Data Breach Lawsuits: What Are The Legal Ramifications?

According to the Identity Theft Resource Center (ITRC), approximately 1862 data breach cases were reported in 2021. This number indicates the 68% surge in breaches, thereby becoming a major concern for customers, clients, and other stakeholders.

Unfortunately, the loss doesn’t end here. 34% of such cases report the involvement of corporate staff. And the estimated cost of mega-breach for the year 2021 has touched the mark of $401 million.

Considering these figures, it is no surprise that businesses face data breach lawsuits at alarming rates.

Stakeholders often trust the organization to protect sensitive information by implementing necessary preventive measures. Despite that, internal actors and ill-intentioned individuals try to ruin the company’s reputation and credibility with data compromise.

As you are reading this article, it is likely that your organization is caught up in such an incident. If so, continue reading to know the legal aftermath of the breach.

Legal Definition Of Data Breach

Before proceeding with the legal repercussions of information theft, let’s learn how the law defines this act:

“The unlawful and unauthorized acquisition of personal information that compromises the security, confidentiality, or integrity of personal information.”

Commonly targeted information in the breach includes:

• Personal information
• Business records
• Medical health records

It is also noteworthy that many legislative guidelines share the common idea that if sensitive data is encrypted, a breach cannot happen. For businesses, encryption is seen as a “safe harbor.” Unfortunately, many corporations still frequently disregard PII (personally identifiable information ) encryption.

Nevertheless, firms that become the target of hackers deal with a number of major problems, such as high government fines, litigation costs, eDiscovery costs, legal fees, and brand depreciation. This liability manifolds if the organizations have access to PII.

What Are State Rules In Case Of Breach?

The majority of jurisdictions have notification breach laws. It mandates that businesses must notify all the impacted stakeholders as promptly as possible about the incident.

It further indicates that businesses outside the state that possess the personal information of its citizens must also abide by the breach notification regulations. It is because, during the lawsuit, each record violation can result in penalties.

What Are Federal Regulations In Case Of Breach?

The federal government abides by the general nationwide data breach law. It includes the Data Security and Breach Notification Act, which mandates that businesses notify customers of breaches within 30 days. Know that punishment is added by the bill, and if someone “intentionally and willfully” hides a data breach, they might spend up to five years in jail.

The Health Insurance Portability and Accountability Act (HIPAA) and the Gramm-Leach-Bliley Act (GLBA) are two of the more well-known federal regulations that mandate breach notification. HIPAA targets healthcare providers, health insurers, doctors’ offices, and any other business that handles patient information, whereas the GLBA targets financial aspects of the fraud.

What Should A Corporation Do?

Regardless of who is at fault for the breach- internal actors or professional hackers, the company will be held accountable for the incident. It will be categorized as white-collar crime. It is because the safety of sensitive information by implementing cyber security measures is the responsibility of corporations.

Depending on the severity of the offense, it may or may not involve the Federal Bureau of Investigation (FBI), The Securities and Exchange Commission (SEC), and the National Association of Securities Dealers (NASD).

Even so, it would be best to hire a criminal defense attorney with expertise in white-collar crimes. They can guide you about the laws and regulations associated with the case and collect evidence to defend you.

Undoubtedly, the cases involving identity and information theft are complex. However, the attorney can assist with the investigation, cross-examination, and opening and closing statements.

Their knowledge and experience in the subject matter would aid in lowering the penalties. They can find evidence that corporate confidential information is also stolen along with personal information to establish the organization’s non-involvement in the case.

Immediate Steps That A Company Must Take After Data Breach

1. Confirm The Breach

First of all, you need to ensure that the breach actually happens and not merely fake news. In some situations, you may get a phishing email with an informative link, leading to the breach. Therefore, you must be vigilant when dealing with such news. Contact your BOD and top-level management team to confirm the information before taking further action.

If you get an email, do not click on the link without confirming the news. 

2. Identify Which Information Is Stolen

If the information is true, identify what sensitive data is stolen. Typically, it is recommended to encrypt all corporate information and have two-factor authentication to avoid cybercrime. Nevertheless, people with ill intentions could possibly get access to the data. So, get your IT team to work and find out the source of fraud.

3. Secure The Credentials

To mitigate the damage already done, follow the steps given below:

1. Change all the log-ins immediately. Add a two-factor or multi-factor authentication system if you haven’t done it already.
2. Make sure the password is not easy to crack or previously used.
3. Check the people who already have access to credentials. This information would come in handy during the investigation and lawsuits. 

4. Inform The Authorities

As stated above, legally, you are required to inform the stakeholders about the breach. In addition, you should file a complaint with the police, banks, and other appropriate authorities. This will ensure your compliance with state and federal laws, thereby giving weightage to your lawsuit. 

5. Hire A Lawyer

Last but not least, you must hire a lawyer to defend yourself. As the cases of data breaches are increasing drastically, the laws are getting more strict. Therefore, working with an attorney will put you in a favorable position and facilitate your case. They can further guide you about the do’s and don’ts to lower the financial penalty as much as possible.

To Sum It All Up

These are a few ways in which a company can comply with the legal ramifications; while protecting itself. Nevertheless, it would be best to follow cybersecurity measures in advance to avoid such incidents, like getting some help with the implementation of HIPAA-compliant cloud storage solutions through platforms like Duplocloud.

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