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A consumer reporting agency that failed to properly screen prospective customers and, as a result, sold at least 318 credit reports to identity thieves, has agreed to settle Federal Trade Commission charges that it violated federal law. Under the settlement, the company and its principal must ensure that they provide credit reports only to legitimate businesses for lawful purposes, use a comprehensive information security program, and obtain independent audits every other year for 20 years. The settlement also imposes a $500,000 penalty but suspends payment due to the defendants' inability to pay. According to the FTC, the defendants use sensitive financial data from other consumer reporting agencies to create reports that landlords use to assess potential renters. These reports contain consumers' names, Social Security numbers, birth dates, bank and credit card account numbers, credit histories, and other personal information. The Commission alleges that the company failed to properly screen new customers. The company allegedly requested only publicly-available information from applicants seeking credit reports, and it did not request supporting documentation to establish that an applicant was actually a landlord renting property. As a result, identity thieves posing as property owners were given an account with unlimited online access to credit reports, and the account was used to access at least 318 reports containing sensitive personal information. The FTC charged the defendants with violating the Fair Credit Reporting Act (FCRA) by furnishing credit reports to persons who did not have a permissible purpose to obtain them, and by failing to maintain reasonable procedures to prevent such impermissible disclosures and to verify their customers' identities and how they intended to use the information. The agency also charged them with violating the FTC Act by failing to employ reasonable and appropriate security measures to protect sensitive consumer inform

Days after Visa seemingly confirmed that a data breach had taken place at a third payment processor, following on the recent breach disclosures by Heartland Payment Systems and RBS WorldPay, the credit card company now is saying that there was no new security incident after all. In actuality, Visa said in a statement issued Friday, alerts that it sent recently to banks and credit unions warning them about a compromise at a payment processor were related to the ongoing investigation of a previously known breach. However, Visa still didn't disclose the identity of the breached company, nor say why it is continuing to keep the name under wraps. Visa said that it had sent lists of credit and debit card numbers found to have been compromised as part of the investigation to financial institutions "so they can take steps to protect consumers." It added that it currently "is risk-scoring all transactions in real-time, helping card issuers better distinguish fraudulent transactions from legitimate ones." Visa's latest statement follows ones issued by both it and MasterCard International earlier this week in response to questions about breach notices that had been posted by several credit unions and banking associations. The notices made it clear that they weren't referring to the system intrusion disclosed by Heartland on January 20 and suggested that a new breach had occurred.

Data breaches are running at record levels, according to the San Diego-based Identity Theft Resource Center, a non-profit that tracks cybercrime. ITRC says it recorded 342 data breaches from Jan. 1 through June 24, up 69% from the same period in 2007. But, like the origins and perpetrators of so many individual data breaches, mystery also lies behind the aggregated numbers. "I'm not sure that this says breaches are increasing," ITRC founder Linda Foley tells Digital Transactions News. "What we know is the reporting of breaches is increasing." A handful of states now require some disclosure of data breaches to authorities, Alaska being the most recent. And some companies that have been hacked are starting to report breaches voluntarily, Foley says. While data breaches can compromise all manner of personal and business records, they often involve credit and debit card data and bank-account information. ITRC lists five major categories of breached entities, with the so-called banking/credit/financial sector accounting for 10% of 2008's breaches. Businesses, which include physical and Internet retailers, insurance companies and other private enterprises, accounted for 36.8%. Schools accounted for 21.3%; government and military facilities, 17%; and health-care facilities, 14.9%. IRTC also categorizes breaches by how they happened, such as through hackings-break-ins into computers and related systems, insider thefts, data lost in physical transit, and by other methods. The number of 2008 hackings through late June in the banking/credit/financial category was 10-double the five for all of 2007. The estimated number of records compromised as a result was 227,864. In 2007, the reported number of compromised records at financial institutions through hackings was 83,500. But Foley says not to put too much stock in the records numbers because so many breached organizations don't know or fail to report the number of compromised records when they report a bre

