Massachusetts AGO Stresses the Importance of Encryption

[author: Amy Crafts]

The Massachusetts Attorney General’s Office ("AGO") has entered into an Assurance of Discontinuance (the "Settlement") with a Massachusetts company after allegations that the company failed to adequately protect personal information of Massachusetts residents. The AGO alleged that an employee of Maloney Properties, Inc. ("MPI") stored unencrypted personal information on a company laptop, and failed to follow the company’s written information security program ("WISP") that set forth the company’s standards for protecting personal information. MPI agreed to pay a fine of $15,000 in connection with the Settlement.

The laptop stored residential housing data for over 600 Massachusetts residents. The data is required to ensure eligibility for federal and state housing subsidies, and included social security numbers, in whole or in part. According to the Settlement, the violations occurred when the employee "knowingly stored unencrypted personal information on an MPI-owned laptop and then left that laptop unsupervised overnight in a personal automobile, resulting in the potential disclosure of the personal information of 621 Massachusetts residents when that laptop was stolen from the automobile…." The AGO alleged that this data breach violated the Massachusetts Consumer Protection Act, M.G.L. c. 93A §2 by violating the Massachusetts Standards for the Protection of Personal Information of Residents of the Commonwealth, 201 CMR 17.00 et. seq. (the "Massachusetts data security regulations").

The Settlement is largely focused on the encryption component of the Massachusetts data security regulations, which require that personal information must be encrypted – when transmitted over the internet or wirelessly, or when stored on portable devices such as laptops – when technically feasible. The Settlement sets forth MPI’s agreement to comply with the Massachusetts data security regulations, including encrypting all personal information stored on laptops or other portable devices.

In addition to paying a civil fine of $15,000 and agreeing to encrypt all personal information stored on laptops or other portable devices, MPI agreed to comply with all provisions of its WISP, including (a) ensuring that MPI owned laptops and portable devices are kept in a secure location at all times, including when used outside of MPI-owned premises or properties; (b) ensuring that personal information is not unnecessarily maintained by MPI on laptops or other portable devices for longer than is dictated by business necessity; (c) ensuring that personal information that must be maintained on MPI laptops or other portable devices is and remains encrypted; (d) effectively training the members of its workforce, on at least an annual basis, on the policies and procedures with respect to maintaining the security of personal information, including the proper encryption of personal information kept on portable devices, and the secure storage of those portable devices; and (e) performing on at least an annual basis an audit of its compliance with its WISP. Importantly, MPI also agreed to submit the results of their 2012 and 2013 audits to the AGO.

The Settlement notes that there is no evidence indicating that any of the compromised personal information has been acquired or used by an unauthorized person for an unauthorized purpose. In the event that the loss of the MPI-laptop results in actual harm to MPI customers, MPI and the AGO agreed to reopen discussions to determine "appropriate restitution to affected MPI customers," an approach used previously by the AGO.