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The Legal Implications of Social Networking Part Three: Data Security

Posted in Social Networking

In 2011, InfoLawGroup began its “Legal Implications” series for social media by posting Part One (The Basics) and Part Two (Privacy). Well, after 4th quarter year-end madness and a few holidays Part Three is ready to go. In this post, we explore how security concerns and legal risk arise and interact in the social media environment. Again, the intended audience for this blogpost are organizations seeking to leverage social media, and understand and address the risks associated with its use.

As might be expected criminals view social media networks as fertile ground for committing fraud. There are three main security-related issues that pose potential security-related legal risk. First, to the extent that employees are accessing and using social media sites from company computers (or increasingly from personal computer devices connected to company networks or storing sensitive company data), malware, phishing and social engineering attacks could result in security breaches and legal liability. Second, spoofing and impersonation attacks on social networks could pose legal risks. In this case, the risk includes fake fan pages or fraudulent social media personas that appear to be legitimately operated. Third, information leakage is a risk in the social media context that could result in an adverse business and legal impact when confidential information is compromised.

Social Media = Social Engineering

One of the biggest social media security risks reveals itself in the name of the medium itself: social media yields social engineering. In short, when it comes to social media attacks, an organization’s own employees may be its worst enemy. Fraudsters leverage the central component of social media that makes it so attractive: trust between “friends.” Social media users may be tricked into downloading applications infected with malware because a posting was “recommended” by a friend. For example, almost immediately after Osama Bin Laden was killed by U.S. troops, one Facebook scam inserted malware on computers using a malicious (and false) link to the “real” Osama Bin Laden dead body photo that looked like it was posted on a friend’s wall. In addition, some scams have used messaging capabilities within social media platforms to initiate computer attacks.  Unfortunately, if a company’s employee is scammed and downloads malware from a social media network to the company network, it may be the company that faces legal liability.

In addition, fraudsters use the trust users place in the social media platform itself to effectuate security breaches. For example, most would feel fairly comfortable clicking on an advertisement displayed on Facebook. However, in some cases that click could result in a “malvertisement” infection.

Another common attack technique is phishing. Criminals create fake email notices that appear to come from social media sites. Unsuspecting users that click on links in these emails may end up providing sensitive information to fake websites that look like the social media site they belong to, or downloading malware onto a company’s system.  Unfortunately, even an employee just giving up his or her personal social media passwords can be risky for a company. Many individuals use the same passwords at multiple sites and disclosing a social media password could also amount to providing the password to the network of an employee’s employer.

There is increasing evidence that criminals are using social media to target key company personnel in order to burrow into company networks and steal trade secrets and other sensitive information.  The wealth of personal information users share on social media sites provides ammunition for such attacks. Fraudsters can gather details about a user before engaging in an attack (e.g. employer, address, phone number, friends, affiliated companies, etc.) and then use the details to target the attack specifically at the individual(s) (such as a phishing email).  In fact, this very technique appears to have been used in one of the biggest breaches of 2011, the RSA breach.

With regard to legal risk, companies suffering a breach arising out of social media face the same risks for any security breach. If malware infects a system or an employee is tricked into providing his or her login-credentials, and confidential or personal information is stolen, the employer may face lawsuits or regulatory scrutiny.  Actions alleging breaches of NDAs may also come from third parties whose trade secrets or other confidential information a company holds. Moreover, if personal information is accessed or acquired due to the social media security breach, notification may be necessary and related costs would have to be incurred by the employer.

Social Media Spoofing and Hijacking

Companies may also face legal liability for failing to detect and notify social media users of scams associated with the company’s social media site or key personnel with social media presences. If an organization becomes aware of a spoofed fan page that looks like its own, or a criminal disseminating a malware-infested social media application that looks like it is sponsored by the organization, legal repercussions could arise. Similarly, fraudsters could create fake profiles of key company personnel in order to commit crimes.

Security and legal risks can also arise if hackers are able to take over a company’s fan page or social media profiles of key company personnel. By creating a fake fan page or profile, or hijacking an existing fan page or profile, fraudsters could send out messages with malware to all of the individuals who joined the fan page or trick customers into disclosing sensitive information.  From the legal risk perspective, while case law is sparse, companies that fail to have fake fan pages removed or that fail to warn their customers of scams that look like they come from the company, could face legal liability.

