Reversing a 1992 precedent in Quill v. North Dakota, on June 21, 2018, the U.S. Supreme Court issued a decision in South Dakota v. Wayfair, Inc., holding that physical presence in a state is not necessary to require a remote seller to collect sales tax. In many respects this decision sets the stage
Mark H. Francis
D.C. federal court rules that web scraping does not violate the CFAA and may be protected by the First Amendment
On March 30, 2018, a D.C. federal district court denied a motion to dismiss an ACLU case filed against the government to challenge the constitutionality of the Computer Fraud and Abuse Act (CFAA), which makes it a federal crime to access a computer in a manner that “exceeds authorized access.” Sandvig v. Sessions, No. 1:16-cv-01368, Dkt. 24 (D.D.C. Mar. 30, 2018). The court held that the plaintiffs could proceed with their claim that the Free Speech and Free Press Clauses of the First Amendment, as applied, bar prosecution under the CFAA because it would restrict the plaintiffs’ ability to report on publicly available information, and even information available only following user registration on a site is generally available to the public.
The particular facts of the Sandvig case are unsurprisingly aimed at highlighting a potentially extreme application of the CFAA. The named plaintiffs are four professors and a media organization investigating whether automated decision-making and ad targeting technologies employed by various websites would result in potentially discriminatory practices against protected classes. For example, they want to analyze whether a real estate or employment website would discriminate against a user based on race. To perform the necessary analysis, they intend to use web scraping, bots, fake accounts (“sock puppets”) and other data collection techniques to conduct outcomes-based audit testing of websites and uncover such practices. These activities are typically prohibited by websites’ terms of service (TOS) and therefore unauthorized activity.…
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FTC report looks to improve mobile device security for businesses
On February 28, 2018, the Federal Trade Commission (FTC) released a report about security update practices for businesses providing mobile phones and other connected devices. The report recommends that manufacturers and carriers provide security updates that are consistent with consumer expectations, provide better information regarding their security practices and educate consumers on their role in…
Launching New Multistate Assessment Tool for Data Breach Notification Obligations
Nearly every state in the United States requires notification when certain personal information is lost, stolen, or misused. However, the many state laws vary in subtle but crucial respects, making it difficult to get to a bottom line quickly. Reed Smith’s Information Technology, Privacy & Data Security practice is thrilled to release a first-of-its-kind tool…
OCR’s Latest Health Breach Investigations Yield Big Settlements
In a span of a few weeks in early January 2017, the U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) announced two major settlements under the Health Insurance Portability and Accountability Act (“HIPAA”) relating to the breach of protected health information (“PHI”). Neither settlement included an admission of any liability, but they included significant fines and mandated that additional measures be taken to protect PHI.
One of the investigations was triggered by alleged untimely notification of a breach of the PHI of 836 individuals by a large health care network. The health care network discovered that paper-based operating room schedules with PHI went missing from one of its surgery centers October 22, 2013, but did not notify the OCR until January 31, 2014. The notification delay was apparently because of miscommunication between its workforce members. Citing the 60-day notice deadline in the HIPAA Breach Notification Rule (45 CFR §§ 164.400-414), the OCR investigation concluded that the notifications to OCR that affected individuals (on February 3, 2014) and required media outlets (on February 5, 2014) were roughly 40 days overdue. OCR also reviewed notifications provided by the health care network in regard to smaller breach incidents in 2015 and 2016, and concluded that those notifications were not timely either.
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Facebook Implements Additional Measures to Prevent Discriminatory Practices in Targeted Advertisements
Responding to news reports that journalists were able to purchase advertising on Facebook targeted to ethnic groups, Facebook announced several new changes to the company’s advertising products. The move highlights heightened scrutiny of advertising practices surrounding the increasing use of big data in many aspects of marketing and advertising.
Facebook’s response grew out of a ProPublica report published on October 28, 2015 detailing how journalists were able to purchase ads targeted to house hunters on Facebook,, all while excluding specific “Ethnic Affinities,” such as African-American, Asian-American or Hispanic people. The report raised significant ethical and legal questions on how the features that enable advertisers to target their ads can be misused for discriminatory purposes. The potential for interactive computer service providers to violate anti-discrimination laws has drawn attention for several years, especially following the decision of the Ninth Circuit Court of Appeals in the Roommates decision, which held that the that immunity provided by the Communications Decency Act (CDA) for online operators did not apply to an online service that offered questionnaires and selections to online participants that could facilitate discrimination against protected classes. See Fair Hous. Council v. Roommates.com, LLC, 521 F.3d 1157, 1166 (9th Cir.2008) (en banc).
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Are You Prepared for Your Vendor’s Data Breach?
Ever since the Target and Home Depot breaches were traced to intrusions at their vendors, the management of cybersecurity at third-party vendors has been a focus of companies and regulators. The FTC has flagged the issue, as has the SEC. The DoD has imposed strict cybersecurity requirements for contractors that “flow down” to sub-contractors.
But despite an increasing focus on the full lifecycle of third-party risk management, vendor incidents continue to represent a high percentage of reported data breaches. According to a March 2016 Ponemon Institute report, 49 percent of survey respondents indicated that their organization experienced a data breach caused by a vendor.
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The Future of the NIST Cybersecurity Framework
On April 5-7 2016, the National Institute of Science and Technology (NIST) hosted a workshop on its popular Framework for Improving Critical Infrastructure Cybersecurity (the “Framework”). The workshop was preceded by a request for information that prompted 105 responses, many from industry associations representing hundreds of companies. The discussions at the workshop are likely to…
Following its Settlement with Wyndham, the FTC Launches Wide Scale Inquiry Into PCI Compliance Audits
In December 2015, the Federal Trade Commission (FTC) settled a drawn-out civil action it brought against Wyndham Worldwide Corporation (Wyndham) for multiple data breaches involving cardholder data (i.e., information on credit and debit cards). In a departure from dozens of prior FTC settlements that mandated broad security measures for all consumer data, the Wyndham consent order was limited in scope to cardholder data, and required compliance with the Payment Card Industry Data Security Standard (PCI DSS) and annual independent audits to confirm compliance.
PCI compliance has apparently become a topic of great interest to the FTC, and it has now issued an Order to nine PCI DSS auditors pursuant to Section 6(b) of the FTC Act, seeking insight into data security compliance auditing and its role in protecting consumers’ information and privacy. The companies have been given 45 days to respond with a “Special Report” containing information, documents, and items responsive to the Order. According to the FTC’s Press Release regarding the Order, “[i]nformation collected by the FTC will be used to study the state of PCI DSS assessments.”
The Order contains a number of requests with upwards of 38 subparts, and specifically seeks both information and documentation regarding PCI auditing activities from January 2013 through the present, including:…
Continue Reading Following its Settlement with Wyndham, the FTC Launches Wide Scale Inquiry Into PCI Compliance Audits