You Detected a Data Breach. Now What?

You have detected a data breach. Alert!

You are the CEO of a mid-size company. As you are going about your day, minding your business, you get a call from your security department. It’s a call you really didn’t want. Security has detected suspicious file movements and wants your directions about what to do next. You have likely suffered a data breach.

Now what?

Ideally, you will go to your shelf and pull out your executive copy of the company’s data breach plan. But what if you don’t have a plan?

As with most policies, the time to develop your data breach plan is “before you need it.” In this case, it’s important for two main reasons. First, the law requires you to have a plan if you have Massachusetts customers (as part of a Written Information Security Plan, or WISP) or are in one of any number of regulated industries. Second, odds are high that your business will suffer a data breach sooner or later.

If you don’t have a plan yet, you are not alone. About 20% of companies have not yet developed a plan, according to a 2015 Ponemon study. If you do have a plan but aren’t totally confident in it, again, you are not alone. About 2/3 of companies with a plan weren’t confident in their plans in the same study. If you don’t have a plan, or if you do have a plan and wonder whether it covers everything it should, this post is for you.

Your company’s data breach plan should include each of these important elements:

    The Right Crowd. When you develop your plan, you should include at minimum your security, technology, legal, customer service, and PR/communications folks, as well as representatives from any areas specifically affected. For example, include someone from HR when developing policies about handling HR data. Depending on the size of your organization, this group might include anywhere from 2 people to 20. In final form, your plan should include the roles and responsibilities of people from all of these groups as well. If you don’t have the right people in the room from the start, you face the very real possibility of chaos when a data breach occurs.

    Administrative, Technical, and Physical Safeguards. Your plan should cover how you are going to keep your data as safe as possible. You may not be able to prevent every breach, but you can reduce the number and severity of breaches by taking some basic cybersecurity steps. Administrative safeguards have to do with people’s behaviors and knowledge. Examples include policies about access to and use of data, hardware, and software; background checks; agreements; and training. Technical safeguards have to do with preventing access electronically. Examples include encryption, separating identifier and content data, roles-based systems access, and regular logging and auditing of access to systems. Physical safeguards have to do with preventing physical access to sensitive information. Examples include locked filing cabinets, secure workstations, video surveillance, biometric locks, and ID badges.

    Business Continuity. Your plan should tell you how to keep your business running if you do not have access to your computers or files. This may or may not be included in your normal business continuity plan, so be sure to check. A natural disaster that takes out one of your two locations will play out very differently from a ransomeware attack that ties up your entire network.

    Specific Steps. A data breach plan should ideally cover exactly who does what, and when. In the heat of the moment, your employees may not be thinking clearly; your plan should guide them so that they avoid panicked mistakes. In creating the plan, your organization should spend some time figuring out what its greatest vulnerabilities are and how it will address a resulting breach should it occur. (Ideally, of course, you will find ways to reduce these vulnerabilities during the course of developing your plan, but we live in the real world where time and budget are always constraints.) A data breach plan should cover these specific steps:

    • Escalation: When do you contact your internal and external security team and lawyers? When do you contact your Chief Information Officer? CEO? Your board? If there is any indication of a major incident, your first call should be to your data forensics consultant; the consultant will help you avoid accidentally harming your own systems or destroying any evidence. Beyond that, your next calls will depend a great deal on your organizational structure and preferences.
    • Investigation. If your business can afford it, you should enlist outside help with a data breach; legal, PR, and data forensics consultants will have experience that you may not have internally. They will also be able to give you perspective in a stressful situation. It is important to know who you will contact for outside help ahead of time. Be sure to keep their contact information in your breach plan. During the course of investigation, no matter who is conducting it, it is most important that you avoid destroying evidence, notify law enforcement, and ask the right questions: What specifically was compromised? What can we do to prevent further damage? Can this system be quarantined? What data can be salvaged? What data can we still trust? Can we trace who did it? And perhaps most importantly, is it a data breach as defined by law?
    • Most laws and regulations define “data breach” slightly differently from one another. Generally, though, a data breach is the unauthorized acquisition of computerized data that compromises the security, confidentiality, or integrity of personal information maintained by a data collector.

