Mega-breaches and the importance of the Wyndham decision

By John Breyault, Vice President of Public Policy, Telecommunications and Fraud

Consumers can be excused for not following the minutiae of U.S. district court decisions, but developments this week in New Jersey marked an important victory for data security. On Monday, Judge Esther Salas allowed a lawsuit brought by the Federal Trade Commission against Wyndham Worldwide Corp. (the parent entity of Days Inn, Howard Johnson’s and Ramada, among other hotel chains) to move forward. From 2008 to early 2010, hackers breached Wyndham’s computer network, stealing credit and debit card information of approximately 500,000 customers. In 2012, the FTC sued Wyndham for the company’s alleged failure to adequately protect its customers’ information from theft.

To date, the FTC has settled more than fifty similar cases resulting from businesses’ failure to put in place reasonable data security measures.  However, in the Wyndham case, the company is challenging the FTC’s authority to regulate corporate data security practices. This is important because the FTC is the only federal regulator charged with holding companies accountable for failure to protect their customers’ data. Had Judge Salas agreed with Wyndham, it would have threatened to eliminate the FTC’s authority to hold companies to account.

The importance of Judge Salas’ decision was put in stark relief yesterday when security firm Symantec published its latest Internet Security Threat Report. The report, one of the most comprehensive security assessments in the industry, didn’t mince words when they called 2013 the “Year of the Mega Breach,” when “cybercriminals unleashed the most damaging series of cyberattacks in history.”

Headlines from the report include:

  • 91% increase in targeted attacks campaigns in 2013
  • 62% increase in the number of breaches in 2013
  • Over 552 million identities were exposed via breaches in 2013
  • Spear-phishing campaigns saw a 91% rise in 2013
  • 38% of mobile users have experienced mobile cybercrime in past 12 months
  • 8 of the breaches in 2013 exposed more than 10 million identities each
  • 1 in 8 legitimate websites have a critical vulnerability
  • 500% increase in ransomware scams in 2013

The Symantec numbers are just the latest in a string of warnings coming out of the cybersecurity community about the growing threat from hackers. For example, Tuesday also marked the end of Microsoft’s support for the Windows XP operating system, which may still be installed on nearly 28 percent of desktop computers, as well as ATMs and government computer systems. Reports indicate that this could result in a field day for hackers as remaining security vulnerabilities in the operating system are exploited. News about a major vulnerability in the widely used OpenSSL security technology could expose the two-thirds of websites that run it to hackers. And those are just the warning coming out this week!

While Monday’s decision in the Wyndham case was encouraging, the issue is far from resolved. Wyndham has stated that it will continue to challenge the FTC’s authority to regulate companies’ data security practices. This means consumers are still in danger of losing the most important data security cop on the beat. Given the constant stream of data security warnings, it’s imperative that uncertainty about the FTC’s ability to regulate data security be addressed. A number of bills currently pending in Congress would do just that. The FTC should also convene a workshop to examine the issue in depth, as NCL and others suggested last month.

To be clear, there isn’t just a cybercrime wave going on right now. What consumers and businesses across the country are experiencing is more like a cybercrime tsunami. Policymakers in Washington need to make sure the FTC can continue to respond to this threat before we’re all washed away.

The time for credit card security reform is now

(Photo: Steven Senne, AP)

(Photo: Steven Senne, AP)

During the busiest shopping time of the year – the period between Thanksgiving and Christmas – Target, one of America’s largest retailers, suffered the second biggest data breach in US history as 40 million credit and debit cards were compromised. Americans assume that when they shop their personal financial information will be kept private and away from identity thieves. Unfortunately, that is not always the case evidenced by the more than 4,000 data breaches that have been reported since 2005, an average of more than one a day over the last nine years.

Consumer advocates hope that the scale of the Target data breach will serve as the impetus for much needed credit card security reform. The time for change is now. Although consumer’s financial information will never be 100% secure, there are things that can be done. Retailers can use advanced encryption technology and more secure firewalls. Credit card companies can encourage the use of “Chip and PIN” technology in their credit cards. Our politicians can pass legislation establishing a national data breach notification standard and urge the Obama Administration to explore incentives and penalties to encourage private sector businesses to better protect consumer data. These changes will not happen without pressure from consumers.

