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Data Privacy Trends: Randy Sabett, Information Security Attorney March 26, 2009 Activity at the State Level Points Toward a Federal Data Breach Notification Law Data privacy legislation -- the trend started in California and is being discussed heatedly in Massachusetts today. Data breach notification and privacy laws have now been enacted in 40 separate states, and government observers think we're close to seeing federal legislation proposed. In an exclusive interview, Randy Sabett, a noted privacy/information security attorney, discusses: Trends in state data privacy legislation; What these laws mean to businesses; The Obama Administration's approach to data privacy; Trends to keep an eye on throughout 2009. Randy V. Sabett, CISSP, is a partner in the Washington, D.C. office of Sonnenschein Nath & Rosenthal LLP, where he is a member of the Internet, Communications & Data Protection Practice. He counsels clients on information security, privacy, IT licensing, and patents, dealing with such issues as Public Key Infrastructure (PKI), digital and electronic signatures, federated identity, HIPAA, Gramm-Leach-Bliley, Sarbanes-Oxley, state and federal information security and privacy laws, identity theft and security breaches. He served as a Commissioner for the Commission on Cyber Security for the 44th Presidency.

Welcome to GovInfoSecurity.com We have a new President, a new Administration, a new session of Congress ... and a new national mission throughout government to secure personal data and protect our borders from cyber threats. Information security has never been more important to the federal government - or to all of us, as we conduct personal and professional business in this electronic world. To track the progress of this new security-savvy Administration - and to give you the information and opportunity to present your opinions - we're pleased to introduce GovInfoSecurity.com, a new site dedicated to providing interactive news, views and training on all facets of federal government security.

US senators have drafted legislation that would give the federal government unprecedented authority over the nation's critical infrastructure, including the power to shut down or limit traffic on private networks during emergencies. The bill would also establish a broad set of cybersecurity standards that would be imposed on the government and the private sector, including companies that provide software, IT work or other services to networks that are deemed to be critical infrastructure. It would also mandate licenses for all individuals administering to strategically important networks. The bill, which is being co-sponsored by Senate Commerce Committee chairman John Rockefeller IV and Senator Olympia Snowe, was expected to be referred to a senate committee on Wednesday. Shortly after a working draft of the legislation began circulating, some industry groups lined up to criticize it for giving the government too much control over the internet and the private companies that make it possible. "This gives the president too much power and there's too little oversight, if there's any at all," said Gregory Nojeim, senior counsel at the Center for Democracy and Technology. "It gives him the power to act in the interest of national security, a vague term that has been broadly defined." Nojeim was pointing to language in the bill that permits the president to "order the limitation or shutdown of internet traffic to and from any compromised federal government or United States critical infrastructure information system or network" after first declaring a national cybersecurity emergency. A separate provision allows the executive in chief to "order the disconnection of any federal government or United States critical infrastructure information systems or networks in the interest of national security." "It applies to any critical infrastructure," Nojeim added. "Surely, the internet is one." The bill would also require NIST, or the National Institute of Standards and Techn

Should responsibility for defending against cyberattacks be moved from the Dept. of Homeland Security to the military? Air Force Gen. Kevin Chilton suggested as much at a Congressional hearing where he warned of U.S. vulnerability to cyberwarfar "across the spectrum." Such attacks "potentially threaten not only our military networks, but also our critical national networks," Chilton told a House Armed Services subcommittee, the Washington Post reported. As head of Strategic Command, the general isn't responsibel for defending civilian networks, just government computers. [Stratcom's responsibility is] "to operate and defend the military networks only and be prepared to attack in cyberspace when directed. I think the broader question is, who should best do this for the other parts of America, where we worry about defending power grids, our financial institutions, our telecommunications, our transportation networks, the networks that support them." Well, that's where the 60-day interagency overview of cybersecurity comes in. At the end of that, Chilton said, responsibility for protecting private sector networks may well fit under Stratcom's duties. So what impact in having the military at the center of cybersecurity? Importantly, it brings offensive ops into the defense game. And where the military is involved, can NSA be far behind? No. Operational control over both [offensive and defensive ops], Chilton said, has been delegated to Lt. Gen. Keith B. Alexander, the head of the National Security Agency. … NSA, according to Chilton, already has a role in information security, and the agency's support "has been instrumental in our efforts to operate and particularly to defend our networks," he said. Combining oversight of cyber defense and offense made sense, Chilton said, "because they're so interconnected. . . . As you consider offensive operations, you want to make sure your defense are up."

Fraud on the Internet reported to U.S. authorities increased by 33 percent last year, rising for the first time in three years, and is surging this year as the recession deepens, federal authorities said on Monday. Internet fraud losses reported in the United States reached a record high $264.6 million in 2008, according to a report released on Monday from the Internet Fraud Complaint Center, run by the FBI and the National White Collar Crime Center. Online scams originating from across the globe -- mostly from the United States, Canada, Britain, Nigeria and China -- are gathering steam this year with a nearly 50 percent increase in complaints reported to U.S. authorities in March alone. "2009 is shaping up to be a very busy year in terms of cyber-crime," the report's author, John Kane, told reporters in a telephone briefing. Last year's losses compared with $239.1 million in 2007 and dwarfs the $18 million of losses of 2001.

