How Data Breaches Can Put You in Legal Troubles

There have been reports of several cases of data breaches. The most notable is the 2014 data breach at Yahoo, the popular internet service company. The breach, which affected over one billion accounts, ranks as the largest to date. It left Yahoo struggling with several lawsuits and investigations and since then, the attacks have got bigger and even the best of the companies have been caught off guard. 

Data breaches generally have implications that considerably harm your business. Your reputation will certainly suffer, and on top of that, you could fall into protracted legal troubles. Here is how:

Data breaches associated with crime

They can hold your business or company liable should data breaches occur owing to factors generally associated with the crime. These include the manner in which your company was storing information and the controls you had put in place to protect the information prior to the breach. It also includes the actions of company employees. 

The company is liable when an employee shares client information or takes confidential customer files. To avert such risk, secure cloud file transfer is critical. You must explore GoAnywhere MFT, a secure managed file transfer solution that automates, encrypts, and streamlines file transfers in the cloud, within company premises or in a hybrid environment.

Data breach on third-party vendors

Your company is obviously dealing with several third-party clients or vendors. These assist in your company transactions and operations based on contractual obligations for you to deliver resources, products or other related services. In dealing with such third-party actors, you attach several services, including file sharing online and even payments. 

However, it could happen that some individuals, for example, those in charge of delivery services, cleaning and maintaining the company premises, etc., can get access to confidential documents and files left unsecured. Clients will hold your company liable in the event of a data breach, whether through files, paperwork or electronic means. 

Breach of customer data

They can also hold your company liable in the event of an external data breach on customer data that you store within the company. Whereas the company has fallen victim to the data breach crime, still, they may hold it partly liable for the crime. This is what happened to Yahoo Internet Company following the historic 2003/2004 data breach.

The reason is that the company is taken as having an obligation to keep customer data safe. Obviously, some companies have in place poor security measures to protect data. In the event of a breach, customers attach negligence to the company and can file complaints.

Delayed or non-notification 

If you are running a business or a company that deals in gathering and storing consumer information, they expect that you have in place robust security measures to keep such customer data secure. In the US, your company has to comply with State-specific laws. In the event of a data breach, they particularly expect you to notify affected individuals.

However, should you not notify the Attorney General of the resident city and timely report the breach to the individuals affected, they may file cases against the company or business. In such an event, the company is liable to severe penalties, including additional fines for late reporting.

The manner of your response 

Let’s say the data breach has occurred. When did you get to know it, and what did you do? How did you respond? This calls for companies to have in place plans for effective response to data breaches. Indeed, having an effective response plan is a measure of the company’s readiness and credibility.

Equip your IT security support to anticipate likelihoods and to investigate occurrences of data breach, their extents and origin. Otherwise, having no effective plan for responding to data breaches is a sign of carelessness and negligence. In such an event, your company is liable to hefty fines, apart from eroding its reputation.