This week, a group of Democratic Senators requested that the Senate banking Committee hold hearings to examine cybersecurity practices. The letter, written by Senators Robert Menendez (D-NJ), Mark Warner (D-VA), and Charles Schumer (D-NY) stated, “We believe it would be valuable for the Committee to examine whether market participants are taking all appropriate actions to safeguard consumer data and protect against fraud, identity theft, and other harmful consequences, and whether we need stronger industry-wide cybersecurity standards.”

Changing and improving security standards will inevitably cost time and money. No one wants to foot the bill for needed innovations. Our lawmakers must capitalize on the current consumer awareness of the need for better cybersecurity and hold a congressional hearing to determine how businesses can better protect consumer data.

The NSA scandal: balancing safety and liberty

By Sally Greenberg, NCL Executive Director

On June 6, Edward Snowden leaked classified information about the National Security Agency’s (NSA) collection of massive amounts of data over the last decade. First came the revelation that the secretive agency demanded that telecom providers hand over droves of phone conversation metadata, including the telephone numbers of those making and receiving calls and how long those calls lasted. Later we learned that the NSA also requested online data collected from Google, Facebook, Yahoo, and others.

Some have called Snowden a hero, others a traitor. The U.S. government has charged Snowden with espionage. Snowden, a 29-year-old high school drop-out (he later earned his GED), had been hired by an outsourced government contractor and working with sensitive NSA data since 2009. His release of the classified information has not only raised serious questions about the legality of such data collection and what this means for people living in a free, democratic society such as ours, but also has muddled international relations with China and Russia, both countries in which he has appeared since fleeing. Neither Russia nor Hong Kong were willing  to extradite  him  to the US.

Much of the media’s focus over the last few weeks has revolved around Snowden’s whereabouts, but these revelations about NSA’s actions have also started a more sobering discussion about what role the government plays in both protecting the American people from terrorist attacks and preserving civil liberties.

Polls taken since the disclosure of NSA’s policies show Americans are divided on this issue. A PEW poll reported that 56 percent of Americans think the NSA’s tracking of “millions of Americans” phone records is an acceptable way for the government to investigate terrorism. Conversely, in a CBS poll that asked about collecting phone records of “ordinary Americans” only 38 percent of respondents found the practice acceptable. Due to the lack of transparency in the NSA program, Americans are unclear how useful such data collection is to ensuring our safety and security.

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Federal medical privacy rules strengthened; Medication adherence must be protected

By Sally Greenberg, NCL Executive Director

Last week, the U.S. Department of Health and Human Services’ (HHS) Office of Civil Rights (OCR) published its long-awaited final rule revising the nation’s federal medical privacy requirements under the HITECH Act of 2009 – a.k.a. the “HIPAA Privacy Rule.” NCL, a founding member of the Best Privacy Practices Coalition, congratulates HHS for strengthening consumer privacy and data security protections, and enhancing enforcement for HIPAA violations by covered entities and their business associates.

The final rule attempts to strike a balance between patients’ privacy concerns and the meaningful benefits of sponsored and non-sponsored communications that can improve adherence to prescribed therapies and greatly improve patient health. Notwithstanding HHS’s efforts, there remains some tension between certain of the privacy protections and the goals of bolstering public health.

The problem of poor medication adherence is a major, and significantly under-appreciated health problem. Studies suggest that nearly three-out-of-four Americans do not take their medication as directed and that the cost to the health care system of non-adherence annually is a $290 billion. To address the problem, NCL is leading a medication adherence public awareness campaign, Script Your Future (www.scriptyourfuture.org). NCL’s campaign is designed to help patients take their prescribed medication as directed and better manage health problems such as diabetes, COPD, asthma, high blood pressure, and high cholesterol.

To help combat this problem of poor adherence, most pharmacies, health plans, and doctors provide a broad range of patient-directed communications regarding prescription drug therapies, including communications that encourage patients to stay on prescribed therapy. NCL’s views these communications, particularly “refill reminders,” as tools that help patients follow their medication regimen.

