Privacy's Trajectory
As many of our readers know, the International Association of Privacy Professionals (IAPP) will celebrate 10 years this Tuesday, March 16. In connection with that anniversary, the IAPP is releasing a whitepaper, "A Call For Agility: The Next-Generation Privacy Professional," tomorrow, March 15. Monday morning you can find the whitepaper here. I am honored that the IAPP has given me the opportunity to read and blog about the whitepaper in advance of its official release. Where exactly is privacy going in today's environment? What is the role of the privacy professional over the next 10 years? And, a lot of people I know and love (you know who you are) would ask, what in the world is a privacy professional anyway?
Of late, I have found myself reiterating, and getting a lot of positive feedback for, the following proposition: with data (massive amounts of it) as the new currency, the explosion in outsourcing to "trusted partners," and the growth of legal risks associated with an ever-expanding body of privacy and data security regulation, the role for professionals who understand privacy is becoming increasingly important. Further, such professionals are uniquely positioned to bring together various key stakeholders in an organization, including Information Security, Legal, IT, and various business units. Why? Because privacy professionals are, by virtue of what they do, multidisciplinary. And the growing opportunities for such professionals are inextricably intertwined with that quality. The IAPP has summed this up succinctly, and eloquently in its whitepaper, as follows:
Continue Reading...Issuing Banks File Class Action Suit Against Acquiring Banks in Heartland Breach Matter
In an interesting development, a handful of issuing banks impacted by the Heartland breach have filed a class action lawsuit against two acquiring banks related to Heartland Payment Systems. According to this article, the issuing banks are unhappy with Heartland's proposed settlement with Visa. This appears and to be an attempted end-run around the proposed $60 million settlement with Visa. It also may demonstrate that issuing banks are not satisfied with the dispute resolution mechanisms under the Visa Operating Regulations (the Account Data Compromise Recovery process estimated the loss at $140 million, yet the settlement was for only $60 million), and their ability to be made whole under those mechanisms. We will have more analysis of the complaint at a later day. In light of the relative lack of success issuing banks have had in these types of cases, it will be very interesting to analyze the legal theories employed by the issuing banks and track the progress of this matter.
Massachusetts's Highest Court Delivers BJ Wholesalers (and other Retailers) a Data Breach Liability Gift
While the proverbial jury is still out concerning retailers’ sales success this 2009 holiday season, Massachusetts’s highest court (the Supreme Judicial Court or “Supreme Court” as referenced herein) delivered retailers a significant holiday gift in the form of an opinion slamming the door on some financial institutions seeking to recover reissuance costs arising out a retailer’s payment card data breach. The Cumis Insurance Society, Inc. v. B.J. Wholesale Club, Inc. decision (“Supreme Court Decision”) analyzed and ruled upon most of the mainstream legal theories issuing banks have used to attempt to recover card reissuance costs, including breach of contract under a third party beneficiary theory, fraud, negligence, negligent misrepresentation and breach of unfair/deceptive practices laws (in this case M.G.L. Chapter . 93A, section 11). We have previously commented on multiple decisions involving retailer payment card breaches similar to the BJ Wholesale breach and PCI liability in general, including a 3rd Circuit federal appellate decision that allowed issuing banks to proceed forward with a third party beneficiary breach of contract theory. This blog post dives into and analyzes the Supreme Court Decision, and looks at it in context against similar decisions. Overall, in terms of issuing banks recovering for payment card breaches, the game does not appear to be litigation in the courts, but rather in the backroom contracts and recovery processes contained in the card brand operating regulations that most retailers agree to comply with.
Continue Reading...Quickhits: AMEX settles with Heartland Payment Systems for $3.6 Million
Read all about it: HERE.
The Merchants Strike Back?
With the recent news of several restaurants teaming up to sue point-of-sale system provider Radiant Systems (a copy of the complaint can be found here) for failing to comply with the PCI Standard, it appears that some merchants may be in a mood to strike back in the aftermath of a payment card security breach. This lawsuit comes in the wake of a couple lawsuits against payment card security assessor Savvis for allegedly failing to properly validate a processors' Visa CISP compliance (admittedly in this case it is the merchant bank suing the assessor, but a similar cause of action could exist for a merchant if its assessor makes a mistake in verifying PCI compliance). While two instances certainly don’t indicate a trend, they do indicate a potential route that merchants may consider to deflect liability arsing out of a payment card security breach.
