. The proposed amendments revise several aspects of the draft Cybersecurity Rule amendments released on July 29, 2022. These changes reflect several comments made in response to the draft Cybersecurity Rule to further clarify, strengthen and clarify various requirements, as highlighted below.

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On October 31, 2022, the Federal Trade Commission announced a proposed settlement with education technology provider Chegg in connection with the company’s alleged poor cybersecurity practices. 

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On October 24, 2022, the Federal Trade Commission announced a proposed consent order with Drizly, an online alcohol ordering and delivery service, and the company’s CEO, for the alleged failure to maintain appropriate security safeguards that led to a data breach that affected 2.5 million consumers’ personal information.

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On October 18, 2022, the Transportation Security Administration (“TSA”) issued a new cybersecurity directive requiring passenger and freight railroad carriers to create plans for responding to cybersecurity incidents. The new directive is one of many actions taken by the Biden Administration to strengthen the cybersecurity posture of the U.S.’s critical infrastructure following a significant ransomware attack on a major U.S. pipeline in 2021.

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On October 24, 2022, the UK Information Commissioner’s Office (“ICO”) issued a £4.4 million fine to Interserve Group Limited for failing to keep employee personal data secure, which violates Article 5(1)(f) and Article 32 of the EU General Data Protection Regulation (“GDPR”), during the period of March 2019 to December 2020. The ICO determined that such violations rendered Interserve vulnerable to the cyber attack which took place between March 2020 and May 2020, affecting the personal data of up to 113,000 Interserve employees. The compromised data included contact details, national insurance numbers and bank account details, as well as special category data, including ethnic origin, religion, details of any disabilities, sexual orientation and health information.

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On October 18, 2022, the New York State Department of Financial Services (“NYDFS”) announced that EyeMed Vision Care LLC (“EyeMed”) agreed to a $4.5 million settlement for violations of the Cybersecurity Regulation (23 NYCRR Part 500) that contributed to the exposure of hundreds of thousands of consumers’ health data in connection with a cybersecurity event in 2020.

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On October 19, 2022, Bloomberg Law reported that the White House is planning to introduce a system to label Internet of Things (“IoT”) devices with information related to the devices’ cybersecurity risk.

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On October 12, 2022, New York Attorney General Letitia James announced that her office had secured a $1.9 million penalty from e-commerce retailer Zoetop, owner of SHEIN and ROMWE, following an improperly handled data breach. The Office of the Attorney General of the State of New York (“NYAG”) alleged in its Assurance of Discontinuance that Zoetop failed to properly handle the breach and lied about its scope to consumers.

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On October 11, 2022, the Biden-Harris Administration released an informational statement about the current Administrations’ progress in strengthening America’s national cybersecurity. The statement provides detail into several new initiatives and sets goals for America’s future in cybersecurity:

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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. 

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Background

On September 15, 2022, the European Commission presented its proposal for a Regulation on horizontal cybersecurity requirements for products with digital elements (the “Cyber Resilience Act”). According to the European Commission, the Cyber Resilience Act will be the first EU-wide legislation introducing “cybersecurity requirements for products with digital elements, throughout their whole lifecycle.”

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On September 12, 2022, the Cybersecurity and Infrastructure Security Agency (“CISA”) released a Request for Information (“RFI”) seeking public input regarding the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (“CIRCIA”). The public comment period will close on November 14th, 2022. The RFI provides a “non-exhaustive” list of topics on which CISA seeks public input, including:

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On September 9, 2022, the National Highway Traffic Safety Administration (NHTSA) announced its publication of final Cybersecurity Best Practices for the Safety of Modern Vehicles (the “2022 Best Practices”). The 2022 Best Practices reflect the agency’s final, non-binding vehicle cybersecurity guidance following its release of draft guidance in January 2021. The 2022 Best Practices also is an update to NHTSA’s first cybersecurity best practices document, which was issued in 2016

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On August 16, 2022, the Securities and Exchange Commission (“SEC”) charged 18 individuals and entities in relation to their involvement in a fraudulent hacking scheme. The scheme targeted and hacked 31 online retail brokerage accounts and forced them to make large purchases of certain stocks from two public microcap companies: Lotus Bio-Technology Development Corp. (“LBTD”) and Good Gaming, Inc. (“GMER”). The owners of the accounts that purchased the shares did not authorize the purchases. Both LBTD and GMER already were controlled in large blocks by fraudsters who repeatedly took steps to conceal their ownership. In doing so, the fraudsters artificially inflated the trading price and volume of the stocks and then sold the shares they had acquired at the inflated prices, generating approximately $1.3 million in proceeds and creating substantial profits.