While we are pleased that the rule does allow use of “refill reminders” we are concerned that HHS’s final rule is more restrictive than the prior HIPAA Privacy Rule in requiring patient authorization (opt in) for health care providers’ (and health plans’) capability to use patient information to execute certain sponsored patient communications programs (refill reminders are excepted). To its credit, in addition to codifying the statutory exception for “refill reminder” messages, HHS also maintained the exception for sponsored communications that are delivered in face-to-face settings (e.g., in the pharmacy or doctor’s office).

In particular, we are concerned that the statutory exception for “refill reminders” is available only if compensation received by the covered entity provider or plan is “reasonably related” to the entity’s costs of making the communication. Although Congress included this “reasonable in amount” limitation in the HITECH Act, NCL believes that HHS has gone too far in its preamble interpretation by limiting such compensation to only certain direct costs. Specifically, under the final rule, HHS considers permissible costs to be restricted to those of labor, supplies, and postage to make the communication and that they include “only the pharmacy’s cost of drafting, printing, and mailing the refill reminders.” It sounds like a minor point, perhaps, but we are concerned that this could have a negative impact on patient adherence. We think that a broader definition of costs is called for, including such things as computer hardware, software, and other overhead – because we don’t want to inhibit in any way communications that can help improve the likelihood of patient adherence to medication.

We also are concerned that, from a policy standpoint, the “reasonable compensation” requirement may inhibit HHS efforts to promote medication adherence, and in the end does little to advance patient privacy. For instance, HHS’s Centers for Medicare and Medicaid (CMS) requires and rewards patient adherence programs in several respects, including through physicians’ “meaningful use” of electronic health records (EHRs). Furthermore, in order for vendors implementing Medicare part D to qualify for reimbursement, they must make use of CMS’s Medication Management Therapy Programs (MTMP), which are, by their very nature, adherence -focused incentives. In addition, HHS’s Agency for Healthcare Research and Quality (AHRQ) has studied the comparative effectiveness of medication adherence interventions and funds adherence educational programs.

We’re concerned that HHS’s interpretation of “reasonable compensation” may not be grounded in good public policy and could actually hamper sponsored adherence efforts, which are widely regarded as beneficial to public health. In the final rule, HHS signaled its intention to issue informal guidance on the “refill reminder” exception. NCL hopes that, in so doing, HHS will make clear that the exception serves an important public health function and that “reasonable compensation” ought to be interpreted in the broadest possible fashion in order to ensure that we are doing all we can to promote improved medication adherence.

NCL symposium examines consumer issues and the next Congress

By John Breyault, NCL Vice President of Public Policy, Telecommunications and Fraud

The freshman class of the 113th Congress will feature 12 new Senators and 67 new Representatives. For consumer advocates, this is an opportunity to introduce ourselves to these new lawmakers and develop relationships that can help promote our economic and social justice mission on the Hill. Freshman like Senator-elect Elizabeth Warren have long been heroes to the consumer movement, but others such as Senator-elect Heidi Heitkamp and Members-elect Kevin Cramer, Joseph Kennedy III, and George Holding all have experience in regulatory agencies and in the legal system where consumer issues arise.

The incoming members of the 113th Congress will have a full agenda when it comes to consumer issues. Even before the next Congress, the Lame Duck session of the current 112th Congress is tackling the so-called “fiscal cliff” of tax increases and spending cuts mandated by the Budget Control Act of 2011.

It is in this context that NCL convened our inaugural Consumer Issues Symposium on Wednesday, November 14 to examine the future of three important consumer issues in the lame duck session and the coming 113th Congress. We chose to focus the event on three issues near and dear to NCL’s heart – food safety, sequestration and privacy. The goal of the event was to examine not only the future prospects for consumer-focused legislation in Congress, but also to highlight the real-world impact of these policy areas on consumers.

For example, the sequestration cuts envisioned as part of the “fiscal cliff” will require numerous federal agencies to significantly scale back their activities. When the USDA’s Food Safety and Inspection Service is projected to take an $86 million haircut, what does that mean for the safety of America’s food supply? Likewise, in a scenario where the federal Low-Income Home Energy Assistance Program is on track to take a $285 million budget hit, how will consumers living through the cold winter months adjust?

