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CORPORATE DATA BREACHES? BLAME CEOs: PART TWO (END)

In Bureaucracy, Business, History, Law, Law Enforcement, Politics, Social commentary on August 2, 2019 at 12:43 am

On July 15, 2015, Ashley Madison joined the list of companies that failed to safeguard their customers’ most sensitive information—such as their credit card numbers, addresses, emails and phone numbers.

And Ashley Madison had more reason than most to do this—as the notorious website for cheating wives and husbands.

After all, its database is a blackmailer’s dream-come-true. Yet apparently its owners didn’t care enough about the privacy of their customers to provide adequate security.

Like so many other companies hit by hackers, Ashley Madison sought to reassure its dangerously compromised customers:

“At this time, we have been able to secure our sites, and close the unauthorized access points. We are working with law enforcement agencies, which are investigating this criminal act.”

This statement gave new meaning to the phrase, “Closing the barn door after the cow has gotten out.”

Avid Life Media assured its customers that it had hired “one of the world’s top IT security teams” to work on the breach.

Adultery-dating website Ashley Madison hacked

So why wasn’t this “top IT security team” hired at the outset?

On August 18, 2015, the hackers began releasing their pirated information. 

Ashley Madison’s customers chose to put their private information on its computer system.

Those of Equifax, didn’t. Equifax collected this from credit card companies.

From Mid-May through July, 2017, Equifax was hacked. The breach was discovered on July 29. 

But the company didn’t announce it until September 7, 2017.

As a result, the private data of nearly 150 million people was compromised.

On July 22, 2019, the Federal Trade Commission (FTC) announced that Equifax, one of the nation’s largest credit-reporting companies, would pay up to $700 million to settle with the FTC and consumers.

If approved by the federal district court Northern District of Georgia, the settlement will provide up to $425 million in monetary relief to consumers and a $100 million civil money penalty.

According to Karl A. Racine, attorney general for Washington, D.C., it’s the largest settlement ever for a data breach. 

“Equifax failed to protect consumers’ information and failed to enact reasonable security measures under California’s data security laws,” California Attorney General Xavier Becerra said in a news conference.

“That left very important personal information exposed and allowed hackers to steal consumers’ names, Social Security numbers, their birth dates, their addresses and in some instances their driver’s license number and even credit related information.”

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And for those who believe the private sector is inherently more efficient than the public one: On the week that Equifax agreed to pay $700 million for its massive 2017 data breach, Richard Smith, its disgraced former CEO, got some wonderful news: 

  • He was slated to receive as much as $19.6 million in stock bonuses since leaving the company.
  • That’s roughly 1,000 times the $20,000 maximum payout that any financially damaged consumer can collect from Equifax.
  • In addition, Equifax agreed to cover Smith’s medical bills for life, a benefit the company estimates is worth another $103,500.
  • Equifax decided he deserved a $24 million pension.
  • Smith got $50,000 in tax and financial planning services.
  • His stock bonuses cover a period that includes the former executive’s performance in 2017. 

When CBS News contacted Equifax on this development, the company refused to comment. Neither could Smith be reached.

There is a reason why these security breaches keep happening.

An October 22, 2014 “commentary” published in Forbes magazine raised the highly disturbing question: “Cybersecurity: Does Corporate America Really Care?”

And the answer is clearly: No.

Its author was John Hering, co-founder and executive director of Lookout, which bills itself as “the world leader in mobile security for consumers and enterprises alike.”

Click here: Cybersecurity: Does corporate America really care?

“One thing is clear,” wrote Hering. “CEOs need to put security on their strategic agendas alongside revenue growth and other issues given priority in boardrooms.”

Hering warned that “CEOs don’t seem to be making security a priority.” And he offered several reasons for this:

  • The sheer number of data compromises.
  • Relatively little consumer outcry.
  • Almost no impact on the companies’ standing on Wall Street.
  • Executives may consider such breaches part of the cost of doing business.

“There’s a short-term mindset and denial of convenience in board rooms,” wrote Hering.

“Top executives don’t realize their systems are vulnerable and don’t understand the risks. Sales figures and new products are top of mind; shoring up IT systems aren’t.”

There are three ways corporations can be forced to start behaving responsibly on this issue.

  1. Smart attorneys need to start filing class-action lawsuits against companies that refuse to take steps to protect their customers’ private information. There is a name for such behavior: Criminal negligence. And there are laws carrying serious penalties for it.
  2. There must be Federal legislation to ensure that multi-million-dollar fines are levied against such companies—and especially their CEOs—when such data breaches occur.
  3. The Justice Department should vigorously prosecute CEOs whose companies’ criminal negligence leads to such massive data breaches. They should be considered as accessories to crime, and, if convicted, sentenced to lengthy prison terms.

Only then will the CEO mindset of “We don’t care, we don’t have to” be replaced with: “We care, because we’ll lose our money and/or freedom if we don’t.”

