The Massachusetts AG Has Not Forgotten About the State’s Data Security Regulations – and Neither Should You

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Just because we have not heard much about the Massachusetts data security regulations in the past year does not mean that the regulations should be forgotten. On Monday, March 28, 2011, the Massachusetts Attorney General (“AG”) entered into a settlement with the owner and operator of several Boston bars and restaurants with respect to a security breach and related data security failings. Importantly, the Massachusetts data security regulations played a prominent role in the settlement.

According to the Massachusetts AG’s complaint, the restaurant chain experienced a data breach in April 2009 in which malware on its computer systems allowed hackers to access customer payment card information. Moreover, the AG’s complaint alleged, among other things, that the restaurant chain did not follow a number of basic computer security precautions, including, for example, failing to change the default usernames and passwords on its computer system and permitting employees to share common usernames and passwords. Although the lack of these controls occurred before the effective date of the Massachusetts data security regulations, this conduct would appear to have stood in stark contrast to the controls required by the regulations (let alone basic industry best practices).

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