    • Responses/Reporting. If you determine that your incident is a data breach under applicable law, you will need to report the breach. The law or regulation that applies to your situation will tell you who you need to contact. Most of the time, you will need to tell law enforcement and the people whose information was affected by the breach. You may also need to tell investors, state attorneys general, regulators, credit reporting agencies, or the media. In order to expedite reporting, you should consider having template versions of communications to these parties in your data breach plan.
    • Remediation. First, protect your customers from further damage. Make sure that any information that has been placed on the web is removed, including information on cached sites. Second, make sure that your company is protected for the future. Ideally, the same kind of incident should never happen to the same company twice. After the excitement has died down, evaluate what happened. Follow any steps recommended by your data forensics consultant. Consider whether you need to revamp any contractor relationships, contracts, technology, training programs, or physical safeguards.
    • Re-Evaluation and Practice. Take a look at your breach plan. How well did it perform? Would you do something differently next time? If so, amend the plan. If the plan worked well, practice it. You should run internal and external drills regularly, so use this opportunity for another run-through.

And now? If you already have a plan, great! You should make sure it contains all of these elements, then practice it this week. If you do not have a plan, don’t panic! Gather the folks in your company who need to be involved and develop one. This week.

Does your company have a plan? Do you trust that it will work if you need to implement it tomorrow?

What Should I Put in My Company’s Social Media Policy?

Privacy & Data Security

It seems like someone is in the news for getting into trouble on social media almost daily. Many companies have adopted social media policies as part of their employment policies to help guide their employees’ behavior and prevent embarrassing mishaps. If you are considering a social media policy, here are some things to think over and include.

Trust your employees. You wouldn’t have hired them if you didn’t think they were reasonably intelligent adults. Don’t over-do your social media policy, particularly if you go into detail about rules for external communications elsewhere. One of my favorite social media policies is Best Buy’s: short, sweet, and to the point. You don’t want to anger or alienate your employees.

FTC regulations. There are a lot of them, but the ones most relevant to social media policies have to do with privacy (don’t disclose information that doesn’t belong to you) and disclosure of relationships (do disclose a relationship when you could have something to gain from your comments).

NLRB rulings. The National Labor Relations Board has been extremely active in regulating social media policies for the past few years, all on the theory that certain provisions might discourage protected activity. Make sure your policy doesn’t run afoul of any of these rulings.

Public companies. Social media is a must for public companies these days, but public companies are subject to special rules about what they can tell people and when. Remind your employees to think about those rules when posting on social media sites. A single thoughtless comment about what an engineer is working on at work can reveal a great deal more than s/he intended.

Regulated industries. If you are in a regulated industry, social media is not exempt from the requirements for your company’s communications. Remind your employees of this fact and make sure that you have the technology in place to support any documentation requirements.

Use during working hours. Companies approach this one in many different ways. Employees can use social networking as a valuable tool for creating and maintaining working relationships; or they can dither away time watching videos of cats. There can be some overlap there, too; finding that one has a shared love of cat videos with an important customer can solidify a working relationship. You need to take a look at your own company’s culture in deciding whether to restrict use of social media during working hours and on company equipment. Some common approaches are 1) the outright ban, blocking access from work computers (though you cannot physically/technologically prevent people from using mobile devices, without blocking all mobile signals); 2) the partial ban, allowing access only to selected sites or by selected employees who use social media as part of their jobs; or 3) the “use responsibly” policy, allowing employees to choose whether and when to use social media during working hours and on work machines, within reasonable limits.

Intellectual property. One area that your average employee likely does not have to deal with extensively in the normal course of business is intellectual property. Furthermore, the ways in which photos, videos, and so on, are shared on sites like Facebook, Twitter, and Pinterest has eroded the public sense of what is or is not acceptable practice under the law. Your policy may need to spell out the intellectual property practices of your organization, depending upon how and how often your employees have reason to come into contact with them.

Special concerns. You know your company. You know your industry. There are very likely one or two things that should be in your policy that are unique. You know what they are.

What does your company have in its policy? What else do you think a company should include in its policies?

7 Things You Must Know Before You Text Your Customers

Texting has become a more and more popular mode of communicating with business customers and potential customers. Texts are fast, easy, convenient, and your customers may even initiate the conversation. But there are many traps for the unwary lurking in the texting relationship. Here are seven things to consider before the next time you text with your customers.

You may have to have permission. The Federal Communications Commission has rules prohibiting unsolicited commercial text messages by auto-dialer. That’s quite a lot of jargon, so in translation: you cannot send text messages automatically to many people (let’s call those “mass texts”) that each customer did not give you permission to send. If you are trying to convince the people you are texting to purchase something (e.g., notifying them of a sale), that permission has to be in writing. If you are not trying to convince them to purchase something (e.g., notifying them that you have shipped their order), that permission may be either oral or in writing. The exception is emergency situations, when you may send mass texts without permission.