Payment processor Heartland Payment Systems has been sued over a data breach it disclosed publicly on Inauguration Day last week. The lawsuit, filed on Tuesday in U.S. District Court in Trenton, N.J., alleges that Heartland failed to adequately safeguard the compromised consumer data, did not notify consumers about the breach in a timely manner as required by law, and has not offered to compensate consumers for costs they may incur in protecting themselves from identity fraud. In a statement that coincided with President Barack Obama's inauguration events, Heartland said the breach occurred last year but that it found evidence of the intrusion only in the previous week and immediately notified law enforcement and credit card companies. Heartland was alerted in late October to suspicious activity surrounding processed card transactions by Visa and MasterCard and hired forensic auditors who uncovered malicious software that compromised data in the company's network, said Robert H.B. Baldwin Jr., chief financial officer of Heartland, last week. The lawsuit seeks damages and relief for the "inexplicable delay, questionable timing, and inaccuracies concerning the disclosures" with regard to the data breach, which is believed to be the largest in U.S. history. Heartland executives have declined to specify how many consumers or accounts were affected. The company handles 100 million transactions per month for more than 250,000 merchants. The lawsuit, first reported by SearchSecurity news site, also accuses Heartland of negligence in taking more than two months to determine the existence and scope of the breach and criticizes the company for failing to identify which merchants were affected by the breach. The suit was filed on behalf of Woodbury, Minn., resident Alicia Cooper, who was notified last week by her credit union that a card associated with her account was included in the breach. It seeks class action status. A Heartland spokesman said the company could no

This tip is part of Mitigating Web 2.0 threats, a lesson in SearchSecurity.com's Data Protection Security School. Visit the lesson page or our Security School Course Catalog for additional learning resources. Social networking, a term relatively new to the computing vernacular, has already become part of the cultural norm for a great proportion of Internet users. Even more recently, the use of online communities to establish and build connections among those with shared interests has become part of the corporate world as well. As professional social networks such as LinkedIn and Blue Chip Expert continue to grow, and professional groups gain in popularity on once-personal sites like Facebook and MySpace, enterprise security and risk management professionals must face the reality that these sites are emerging conduits for the unauthorized disclosure of confidential corperate information. Add the use of public social networking tools to the list of concerns, and the effectiveness of the traditional corporate security perimeter is further diminished. However, a robust set of policy, process and architecture aids in mitigating the risks of being social. Broadly, social networking is described as software that lets people interact, rendezvous, connect, play or collaborate by use of a computer network. This definition covers the popular social networking sites, including those mentioned above, as well as blogs, wikis, RSS, podcasts, tags, and more recently, search engines. While there are numerous benefits to social network solutions, including reducing costs and increasing collaboration, we'll focus on addressing the risks.

I have an open question for the people who complain about the potential of advertising networks to track your behavior on the Internet: What is a better way? Some might say that all behavioral targeting should simply be banned. But if you don't think that showing Chevy ads to people looking for cars is equivalent to poisoning the peanut butter, we need a middle ground that explains to people what's going on and lets them decide what is acceptable. This is much harder than it sounds: Any one Web page you visit can have a dozen advertisements and invisible bits of code that each send information about you to different companies, each with different ways of using that data. The privacy policy of the site you are looking at - not that anyone reads privacy policies - can't even try to explain this to you, because the site owner doesn't even know what all of its advertisers are doing. I'm coming to the conclusion that each advertisement on a page has to speak for itself. That's implicit in the approach Google is taking for its new behavioral targeting system. It puts the phrase "Ads by Google" on all its advertisements. Click that link and you'll get some limited information about Google's targeting system and an ability to adjust some of the interests that Google is tracking. But Google's approach is presented in a way that glosses over what they are doing and discourages people from reading the disclosure and exercising control, says Joseph Turow, a marketing professor at the Annenberg School for Communication of the University of Pennsylvania. Mr. Turow has developed a plan that is simpler and more comprehensive: Put an icon on each ad that signifies that the ad collects or uses information about users. If you click the icon, you will go to what he calls a "privacy dashboard" that will let you understand exactly what information was used to choose that ad for you. And you'll have the opportunity to edit the information or opt out o

We've all heard the argument before: "Why should you worry about the government looking into your personal records if you have nothing to hide?" Daniel J. Solove, an associate professor of law at The George Washington University Law School, analyzes that argument in a recently published paper titled "I've Got Nothing to Hide and Other Misunderstandings of Privacy." Solove argues that "the question assumes faulty assumptions about privacy and its value." Those who make the "nothing to hide" argument fail to understand the chilling effect that surveillance has on public discourse, the fact that small bits of private data (which an individual may not object to being uncovered) when put together form a larger and more intimate profile (which an individual may object to), and the mistake of having one's profile mistakenly associated with a group that is labeled as threatening. Here's an excerpt from the paper, which was published in the latest issue of the San Diego Law Review: [T]he problem with the "nothing to hide" argument is that it focuses on just one or two particular kinds of privacy problems - the disclosure of personal information or surveillance - and not others. It assumes a particular view about what privacy entails, and it sets the terms for debate in a manner that is often unproductive. It is important to distinguish here between two ways of justifying a program such as the NSA surveillance and data mining program. First is to not recognize a problem. This is how the "nothing to hide" argument works. It denies even the existence of a problem. The second manner of justifying such a program is to acknowledge the problems but contend that the benefits of the NSA program outweigh the privacy harms. The first justification influences the second, for the low value given to privacy is based upon a narrow view of the problem. The key misunderstanding is that the "nothing to hide" argument views privacy in a particular way - as a