The event, organized in partnership with the law firm of Kelley Drye, was a great success. (Historical note: One of Kelley Drye’s name partners was Nicholas Kelley, son of Florence Kelley, the first General Secretary of NCL). It featured more than a dozen expert speakers from Executive Branch, Congress and advocacy organizations, including FTC Commissioner Julie Brill, FDA Deputy Commissioner Michael Taylor and former Congresswoman and CPSC Commissioner Anne Northup. Photos from the event are currently viewable on NCL’s Facebook page.

 

Facebook privacy

By Sally Greenberg, NCL Executive Director

The Wall Street Journal, of late, has done a very admirable muckracking job looking at privacy policies of Facebook, Skype, Yahoo and other sites. Why are privacy policies important to consumers? Because marketers want information about consumers so they can try to sell us stuff and in the process they dig deep for our personal data. And so the Facebooks, Skypes, and Yahoos of the world offer us access to their many fantastic applications – and many are fantastic – but only if we share information about ourselves.

The authors of a recent article in the Journal- Julia Angwin and Jeremy Singer-Vine, put it like this: “This appetite for personal data reflects a fundamental truth about Facebook, and by extension, the Internet economy as a whole: Facebook provides a free service that users pay for, in effect, by providing details about the lives, friendships, interests and activities.” And Facebook has 800-million-plus subscribers so that’s a lot of money.

You have to ask yourself why Facebook so highly valued – if it goes public it may be valued at $100 billion. Access to Facebook is free for consumers so we pay with our private information which Facebook then sells to advertisers. The Journal also says that Facebook isn’t always enforcing its own rules on data privacy. Dozens of apps apparently allow advertisers that haven’t been approved by Facebook.

Privacy proponents like Helen Nissenbaum, who wrote a book called “Privacy in Context,” are calling for digital “fences” around data usage and even the White House has called for consumers to be told how any data collected will be used. These are serious concerns for all of us who value our privacy and don’t want our personal data collected and sold. Hopefully this Journal series on privacy will get the ball rolling in that direction.

Caller ID spoofing threatening cell phone privacy

By Sally Greenberg, NCL Executive Director

Recently the New York Times reported on the explosion in spoofing caller ID’s by debt collectors or marketers. It turns out that anyone basically can get access to a consumer’s cell phone and spoof the caller ID number—pretend to be a friend, a relative, or a nonprofit like the Humane Society to get you to answer the call.

Ironically, after reading the Times story, I searched the paper’s Web site and found two sites that promise “legal spoofing” so that you can pretend to be someone else when make calls. Spoof Card sells credits—$4.95 is the cheapest—and anyone can buy the credits and use them to spoof any other number but their own.

The other site sounds more sinister, and its name is fitting. “Phone Gangster” makes the following claims and says its spoofing is legal in the USA and Canada:

Upon calling a person, you will get to choose what number you want to appear as. Best of all, there is no way the party can find out what phone number the call originated from because their phone records will display the altered number. Our service is not only fun and useful, but it is legal as well. We have tested and confirmed our caller id spoofing service works in the USA and Canada. Purchase an instant phone card from us today!

In September, the Federal Trade Commission received 140,000 complaints about pre-recorded robocalls, more than double the 61,000 complaints in the same month a year ago, the agency said.

Under the Truth in Caller ID Act, passed last year and enforced by the Federal Communications Commission, it is illegal to transmit inaccurate or misleading caller ID information “with the intent to defraud, cause harm or wrongfully obtain anything of value.”

In addition to potentially violating the law, what’s wrong with being able to call someone using a phony caller ID? Because this would be a heyday for telemarketers, debt collectors, and scammers who already prey on consumers using landlines. Cell phones are the last bastion of privacy, where friends, family, and business associates—in other words, only those you choose to share your number with—get access to your cell phone. If that falls victim to spoofers, consumers will lose the trust they have in their cell phones and their cell phone providers.

Enforcement of the FCC and FTC protections are important, but state attorneys general offices should also stay involved, and no legislation should preempt their ability to protect consumers from the mischief of the explosion of fake caller IDs.

