The Massachusetts AG Reaches Agreement With Bank Over Alleged Violations of the State’s Data Security Regulations

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On July 28, 2011, the Massachusetts Attorney General (“AG”) entered into an agreement with a Massachusetts bank regarding alleged violations of the state’s data security regulation. Specifically, the Massachusetts AG entered into an Assurance of Discontinuance with the bank (in lieu of an enforcement action), in which the bank agreed to comply with the state’s data security regulations, as well as to pay a civil penalty of $7,500.

According to the Massachusetts AG’s press release, a bank employee left an unencrypted backup tape, containing, among other things, Social Security numbers and account numbers of Massachusetts residents, on a desk at the end of the work day, rather than storing the tape in a vault. Reportedly, surveillance footage showed that the backup tape then was inadvertently thrown away by the bank’s cleaning crew. The AG’s press release, however, indicates that ultimately the tape was likely to have been “incinerated” by the bank’s waste disposal company.

In its Assurance of Discontinuance, the Massachusetts AG alleged that this incident involved two violations of the state’s data security regulations. First, the AG alleged that the bank violated the regulations by “maintaining personal information on unencrypted backup data tapes.” Second, the AG alleged that the bank violated the regulations by “failing to follow its own Written Information Security Program . . . resulting in the improper handling and subsequent loss of a backup data tape.” The AG raised this second allegation even though neither the AG nor the bank had any information indicating that any personal information had been acquired or used by an unauthorized person.

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Published In: Administrative Agency Updates, Consumer Protection Updates, Finance & Banking Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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