Data Security Legislation is inevitable

A law(s) for data breaching is around the corner. And the time is right, what with the scads of data breaches involving major retailers lately. Details of customers’ addresses, phone numbers, credit cards and other sensitive information have ended up in the hands of hackers. We’re talking many tens of millions of affected consumers.

Despite this mushrooming problem, no consensus has yet arrived regarding just what role the government should assume to protect peoples’ data. But a common thread to the many ideas is customer notification once a data breach occurs. Though 46 states do have notification laws, retailers gripe that this makes them spend precious time complying with this instead of on fighting data infiltrations and repairing the fallout.

“We’ve long said that action is needed and hopefully we can see passage of data breach notification legislation this year,” says Brian Dodge, a senior vice president at the Retail Industry Leaders Association.

Recently the Data Security Act was introduced. It would require companies and banks to have privacy protections and investigate breaches, plus alert customers about big risks of theft or fraud. Banks have complained about the costs of responding to data breaches and have insisted that retailers take more action to the fallout. The DSA could take some of this burden off banks.

“We think it’s important that essentially everybody up their game,” says Kenneth Clayton, an executive VP and chief counsel at the American Bankers Association. This needs to occur whether through law or industry action, Clayton adds.

The FTC may even get involved. But how much should the government get involved, though? “The idea that the government would do a better job than private industry is a horrible idea,” says John Kindervag, a principal analyst at Forrester Research, an advisory firm.

However, a 2014 priority for the FTC is to protect sensitive health and financial information. “The FTC has long been concerned that this type of sensitive data warrants special protections,” says Jessica Rich, head of the FTC’s consumer protection bureau. She adds that the FTC strongly supports the possibility of new laws that would protect consumers.

Robert Siciliano is an Identity Theft Expert to AllClearID. He is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen See him knock’em dead in this identity theft prevention video. Disclosures.