Smart computing

By Jacob Markey, Summer 2010 LifeSmarts intern

In just a few weeks, LifeSmarts teams from across the country will travel to Hollywood to compete for the 2011 LifeSmarts National Championship. They will get the chance to put their knowledge to the test, while also enjoying the city, meeting some great new people, and having a ton of fun.

Like other readers of the Savvy Consumer Blog, they would be wise to review this month’s LifeSmarts post on Technology. As I mentioned back in December, there are many safety concerns consumers should keep in mind online to keep their personal information private online to better avoid identity theft. With more consumers going online to buy goods, conduct online banking, or read the news, identity theft is a persistent problem for consumers.

Here are some helpful tips to ensure that you have a safer experience online:

  • Know that the site you are buying from is safe and reliable. Be thorough and review a person’s or online store’s background information: Check the person’s online ratings to see if others give the seller positive or negative reviews; see if the business is accredited with the Better Business Bureau in their state; make sure the site is secure if you are paying with your credit card. By taking these types of actions, you will decrease the likelihood that you will do business with a person looking to scam you.
  • Watch the actions you take when using an unsecured wireless network at places like cafes, hotels, and airports. Computer thieves can snoop on unsecured connections to steal your personal information and exploit it if they acquire it. It is recommended that you abstain from reviewing banking and other sensitive information when using an unsecured wireless network. If you need to work on confidential information, it is better to choose a secured wired connection or an encrypted wireless connection that requires a password.

Teens must be aware that there is much to watch out for on the Internet. Even Web sites that look harmless may contain dangerous information. If you have any concerns about these types of issues, ask your parents for advice.

Identity theft and computer issues remain a problem. Following smart Internet browsing will help decrease the likelihood that your computer will become infected, your personal information stolen, and losing a ton of money.

LifeSmarts: teens’ technology education destination

By John Breyault, Vice President of Public Policy, Telecommunications and Fraud

The thought of teaching a modern teenager about technology may seem counterproductive to many people. Indeed, it is teens who seem to be the ones on the cutting edge of technology. The vast majority of teens not only use the latest social networking sites like Facebook, but they are also often inseparable from their cell phones.

Unfortunately, expertise about how to use these technologies doesn’t always equate to knowledge of how to do so safely.  Today, it is more important than ever for teens to know how to use technology wisely. For example, snooping on unsecure wifi connections (such as those found in many coffee shops) is increasingly easy for unscrupulous scam artists. Privacy, which for many Facebook-obsessed teens may seem to be an afterthought, could actually be critically important in college admissions and getting jobs later in life.  Online scholarship and grant scams is also an area where NCL has noticed an uptick as well.

Fortunately, there are tools and smart practices that teens can use to avoid some of the most common technology pitfalls. It is these good technology habits that LifeSmarts’ technology curriculum seeks to promote. LifeSmarts team members learn, for example, the importance of taking advantage of their privacy settings on Facebook to make sure third parties can’t get access to sensitive personal information. Knowing how to differentiate a secure Web site from an insecure one can save teens from having nasty malware surreptitiously installed on their computers. Understanding the importance of using strong passwords (as opposed to easy-to-guess common words) can save teens from seeing their laptops become part of a botnet or worse.

During National Consumer Protection Week, we urge teens and their parents to consider the important value of this knowledge in today’s 24/7 digitally-connected world. By becoming savvy technology consumers, LifeSmarts participants become better prepared to choose their own cell phone plans, get broadband service at their first apartments, and pass on lessons learned in LifeSmarts to friends, family members and, eventually, their own children.

For more information on the LifeSmarts technology curriculum, visit LifeSmarts.org. To learn more about National Consumer Protections Week, visit www.ncpw.gov.

Resolve to be a better consumer in 2011

By John Breyault, Vice President of Public Policy, Telecommunications and Fraud

The start of a new year inevitably means many people will be making New Year’s resolutions. Some of the more common resolutions include spending more time with family and friends, getting into shape, quitting smoking, or getting more organized. Unfortunately, according to researchers, while more than half of consumers believe that they will fulfill their resolutions, just 12 percent will actually be successful.