It's not exactly what anyone might expect to find at a garbage dump in Ghana. Journalism students from the University of British Columbia discovered intact hard drives containing secret international security data and personal information at a digital dumping ground in Ghana, said their teacher, Peter Klein. Mr. Klein, a producer for the PBS television program Frontline and an Emmy Award winning journalist, said the drives included information about U.S. Homeland Security and Pentagon defence contracts as well as social security numbers, credit card numbers, and family photos. The dumps are frequented by criminal gangs in the country, he said. The findings are part of a project by Mr. Klein's graduate students investigating electronic waste, or e-waste. The team also travelled to Guiyu, China, and India, piecing together the afterlife of discarded computers, drives and parts. To find out if cyber criminals could get information stored on the computers, the students bought several hard drives from vendors near the Ghana dumps to test at home in Vancouver. One of the drives came from Northrop Grumman, a large U.S. military contractor. It contained "details about sensitive, multimillion-dollar U.S. government contracts" as well as contracts with the defence intelligence agency and NASA, according to a synopsis of the project on the PBS website.

A disconnect exists between federal government CIOs, CISOs and IT hiring managers and the human resources professionals charged with finding qualified candidates with cybersecurity skills, according to a just-published report. The report, Cyber In-Security: Strengthening the Federal Cybersecurity Workforce from the Partnership for Public Service, concludes that IT managers are less satisfied than their HR counterparts with the quality of cybersecurity recruits and the time it takes to hire IT security personnel. "The human capital management process is broken; operations and HR people should be joined at the hip and collaborate across the government," the report quotes Norman Lorentz, former chief technology officer at the White House Office of Management and Budget. Indeed, one third of chief information officers, chief information security officers and IT hiring managers surveyed for the report expressed unhappiness with candidate quality vs. 10 percent for HR managers. Sixty-one percent of HR managers vs. 40 percent of IT managers expressed satisfaction with candidate quality (see chart).

A New Jersey credit-card processor disclosed a data breach that analysts said may rank among the biggest ever reported. Heartland Payment Systems Inc. said Tuesday that cyber criminals compromised its computer network, gaining access to customer information associated with the 100 million card transactions it handles each month. The company said it couldn't estimate how many customer records may have been improperly accessed, but said the data compromised include the information on a card's magnetic strip -- card number, expiration date and some internal bank codes -- that could be used to duplicate a card. Heartland, of Princeton, N.J., processes transactions for more than 250,000 businesses nationwide, including restaurants and smaller retailers. Avivah Litan, an analyst at research company Gartner, called it the largest card-data breach ever, based on her conversations with industry executives. Previously, the largest known breach occurred when around 45 million card numbers were stolen from retail company TJX Cos. in 2005 and 2006. Robert Baldwin, Heartland's president and chief financial officer, said it was too early to say how many records were accessed and that calling it the largest-ever breach would be "speculative." Representatives of Visa Inc. and MasterCard Inc. alerted Heartland to a pattern of fraudulent transactions on accounts the processor handled sometime last fall, Mr. Baldwin said. But an internal investigation and audits failed to detect a security breach. Last week, however, a forensic investigator discovered evidence of the breach. Mr. Baldwin said Heartland was targeted with malicious software that was "light-years more sophisticated" than malevolent programs commonly downloaded from the Internet.

The ranking member of the Senate Homeland Security and Governmental Affairs Committee told the chief executive of Heartland Payment Systems that she was "astonished" a breach the company's information system lasted for nearly 1½ years without being detected. At a panel hearing Monday on protecting industry against growing cyber threats, Sen. Susan Collins, R.-Maine, asked Heartland CEO Robert Carr to explain how this delay happened. Carr responded that a breach is usually detected when the processing payer is notified of fraudulent use of cards, and that didn't occur until the end of 2008. "Isn't there software in the systems to detect such a breach?" Collins asked.

Recent hacking attacks on Sony Corp. and Lockheed Martin Corp. grabbed headlines. What happened at City Newsstand Inc. last year did not. Unbeknownst to owner Joe Angelastri, cyber thieves planted a software program on the cash registers at his two Chicago-area magazine shops that sent customer credit-card numbers to Russia. MasterCard Inc. demanded an investigation, at Mr. Angelastri's expense, and the whole ordeal left him out about $22,000.

China has denied allegations that it hacked into a Pentagon IT system and recovered plans for the Joint Strike Fighter (JSF). The combat aircraft which is to be procured by Britain as well, is being produced by Lockheed Martin. In allegations first reported in the Wall Street Journal, hackers stole "several terabytes of data related to design and electronics systems". The most sensitive data however on weapons systems and its stealth technology was not breached since it is kept on computers not connected to the internet. IT experts have said that they suspect the hackers came from China although it will be difficult to identify their exact origins. Hacking into IT systems as complex as the DoD's would require the help and capabilities of another government. Recovering data on the JSF would allow countries or rogue groups who could face the aircraft in future conflicts to develop counter measures based on the aircraft's weaknesses. The Chinese strongly denied that the breach originated from their country. "China has not changed its stance on hacking. China has always been against hacking and we have cracked down very hard on hacking. This is not a Chinese phenomenon. It happens everywhere in the world," a spokesperson for the Foreign Ministry said. This is not the first time the JSF's security has been breached. Early on in the contract the DoD and Lockheed Martin admitted that there was no universal IT security policy for the 1,200 sub contractors and that leaks may have occurred. BAE subsequently admitted that their IT security for JSF material was lax and that leaks could have occurred. Britain is scheduled to buy 150 of the aircraft by 2018.

Since Obama's landmark speech on cybersecurity in May, his administration hasn't revealed much about its long-percolating plans to shore up the government's defenses against hackers and cyberspies. But privacy advocates monitoring the initiative are already raising concerns about what they know and what they don't: the details that have trickled out--including the involvement of the National Security Agency--and the veil of classified information that still covers much of the multibillion-dollar project. "It feels like the Bush administration all over again," says Pam Dixon, executive director of the World Privacy Forum. "Not enough people know the details about these programs to have a good public discussion. We all want good security of government systems, but you have to balance the cloak and dagger elements with civil liberties."