Emails sent to cell phones as texts are subject to CAN-SPAM. The Federal Trade Commission has rules governing commercial email messages that are sent to cell phones as text messages. You may not have even known that this was possible, but it is, and there are rules about how to do it right. You have probably already heard of the CAN-SPAM regulations. They say that if you send an email that is commercial (as opposed to informational or transactional), you must:

  • Not use false or misleading information about who sent the email.
  • Use subject lines that accurately reflect the content of the email.
  • Identify the message as an ad.
  • Provide a valid physical postal address.
  • Provide information about how to opt out of receiving future emails from you.
  • Honor opt-out requests within 10 business days.
  • Monitor what others are doing on your behalf—you are responsible for your vendors.

Emails sent as text messages must comply with both the FTC’s rules about content and the FCC’s rules about permission. Importantly, CAN-SPAM applies no matter how many email messages you send. Even a single email you send directly to an existing customer as a text message would be subject to the CAN-SPAM rule.

You have to include certain information. For plain old mass texts of the non-email variety, you should provide information about who is sending mass text messages and about how to stop receiving them. For emails sent as texts, all of the elements of CAN-SPAM compliance have to be included.

Direct texting is less complicated, legally speaking. If you are sending a text to a specific customer with information about something you are doing for the customer, the regulations discussed above do not apply, at least for now. Texting is a communication tool, and you can generally use it as a communication tool. This is true whether your customers are other businesses or individual consumers. That said, you may want to let your customers make the first move when it comes to texting; not everyone appreciates this mode of communication.

Texts can be saved forever. As with all written communication, consider that texts can be saved forever. Be conscious about what you put in writing.

Consider your timing. There are the obvious courtesies of not sending texts to your customers outside business hours unless they have initiated the conversation. Beyond that, make sure you do not send text messages at a time when you know your customers might be doing something where texting could be dangerous, such as driving. Bad timing could cause a tragedy.

Charges to your customers. Although cellular plans with unlimited texting have become ubiquitous, not everyone has this feature. Make sure you aren’t sending so many texts that you could cause a problem for customers who still use older plans. You don’t want to annoy or alienate them.

Updated to add Bonus #8: Beware misdirection. As with email, be very careful not to send a message to the wrong person.

What do you think? Do you text with customers? Has it been a good experience?

Crowdfunding On the Horizon

Back in 2012, there was quite a stir when Congress and the President worked together to create the controversial Jumpstart Our Business Startups Act (JOBS Act), Public Law 112-106. It was widely predicted at the time that the JOBS Act would be a disaster, and the naysaying has continued as the SEC’s regulations have wended their way through the implementation process.

We have very nearly, but not quite, reached the end of the very long implementation road. The SEC has announced that it has adopted final rules (PDF) for crowdfunding, but that 1) the forms for registering as a crowdfunding portal are not effective until January 29, 2016; and 2) the implementing regulations do not go into effect until May 16, 2016, 180 days after they were published in the Federal Register.

And, as was widely predicted at the time, it does appear that the 685 pages of SEC regulations could make crowdfunding a less-than-attractive option for startups, particularly those at the earliest stages. The SEC estimates “a cost range estimate for Form C and the financial statement review of: $2,500 for the smallest offerings, $4,000 to $23,000 for the larger offerings, $6,500 to $38,000 for first-time crowdfunding issuers conducting offerings between $500,000 and $1,000,000, and $7,500 to $50,000 for other issuers conducting an offering in the largest offering amount category.” This means that the cost of raising funds could be up to 7.6% for a first-time issuer conducting a $500,000 offering. This is on par with taking out a small business loan, an old-fashioned financing option that should not be discounted. While taking out a small business loan will involve quite a lot of time, effort, and paperwork, it won’t involve making the extensive disclosures and ongoing disclosures required by the JOBS Act implementing regulations. Small business owners should, as always, speak with their financial and legal advisors about their best options in their own situations.

So what’s next? Once they are allowed to begin to register this coming January, we see how many companies register as funding portals. Portals are how most small businesses (or “emerging growth companies,” as the JOBS Act calls them) will connect with their investors.

What do you think? Now that the process has become clearer, will crowdfunding be a good option for your business, or are you going to stick with more traditional funding methods?

Pinterest for Employers

Pinterest for Business

I was recently interviewed for the Society for Human Resource Management article “Pinterest Might Facilitate Copyright Infringement.” Below for your viewing pleasure is the entire text of the email-based interview with Workplace Law Content Manager Allen Smith.