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On July 7, 2022, the Cyberspace Administration of China (the “CAC”) issued the Measures on Security Assessment on Cross-border Transfer (the “Measures”), which became effective on September 1, 2022, and provide a six-month grace period to the relevant data handlers. On August 31, 2022, the CAC issued the Guidelines on Application for Security Assessment on Cross-border Transfer (the “Guidelines”), which further clarify certain issues and provide specific application documents for security assessments (including templates of application forms for security assessment on cross-border transfer and self-assessments report for risks of cross-border transfer).

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On July 26, 2022, the attorneys general of New Jersey, Pennsylvania, Delaware, Maryland, Virginia, Florida and Washington D.C. announced an $8 million multistate settlement with Wawa Inc. that resolves the states’ investigation into a 2019 data breach that compromised approximately 34 million payment cards used by consumers at Wawa stores and fueling locations. 

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On June 10, 2022, New York became the first state to require attorneys to complete at least one credit of cybersecurity, privacy and data protection training as part of their continuing legal education (“CLE”) requirements. The new requirement will take effect July 1, 2023.

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On July 29, 2022, the New York Department of Financial Services (“NYDFS”) posted proposed amendments (“Proposed Amendments”) to its Cybersecurity Requirements for Financial Services Companies (“Cybersecurity Regulations”). The Proposed Amendments would expand upon the set of prescriptive cybersecurity requirements applicable to all covered financial institutions, as well as impose more stringent requirements for “Class A Companies” (as defined below). There will be a brief pre-proposal comment period, followed by the official publication of the Proposed Amendments, which will trigger a new 60-day comment period. Below are the key changes introduced by the Proposed Amendments.

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On July 21, 2022, the National Institute of Standards and Technology (“NIST”) released an updated draft of its HIPAA Security Rule guidance. The draft guidance, titled “Implementing the Health Insurance Portability and Accountability Act (HIPAA) Security Rule: A Cybersecurity Resource Guide” (NIST Special Publication 800-66, Revision 2), is designed to assist HIPAA regulated entities “maintain the confidentiality, integrity and availability of electronic protected health information (ePHI).” NIST issued the updated draft guidance to align it with other NIST cybersecurity guidance documents that have been published since the original HIPAA Security Rule guidance was issued in 2008.

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On July 22, 2022, T-Mobile entered into an agreement to settle a class action lawsuit stemming from its 2021 data breach. The breach involved the personal information of 76.6 million U.S. residents and was T-Mobile’s fifth breach over a four year period. The proposed settlement will require T-Mobile to pay $500 million to settle customers’ claims and to bolster its cybersecurity practices.  

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On July 22, 2022, companies are required to notify the Arizona Department of Homeland Security when they experience a data breach impacting more than 1,000 Arizona residents. This notification requirement is in addition to obligations to notify affected individuals, the Arizona state attorney general and the three largest national consumer reporting agencies. The notification to the Arizona Department of Homeland Security must be made within “45 days after a determination that there has been unauthorized acquisition and access that materially compromises the security or ...

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On July 1, 2022, amendments to Florida’s State Cybersecurity Act (the “Act”) took effect, imposing certain ransomware reporting obligations on state agencies, counties and municipalities and prohibiting those entities from paying cyber ransoms.

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On June 30, 2022, the New York Office of the Attorney General (“NYOAG”) announced a $400,000 agreement with Wegmans Food Markets, Inc. (“Wegmans”) in connection with a cloud storage security issue. The NYOAG alleges that Wegmans exposed the personal information of three million consumers by storing the data in misconfigured cloud storage containers.

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On June 21, 2022, President Biden signed into law, the State and Local Government Cybersecurity Act of 2021 (S. 2520) (the “Cybersecurity Act”) and the Federal Rotational Cyber Workforce Program Act (S. 1097) (the “Cyber Workforce Program Act”), two bipartisan bills aimed at enhancing the cybersecurity postures of the federal, state and local governments.

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On June 24, 2022, the New York State Department of Financial Services (“NYDFS” or the “Department”) announced it had entered into a $5 million settlement with Carnival Corp. (“Carnival”), the world’s largest cruise-ship operator, for violations of the Cybersecurity Regulation (23 NYCRR Part 500) in connection with four cybersecurity events between 2019 and 2021, including two ransomware events.  

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On April 29, 2022, the National Information Security Standardization Technical Committee of China issued a draft version of the Cybersecurity Standard Practice Guidelines – Technical Specification on Certification of Personal Information Cross-border Transfer Activities (the “Guidelines”). The public comment period for the Guidelines closed May 13, 2022. The Guidelines establish the basic requirements for personal information protection certifications, which are one of four cross-border transfer mechanisms permitted under Article 38 of China’s Personal Information Protection Law (“PIPL”).

