“There are few details of these leaks because credit-card companies do not want people to lose confidence in debit cards,” said Beth Givens, executive director of the consumer advocacy group Privacy Rights Clearinghouse. The mystery surrounding the data breaches underscores loopholes within the majority of state laws which aim to mandate the disclosure of security breaches. Moreover, the silence over responsibility for the breaches contrasts consumer advocates’ warnings that a federal law currently being considered by Congress will ironically roll back protections even further.
There are three cases in which a company suffering a breach can bypass most current notification laws, all of which have some basis in the legislation first drafted in California, security and legal experts told SecurityFocus. A company suffering a data breach can delay notification during a criminal investigation by law enforcement. If the stolen data includes identifiable information–such as debit card account numbers and PINs–but not the names of consumers, then a loophole in the law allows the company who failed to protect the data to also forego notification. Finally, if the database holding the personal information was encrypted but the encryption key was also stolen, then the company responsible for the data can again withhold its warning. In those cases, “they have no obligation to notify,” said Avivah Litan, vice president of security and privacy research for business analysis firm Gartner.
“The bottom line is that they escaped the disclosure law–at least for now.”
At least one state’s notification law has language that forces companies to disclose a breach even if the database records did not contain names or were encrypted and were stolen with the key. The state of New York’s Information Security Breach and Notification Act (S03492) passed in August 2005 does not contain the loopholes. A breach that includes any consumers from New York state would fall under the law’s jurisdiction.
Last June, Mastercard International published a statement warning that online attackers had breached the network of CardSystems Solutions and collected as many as 40 million credit-card accounts of various brands.
A rash of fraud that started in February was blamed on the leak, and media reports pointed at OfficeMax as the source.
“There is an ongoing federal investigation relating to ATM fraud involving legitimate debit card use at various retailers that was later tied to fraudulent transactions outside the U.S.,” the company stated in the filing to the Securities and Exchange Commission.
In the past month, law enforcement authorities in New Jersey and New York arrested more than a dozen people in connection with an organized identity theft operation, said Edward DeFazio, the prosecutor for Hudson County, New Jersey.
http://www.securityfocus.com/news/11381?ref=rss