CORPORATE DATA BREACHES? BLAME CEOs: PART ONE (OF TWO)

In Bureaucracy, Business, History, Law, Law Enforcement, Politics, Social commentary on August 1, 2019 at 12:08 am

Comedian Lily Tomlin rose to fame on the 1960s comedy hit, Rowan & Martin’s Laugh-In, as Ernestine, the rude, sarcastic switchboard operator for Ma Bell.

She would tap into customers’ calls, interrupt them, make snide remarks about their personal lives. And her victims included celebrities as much as run-of-the-mill customers.

Lily Tomlin as Ernestine

She introduced herself as working for “the phone company, serving everyone from presidents and kings to the scum of the earth.”

But perhaps the line for which her character is best remembered was: “We don’t care. We don’t have to. We’re the phone company.”

Watching Ernestine on Laugh-In was a blast for millions of TV viewers. But facing such corporate arrogance in real-life is no laughing matter.

Clearly, too many companies take the same attitude as Ernestine: “We don’t care. We don’t have to.”

This is especially true for companies that are supposed to safeguard their customers’ most sensitive information—such as their credit card numbers, addresses, emails and phone numbers.

Among those companies hacked:

  • Kmart
  • Staples
  • Dairy Queen
  • Target
  • Sony Pictures 
  • Primera Blue Cross
  • Home Depot
  • JPMorgan/Chase

In 2015, they were joined by health insurance giant Anthem Inc. The company announced that hackers had breached its computer system and accessed the medical records of tens of millions of its customers and employees.

Anthem, the nation’s second-largest health insurer, said the infiltrated database held records on up to 80 million people.

Among the customers’ information accessed:

  • Names
  • Birthdates
  • Social Security numbers
  • Member ID numbers
  • Addresses
  • Phone numbers
  • Email addresses 
  • Employment information

Some of the customer data may have included details on their income.

Click here: Anthem hack exposes data on 80 million; experts warn of identity theft – LA Times

Bad as that news was, worse was to come.

A February 5, 2015 story by the Wall Street Journal revealed that Anthem stored the Social Security numbers of 80 million customers without encrypting them.

The company believed that hackers used a stolen employee password to access the database

Anthem’s alleged reason for refusing to encrypt such sensitive data: Doing so would have made it harder for the company’s employees to track health care trends or share data with state and Federal health providers.

Anthem spokeswoman Kristin Binns blamed the data breach on employers and government agencies who “require us to maintain a member’s Social Security number in our systems so that their systems can uniquely identify their members.”

She said that Anthem encrypted personal data when it moves in or out of its database–-but not where it is stored.

This is a commonplace practice in the healthcare industry.

The FBI launched an investigation into the hack.

According to an anonymous source, the hackers used malware that has been used almost exclusively by Chinese cyberspies.

Naturally, China denied any wrongdoing.

Chinese Foreign Ministry spokesman Hong Lei said: “We maintain a cooperative, open and secure cyberspace, and we hope that countries around the world will make concerted efforts to that end.”

He also said that the charge that the hackers were Chinese was “groundless.”  

On July 15, 2015, Ashley Madison—the notorious website for cheating wives and husbands—joined this list.

Launched in 2001, its catchy slogan is: “Life is short.  Have an affair.”

One of its ads featured a photo of a woman apparently kneeling at the feet of a bare-chested man, her hand passionately clawing at his belt. Next to her was the caption: “Join FREE & change your life today. Guaranteed!”

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Millions of its clients suddenly found their lives changed in ways they never imagined—for the worse.

Ashley Madison claimed to have more than 37 million members.  

Its hackers were enraged at the company’s refusal to fully delete users’ profiles unless it received a $19 fee.

Referring to themselves as “The Impact Team,” they stated in an online manifesto: “Full Delete netted [Avid Life Media, the parent company of Ashley Madison] $1.7 million in revenue in 2014. It’s also a complete lie.

“Users almost always pay with credit card; their purchase details are not removed as promised, and include real names and address, which is of course the most important information the users want removed.”

On July 20, 2015, Avid Life Media defended the service, and promised to make it free.

The hackers demanded: “AM [Ashley Madison] AND EM [Established Men] MUST SHUT DOWN IMMEDIATELY PERMANENTLY.

“We have taken over all systems in your entire office and production domains, all customer information databases, source code repositories, financial records, emails.

“Shutting down AM and EM will cost you, but non-compliance will cost you more.”

The hackers threatened to “release all customer records, including profiles with all the customers’ secret sexual fantasies and matching credit card transactions, real names and addresses, and employee documents and emails.”

Avid Life Media assured its customers that it had hired “one of the world’s top IT security teams” to work on the breach:

“At this time, we have been able to secure our sites, and close the unauthorized access points. We are working with law enforcement agencies, which are investigating this criminal act.”

So why didn’t the company hire “one of the world’s top IT security teams” before the hack?

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