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What special copyright issues arise in using Pinterest and how should employees be trained to comply with copyright laws when they are pinning content on Pinterest in a work-related capacity?

Pinterest raises more or less the same copyright issues as any other website, but it has gotten more media attention than others. In general, no one should ever place any content on the web that he or she does not own or have a license (permission) to place on the web. Employees should be aware of what intellectual property their employer owns, any of which may be posted on the employer’s behalf (in compliance with any other laws and workplace policies, of course), and what intellectual property may be subject to licenses which limit the employer’s (and by extension the employee’s) right to post. Otherwise, content located on the web is generally off-limits; making material public does not abrogate any copyright rights. Exceptions include content that is in the public domain (there are several online databases of public domain works—in general, a work published prior to 1923 will be in the public domain); content that is explicitly licensed for pinning; content that falls under fair use exceptions to copyright; and content that is subject to a Creative Commons license (though be careful with that one, as work-related uses may not qualify for some Creative Commons licenses).

Employees should be trained to look for key phrases in website Terms of Use indicating that it is safe to use content on Pinterest (a handy shortcut: if a site owner who clearly owns or licenses the content has placed a “Pin It!” button on the site, pinning should be fine; Etsy is a good example). In addition, a Pinterest account holder that pins its own content has granted a license to Pinterest, so that the content can be re-pinned by other users. The tricky part can be determining whether content was pinned by the rights owner since Pinterest does not have a corollary to the Twitter Verified Account badge.

Could you provide examples of how employees might use Pinterest for work purposes?

I have seen some companies doing wonderful things with Pinterest, primarily retailers. Random House Books has an account and pins not only its own books (brilliant given that “Books Worth Reading” is one of the default pinboards), but also interesting book- and reading-related images. Home Depot has become very involved in the home decor suggestions boards and re-pins content in addition to posting its own proprietary photos, which of course gets people thinking about ways they could improve their homes using Home Depot products. Service professionals can use Pinterest as well; one of my favorite accounts belongs to a style consultant, Sasha Westin, who uses Pinterest to gather suggested wardrobes for people, such as “Men’s Relaxed Professional,” complete with links for purchasing each item.

If employees are using their personal Pinterest accounts to promote their employer, they should be aware of FTC blogger regulations, which require disclosing that relationship.

How are the copyright issues that arise when using Pinterest similar to copyright challenges employees face with other forms of social media that’s used in their work?

As noted, they are really very much the same. No one should post content on any site that he or she does not own or have a license to use. The difference between posting a link to an article on Facebook and posting it on Pinterest, though, is that on Facebook a thumbnail of any photo accompanying the article appears (which has been pretty well, but not definitively, established as fair use), but on Pinterest the full image appears and is uploaded to the Pinterest servers. Pinterest also has a more visual focus, which encourages people to post infringing material such as the work of photographers or painters.

Is pinning content owned by others any different from a legal standpoint from retweeting content on Twitter, and if so, how?

Yes. When someone posts something to Twitter, one of two things is happening: either it is original content, which that person has granted a license to Twitter to use (and that use includes retweeting by other users), or it is not original content. Content that is not original generally must be paraphrased or be a brief introduction to linked content. Linking does not infringe on copyright, and Twitter’s 140-character limit is short enough that it would be difficult to infringe any Twitter-external content. Pinterest has no such limitations.

Are many employees oblivious to the copyright concerns that may exist in their work-related use of Pinterest and, if so, what kind of training might employers provide?

I can’t speak to employees in particular, but much of the general population has developed an ethic about sharing that is not sensitive to the rights of copyright holders. This ethic extends to personal and professional use of social media, including Pinterest. Employers should ensure that their employees are aware that when it comes to copyright, creation, not possession, is 9/10ths of the law. Employees using Pinterest in a work-related capacity should always consider the source, whether the source owns the copyrighted material, and whether the source has given the employer a right to use the copyrighted material. For employers who may be cost-sensitive, the Copyright Office maintains a series of easy-to-understand Circulars, which explain much of what an average person needs to know about copyright. Circular 1 contains the fundamentals. The Copyright Office, however, does not give information about what to look for in a license.

There are also social media certifications becoming available for employees whose routine duties involve social media; the one I am familiar with, from the National Institute for Social Media, should be coming out this fall and will be accredited. (Disclosure: I am chair of the Industry Advisory Committee for NISM, so I wrote the portions of the exam dealing with legal questions. I do not benefit financially from my relationship with NISM.)

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