Wharton School professor Andrea Matwyshyn has attended Defcon for the past five years. This year, her radar is pointing to corporate disclosure of computer security threats. Most consumers, she says, find out about them primarily through news reports and after-the-fact data breach notifications. Big business, Matwyshyn says, needs to do a much better job of keeping customers abreast of how they're dealing with big security threats. "Companies need to be aware that their customers are going to start asking questions about their security and what they're doing," she told Forbes.

ACTA (Anti-Counterfeiting Trade Agreement) has concerned many consumer rights organizations for some time now. Given that it could easily affect criminal laws in many countries around the world, it's not hard to see why there is demand for public disclosure and allow public debate in the matters. Still, to this day, ACTA is being negotiated behind closed doors by many countries around the world and now consumer groups want to, at least, have the negotiations disclosed to them. When it comes to the privacy and surveillance debates, which are in various stages in different countries right now, many say that for national security concerns, further surveillance measures should be taken in the law books. Many policy makers want to know every detail of day-to-day communications of millions of people including who you talk to, when, how, where, and, with a warrant, what the contents of those messages are. Unsurprisingly, consumer rights groups have a problem with that. Meanwhile, when it comes to the highly secretive negotiations happening with ACTA, many consumer rights organizations want a clear indication on how the new international standard is forming and the contents of the legislation and to have such things disclosed to the public. Ironically, policy makers seem to have a problem with that.

A rule requiring healthcare providers, health plans, and other entities covered by the Health Insurance Portability and Accountability Act (HIPAA) to notify individuals of a breach of their unsecured protected health information will become effective September 23, 2009. The "breach notification" regulations implement provisions of the Health Information Technology for Economic and Clinical Health (HITECH) Act, which was part of the American Recovery and Reinvestment Act of 2009 (ARRA). The new "breach notification" regulations apply to HIPAA-covered entities and their business associates. HIPAA covered-entities include health plans, healthcare clearinghouses, and healthcare providers. A business associate is a person or entity (such as a healthcare benefits broker) who, on behalf of the covered entity, performs a function involving the use or disclosure of individually identifiable health information.

Hospital CIOs, chief information security officers, and privacy officers are working diligently to keep their names off that wall. But they are dealing with a regulatory environment that is still in flux. A final rule that will strengthen HIPAA privacy and security safeguards is due out before the end of the year. HHS also has proposed a rule for the accounting of disclosures from electronic records. The biggest shift under way may be a new enforcement regime as the HHS Office for Civil Rights (OCR) shifts gears from only reacting to data breach reports to begin random audits of the privacy and security safeguards of large and small providers and their business associates. Another new wrinkle under the HITECH Act is that state attorneys general can file civil lawsuits for HIPAA violations.

As arguments swirl over online privacy, a new survey indicates the issue is a dominant concern for Americans. More than 90 percent of respondents called online privacy a "really" or "somewhat" important issue, according to the survey of more than 1,000 Americans conducted by TRUSTe, an organization that monitors the privacy practices of Web sites of companies like I.B.M., Yahoo and WebMD for a fee. When asked if they were comfortable with behavioral targeting - when advertisers use a person's browsing history or search history to decide which ad to show them - only 28 percent said they were. More than half said they were not. And more than 75 percent of respondents agreed with the statement, "The Internet is not well regulated, and naïve users can easily be taken advantage of." The survey arrives at a fractious time. Debate over behavioral advertising has intensified, with industry groups trying to avoid government intervention by creating their own regulatory standards. Still, some Congressional representatives and the Federal Trade Commission are questioning whether there are enough safeguards around the practice. Last month, the F.T.C. revised its suggestions for behavioral advertising rules for the industry, proposing, among other measures, that sites disclose when they are participating in behavioral advertising and obtain consumers' permission to do so. One F.T.C. commissioner, Jon Leibowitz, warned that if the industry did not respond, intervention would be next. "Put simply, this could be the last clear chance to show that self-regulation can - and will - effectively protect consumers' privacy," Mr. Leibowitz said, or else "it will certainly invite legislation by Congress and a more regulatory approach by our commission." Some technology companies are making changes on their own. Yahoo recently shortened the amount of time it keeps data derived from searches. It is also including a link in some ads that explains how