You Don't Need A Data Breach To Face Regulatory Scrutiny

Law360, New York (September 26, 2016, 9:29 AM EDT) -- Those who track newsworthy data breaches and other cybersecurity incidents know what type of fallout to expect from these events. Class actions from consumers, shareholders and financial institutions are now not an exception, but are increasingly becoming expected. Similarly, since the Federal Trade Commission began focusing on data security nearly 15 years ago, it has engaged in enforcement actions against numerous companies that were subject to a data breach or other security compromise. State attorneys general have also joined the fray. Notably, these consequences are post hoc, in that they stem from the actual occurrence of a security incident that results in data compromise, loss or exposure. Recently, however, there has been an increase in regulatory and litigation actions based not on breaches or security incidents but on identified security vulnerabilities alone that, if exploited, could result in data compromise, leakage or exposure and so pose a potential risk of harm, whether economic or otherwise, to customers and consumers....

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