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On May 16, 2022, the U.S. Department of State, U.S. Department of Treasury and the Federal Bureau of Investigation issued combined guidance (“IT Workers Advisory”) on efforts by North Korean nationals to secure freelance engagements as remote information technology (“IT”) workers by posing as non-North Korea nationals. The IT Workers Advisory provides employers with detailed information on how North Korean IT workers operate; highlights red flag indicators for companies hiring freelance developers and for freelance and payment platforms to identify these workers; and provides general mitigation measures for companies to better protect against inadvertently engaging these workers or facilitating the operations of the North Korean government (“DPRK”) in violation of U.S. sanctions.

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On May 27, 2022, Vermont Governor Phil Scott signed H.515, making Vermont the twenty-first state to enact legislation based on the National Association of Insurance Commissioners Insurance Data Security Model Law (“MDL-668”). The Vermont Insurance Data Security Law applies to “licensees”—those licensed, authorized to operate or registered, and those required to be licensed, authorized or registered, under Vermont insurance law, with few exceptions. The new law generally follows MDL-668’s provisions, adopting the model law’s broad definition of nonpublic information and requiring licensees to, in part, maintain a written information security program (“WISP”) and investigate cybersecurity incidents. Unlike other state laws based on MDL-668, however, the Vermont Insurance Data Security Law declines to establish separate cybersecurity event notification requirements for licensees.

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On May 4-6, 2022, the California Privacy Protection Agency (“CPPA”) held via video conference several public pre-rulemaking stakeholder sessions regarding the California Privacy Rights Act (“CPRA”). During the sessions, stakeholders ranging from privacy and cybersecurity experts to trade associations and California small business owners provided verbal comments, insights and suggestions to the CPPA as it develops the forthcoming CPRA regulations. The sessions focused on a number of issues, including automated decision-making, data minimization and purpose limitation, dark patterns, consumers’ rights (e.g., opt-out rights, limitation on the use of sensitive personal information), and cybersecurity audits and risk assessments. Comments and positions taken amongst the stakeholders varied. Some of the positions taken by stakeholders are summarized below:

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In April 2022, two states enacted insurance data security legislation based on the National Association of Insurance Commissioners (“NAIC”) Insurance Data Security Model Law (MDL-668). Kentucky Governor Andy Beshear signed HB 474 into law on April 8, 2022, and Maryland Governor Larry Hogan signed SB 207 into law on April 21, 2022. The new laws establish data security obligations for insurance carriers and generally require carriers to take the following actions, subject to certain exemptions:
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On April 28, 2022, India issued new guidance relating to “information security practices, procedure, prevention, response and reporting of cyber incidents for Safe & Trusted Internet.” Notably, the guidance requires “service providers, intermediary, data centre, body corporate and Government organizations” to report cyber incidents to India's Computer Emergency Response Team (“CERT-In”) within six hours of noticing such incidents or being notified about such incidents. Before this guidance, notification of a cyber incident was required "within a reasonable time” after occurrence or discovery.

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On April 5, 2022, North Carolina became the first state in the U.S. to prohibit state agencies and local government entities from paying a ransom following a ransomware attack.

North Carolina’s new law, which was passed as part of the state’s 2021-2022 budget appropriations, prohibits government entities from paying a ransom to an attacker who has encrypted their IT systems and subsequently offers to decrypt that data in exchange for payment. The law prohibits government entities from even communicating with the attacker, instead directing them to report the ransomware attack to the North Carolina Department of Information Technology in accordance with G.S. 143B‑1379.

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On April 8, 2022, the Food and Drug Administration (“FDA”) issued Cybersecurity in Medical Devices: Quality System Considerations and Content of Premarket Submissions, a draft guidance document for industry and FDA staff. Industry stakeholders will have until July 7, 2022 to comment on the proposed guidance.

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On January 18, 2022, New Jersey Governor Phil Murphy signed into law Assembly Bill No. 3950, requiring employers to provide written notice to employees prior to the use of tracking devices in vehicles used by employees (the “Act”). The Act will go into effect on April 18, 2022.

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On March 29 and March 30, 2022, the California Privacy Protection Agency (“CPPA”) will hold public pre-rulemaking informational sessions regarding the California Privacy Rights Act (“CPRA”) via video conference. As we previously reported, the CPPA, which has rulemaking authority under the CPRA and will be responsible for implementing and enforcing the CPRA, recently estimated that it will not publish final CPRA regulations until the third or fourth quarter of 2022.

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