Confidential Information Leakage

Another important business and legal risk arises out of potential confidential information leakage on social media sites.

Imagine a company that is heavily reliant on traditional sales methods and has built up a customer list (a trade secret) with key, difficult-to-find contacts. Oftentimes, companies like this rely on key sales people to bring in large portions of their revenue. Perhaps seeking to be on top of modern marketing practices some of these salespeople establish LinkedIn accounts, and naturally begin linking to dozens or perhaps hundreds of friends, colleagues and customers. On LinkedIn, if settings are not set properly, all of the contacts related to these key salespeople could be publicly viewable. That being the case, it would not be difficult for a competitor to simply view and record those contacts, thereby potentially exposing the company’s customer list and key customer contacts.

Take it one step further. Suppose one of the key sales persons leaves with the customer list and the company sues alleging misappropriation of trade secret. One of the elements for establishing a trade secret are efforts to keep the secret confidential. However, by allowing the sales person to display all of his contacts on LinkedIn, has the company effectively failed to maintain that confidentiality and lost its trade secret protection?

In 2010, we saw an Eastern District of New York case that looked at this issue and ruled that trade secret protection was unavailable for a company where the customer list information at issue could be readily ascertained using sites like Google and by viewing LinkedIn profiles. In contrast, in 2011, the court in Syncsort Incorporated v. Innovative Routines, International, Inc., looked at the issue of whether a trade secret posted on the Internet loses its protection. While the court ruled that trade secret protection was not lost under the facts of Syncsort (where only a portion of the trade secret was available for a limited time), it appears that a different set of facts could yield a decision going the other direction.

The inadvertent disclosure of confidential information by employees may also be problematic for organizations. This problem can arise when employees mistakenly or unknowingly disclosing sensitive information. For example, in September 2011 a Hewlett-Packard executive updated his LinkedIn status and revealed previously undisclosed details of HP’s cloud-computing services. If he had instead posted confidential information about one of HP’s clients it may have resulted in legal liability. Moreover, for publicly-traded companies, certain inadvertent disclosures of financial information could lead to violations of securities laws and regulations.

Even if confidential information is not directly put into a single status update or other post, the aggregated social media postings of multiple employees could yield valuable competitive information. Companies (on their own or through third party service providers) are actively data mining social media sites with the hope of gathering enough bits and pieces of information to provide a competitive edge. Employees may be unwittingly posting what they think is a single piece of non-sensitive data.  However, when combined with multiple data points from other employees and sources, those innocent disclosures could suddenly reveal company or client confidential information.

Conclusion

In summary, the key security-related legal concerns associated with social media start with the fact that social media provides a rich target environment for criminals. Social media users are literally volunteering information that may be sensitive, and the disclosure of which could lead to legal risk. The culture of sharing present on social media sites itself can lead to over-disclosure by employees, and the pure volume of data that can be mined from social media sites may allow competitors and criminals to connect-the-dots to reveal confidential or sensitive information. Moreover, the sense of trust that comes with social media environments provides an opportunity for criminals to breach security. People may be tricked into providing certain information or downloading malware because they think they are having legitimate communications with colleagues or friends. Finally, the ability to easily spoof or create fake sites or pages in social media sites that look legitimate can lead to increased security risk. With this increased security risk, comes increased legal and liability risk (in an area of law that is very unsettled in terms of who can be liable for a security breach, and to what extent).

How can these risks be addressed and mitigated? First, it is key to understand the social media environment and how the various social media platforms work.  The unique characteristics of a particular social media platform may present risks specific to that platform. Second, organizations need to develop a social media strategy to maximize their leveraging of social media while minimizing risk (Are employees allowed to use their social media sites from work computers? Can they talk about the company and its plans on social media sites? What company information can they share on social media sites? Should only a handful of marketing-oriented employees be allowed to post about or on behalf of an organization? Can the company monitor social media usage?) Once strategy is developed, social media policies need to be drafted to reflect the strategy and address risks. In the security context, a big part of minimizing risk is educating and training employees and providing guidance on how to avoid or minimize it.  Technology solutions may also exist that can allow for monitoring and tracking of social media usage by employees. Ultimately, however, like social media itself, it comes down to people — risk can only be addressed appropriately if the individuals using social media are equipped to identify and mitigate against it.