As consumer advocates, we frequently preach the value of setting small, defined and achievable goals. For example, instead of resolving to get out of debt in a single year (a goal that many make, but few achieve), resolve to allocate an extra $30-50 per month towards paying down debt. In this way, you achieve success early (you’re 8.3 percent of the way to your yearly goal there after the first month!), creating a small victory and incentivizing additional work towards the goal.

So, in honor of 2011, here are 11 achievable goals that consumers can resolve to accomplish in the New Year.

  1. Pay 1 percent more on top of your minimum monthly mortgage payment. Doing so on a typical 30-year fixed rate mortgage could knock months and hundreds (or thousands) of dollars off the cost of the loan over its lifetime.
  2. Don’t make any online purchases from a company you haven’t researched with the Better Business Bureau. BBB.org is a wealth of information on online and “brick and mortar” companies, including complaints made and resolved. Don’t shop online without it!
  3. Pay more than the minimum monthly payment on your credit cards. Credit card interest rates are often in excess of 10 percent and may be 20 percent or more. Unless your investments are returning profits at a greater rate than your credit card interest rates, it makes a lot of sense to “invest” in paying down high-interest debt.
  4. Check your credit report at least twice. Consumers are entitled to a free credit report from each of the major credit reporting agencies once per year. While these reports may not give you your credit score for free, you can see if there are old accounts or incorrect information that you can fix and (hopefully) improve your credit score. This small step could save you thousands on home or auto loans where credit scores play a big role in interest rates.
  5. Do a “communications audit” once per year. Most consumers subscribe to some combination of cable TV, wireless phone, wired phone (with local and long distance) and broadband Internet service. At least once a year, gather the bills for these services and total up what you’re paying for all of them. Then do an honest appraisal of what you actually use. Many consumer will find that they use their cell phones for most long distance calls and don’t need a second long distance plan on their home phone service. Other consumers may find that they rarely watch premium movie channels and can drop them from their cable package.
  6. Add any new phone numbers to the federal “Do Not Call” list. Consumers who change residence, switch carriers, or get new cell phones may also get new phone numbers. If you want to limit telemarketing calls to these numbers, consider visiting www.donotcall.gov to add these new numbers to the “Do Not Call” registry. Extra Credit: Some states maintain their own “do not call” lists. Check with your state government to see if such a list exists and add numbers to that as well.
  7. Have a “shredding party!” Consumers tend to accumulate lots of paper, including bills, credit card offers, account statements and other materials, which may contain lots of personally identifying information. These can become fodder for identity thieves. Invest in a good shredder then invite friends over with their bills, credit card offers, etc. and shred away. Here’s a great guide to throwing your own “shredding party.”
  8. Create a household budget. It’s tremendously difficult to pay down debt if you aren’t living within your means to begin with. For most people, creating a simple personal or family budget is the first step in figuring out what their “means” are. This doesn’t have to be as tedious as it sounds, and having a good handle on the money coming in and going out of family accounts can actually relieve a lot of stress. The BBB has a great guide for creating a budget here.
  9. Increase your 401(k) contribution by 1 percent. Many consumers may have been turned off on investing after the recent economic meltdown. However, you still need to save for retirement, and – for most consumers – that means investing in a 401(k) plan. By increasing your contribution by just 1 percent, you probably won’t miss the money and you’ll be investing in your future.
  10. Check your privacy settings on Facebook. Let’s face it: It seems like more of us are on Facebook these days than aren’t. Unfortunately, most users never take a look at their privacy settings. You may be sharing more of your personal information with marketers and other users than you’d like. Check out the Electronic Frontier Foundation’s step-by-step guide to maximizing your privacy on Facebook.
  11. Don’t give to a charity you haven’t checked out first. The holidays are a season ripe for charity scams – where unscrupulous fraudsters use the names of respected charities to con consumers out of their money. Fortunately, a number of online resources are available to help consumers check out a charity ahead of time, including GuideStar.org, CharityNavigator.org and Give.org. For more tips on avoiding charity scams, check out our tip page by clicking here.