Data Breach

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In today’s digital world, most Americans leave long electronic trails of private information wherever they go. But too often, that data is compromised. When they shop—whether online or at brick and mortar stores—retailers gain access to their credit card numbers. Medical institutions maintain patient records, which are increasingly electronic. Corporations store copious customer lists and employee Social Security numbers. These types of data frequently get loose. Hackers gain entry to improperly protected networks, thieves steal employee laptops or disgruntled workers pilfer company information.
“More and more people are putting their data in electronic form,” says Deirdre Mulligan, the faculty director at the Berkeley Center for Law
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Every potentially affected person can claim up to $1,500 in damages for emotional harm and credit monitoring expenses, even though no actual identity theft occurred.
“This really wakes up the government on what kind of liability can be involved here, and how liability can exceed the harm,” Scott says.
That’s significant because most lost hardware incidents requiring public notices to people with potentially jeopardized personal information do not result in actual harm to anybody. “There are many, many cases in which there is a notice with no injury,” Scott says.
Insider Attacks
One of the most distressing types of data breach is also the most difficult to prevent: dishonest people who either work for a company and steal information internally or pose as a trustworthy business partner and convince a corporation to hand over personal records.
That’s exactly what happened to consumer data broker ChoicePoint, now a division of LexisNexis, during a 2005 security incident many experts say played a crucial role in shaping privacy law.
The company sold consumer information from more than 163,000 individuals to identity thieves who pretended to be legitimate businesspeople. The Federal Trade Commission connected more than 800 cases of identity theft to the compromised Social Security numbers, employment information and credit histories. In the resulting litigation, ChoicePoint reached a $15 million settlement that

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