The Matrix

The Federal Trade Commission recently announced a newly updated rule concerning the data security safeguards required for financial institutions to protect their customers’ financial information. The FTC’s updated Safeguards Rule, which originally was mandated by Congress under the 1999 Gramm-Leach-Bliley Act, requires non-banking financial institutions, such as mortgage brokers, motor vehicle dealers, and payday lenders, to develop, implement, and maintain a comprehensive security system to keep their customers’ information safe. The new rule more closely aligns with the NY Department of Financial Services Cybersecurity Regulation.

October is National Cybersecurity Awareness month, and the Department of Justice has chosen this month to roll out a new “Civil Cyber-Fraud Initiative.” The announced purpose of the Initiative is to actively pursue cybersecurity-related fraud claims by government contractors and grant recipients. 

A bipartisan bill was introduced on October 5, 2021, in the Michigan Senate to amend the Michigan Identity Theft Protection Act (the “Act”). The bill, linked below, would create an affirmative defense to tort claims arising out of a security breach. 

On September 21, 2021, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) issued an updated ransomware advisory (the “2021 Guidance”), which supersedes its 2020 ransomware guidance (the “2020 Guidance”), discussed in a previous post on this blog. 

In the 2021 Guidance, OFAC notes that ransomware payment demands have escalated during the COVID-19 pandemic as U.S. businesses maintain significant online and internet-connected activities.  OFAC identifies a 21 percent increase in ransomware attacks and a 225 percent increase in ransomware losses as reported by the Federal Bureau of Investigation (FBI).  The  pandemic has presented numerous opportunities for cyber actors to target system vulnerabilities, particularly smaller businesses and municipal entities with limited resources for cybersecurity investments as well as entities supporting critical infrastructure, such as hospitals, that are likely to make quick payments to avoid service disruptions to patients.