Encryption is Key to Limiting Company Exposure for Data Security Breaches

by Cohen & Gresser LLP

Companies doing business in California may find themselves targeted for investigation if they fail to encrypt personal information, according to a recent report issued by the California Attorney General’s office.   Last week, California Attorney General Kamala D. Harris released a report stating that the AG’s Office will investigate breaches involving unencrypted personal information and urged law enforcement agencies to prioritize these investigations, noting that data breaches in California exposed more than 2.5 million residents to the risk of identity theft in 2012 and that 1.4 million Californians could have been protected from this risk had their personal data been encrypted.  “Data breaches are a serious threat to individuals' privacy, finances and even personal security," Harris said. "Companies and government agencies must do more to protect people by protecting data."

The report’s recommendations are intended to strengthen and supplement the protections established by California’s 2002 data breach notification law (Cal. Civ. Code 1798.82 and 1798.29) (the “Breach Notification Law”).  These laws require government agencies and private companies, respectively, to disclose any breach of unencrypted security information to any California resident whose personal information has been, or is reasonably believed to have been, acquired by an unauthorized person.  Although the Breach Notification Law provides a safe harbor for companies which encrypt personal data by exempting them from the statute’s notification requirements, according to the AG, this “carrot” has not been a sufficient motivator: organizations are still not encrypting personal information and consequently are “subjecting too many Californians to a risk that is eminently avoidable.”

The AG also recommended enacting a law to require the use of encryption to protect personal information on portable devices, media and in email and suggested that “an appropriate encryption standard might be FIPS 197, the National Institute of Standards and Technology’s standard approved for U.S. Government organizations to protect higher risk information.”

Encryption was not the report’s entire focus. The AG also recommended additional security and disclosure measures for companies storing or transmitting personal information from their secure networks.  These measures include requiring companies to:

  • Review and tighten security controls on personal information, including security training for the company’s employees and contractors;
  • Make breach notices more plainly comprehensible to individuals whose data may have been compromised;
  • Offer damage mitigation products, such as credit card monitoring, and provide information on other protective measures to individuals whose social security and/or driver’s license numbers have been exposed; and
  • Notify individuals when there has been a breach of online security credentials (e.g. user names and passwords).

The AG’s recommendations also include broadening disclosure requirements under the Breach Notification Law to require the disclosure of any breach of online credentials such as usernames and passwords.  Such information is not presently deemed “personal information,” as defined in the statutes.  The report notes that such breaches not only create vulnerabilities for personal and corporate security, but can also be exploited to launch cyber-attacks on public infrastructure and government networks. 

The recommendations in the report, if enacted, would set a substantially higher standard for the storage and transmission of personal information.  Companies should consider getting ahead of this trend by upgrading their network and security measures and policies, including developing data encryption for transmitting personal data and providing employee training on data security policies and procedures.

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.

© Cohen & Gresser LLP | Attorney Advertising

Written by:

Cohen & Gresser LLP

Cohen & Gresser LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.