Attacks/Breaches
6/26/2017
05:16 PM
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Anthem Agrees to $115 Million Settlement for 2015 Breach

If approved, it will dwarf settlements paid by Target, Home Depot, and Ashley Madison.

On Friday, June 23, Anthem Healthcare agreed to settle a series of lawsuits related to the company's 2015 data breach, which impacted 78.8 million individuals. The settlement includes a payment of $115 million and three years of additional security protections.

Most of the money will be allotted to an additional two years of credit monitoring and identity protection services, and $15 million will be allocated to pay out-of-pocket costs, up to a certain amount. Class members who claim out-of-pocket costs may receive compensation of $36 to $50. 

If approved by the judge, who is scheduled to hear the motion on Aug. 17, the settlement would be far larger than other recent settlements made for large-scale data breaches: Target agreed to pay $18.5 million last month for a 2013 breach of 41 million customer records, Ashley Madison agreed to pay $17.5 million in December for the doxing attack that affected 37 million customers, and Home Depot paid $43.5 million over two separate settlements (to banks and customers) for a 2014 breach affecting 50 million customers.

According to a statement on the Anthem website, "as part of the settlement, Anthem has agreed to continue the significant information security practice changes that we undertook in the wake of the cyber attack, and we have agreed to implement additional protections over the next three years." According to a preliminary motion filed by attorneys, many details of these protections will remain confidential.

The Anthem attack was reported in February 2015 and leaked customers' income data and Social Security numbers, but likely not medical information. A report by the California Department of Insurance, released in January of this year, stated that an investigation found "with a significant degree of confidence" that a foreign government was behind the attack. Earlier research specifically implicated threat actors operating from China.

Read more details here.

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Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
7/1/2017 | 12:53:37 PM
Re: out-of-pocket cost
@Ryan: Ah, so as I refresh myself from some notes, it seems that more than just health information was compromised. PII was compromised of both patients and employees.

Here's a piece I wrote at the time on the what and the how: enterprisenetworkingplanet.com/netsecur/anthem-could-face-legal-fallout-from-hack.html
Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
7/1/2017 | 12:51:41 PM
Re: Ashley Madison comparison
@Ryan: This goes to my fundamental marketing philosophy: You don't define your brand; your audience does.

As people have started to use Tinder for less ephemeral relationships (i.e., using it for more than, er, what it has become best known for), the app's/company's brand has fundamentally changed.

Similarly, as people have become more interested in the immediacy that Tinder has to offer, competition like OKCupid has had to adjust.

Ashley Madison?  Soooo 2011.
RyanSepe
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RyanSepe,
User Rank: Ninja
6/29/2017 | 10:00:00 AM
Re: Ashley Madison comparison
@Joe Just need to rebrand....I was told by some people I know that Tinder is a "dating service", which I guess on some levels is fundamentally true. Like Comcast with Xfinity, just change the overall branding and everyone will forget what happened in the past :)  
RyanSepe
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RyanSepe,
User Rank: Ninja
6/29/2017 | 9:49:26 AM
Re: out-of-pocket cost
@JoeStanganelli. Great response. I would be less likely to find concern over loss of my medical records than if my identity information were to be breached. But I very much understand where individuals may be concerned.

What were the individual data sets that were lost during this breach? Thanks,
Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
6/29/2017 | 9:43:04 AM
Re: Ashley Madison comparison
@RyanSepe: Not that I'd be one to know (ahem), but it seems to me that Ashley Madison would need to make a major pivot (to say the least) to resume relevance in this, the age of Tinder -- security breach or no.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
6/29/2017 | 9:41:22 AM
Re: out-of-pocket cost
@Ryan: Sure, I agree with you...but look at it this way:

The damage the individual suffers potentially can be much higher -- but is often well mitigated with credit monitoring and similar services. Bought in bulk for thousands or millions of data-breach victims, that helps bring costs down.

The value the attacker gets for a single person's health credentials is probably on the order of about $25.

And then, of course, there are the additional statutory damages. And, of course, the overall cost to society as a whole.

Makes it all seem rather piddling, looked at this way. We're not talking about a toxic tort case like from A Civil Action or Erin Brockovich, after all.

But, of course, when you look at it more empathetically and/or subjectively, those numbers tend to become mentally adjusted much higher. How would you want to be compensated if your medical records were given to someone else?

Which is why settlements happen. Nobody in Anthem's position wants to go to a trial -- and probably not even arbitration.

(Incidentally, this is why official class representatives tend to get compensated far higher than Johnny-come-latelies who join the class afterwards upon learning of their eligibility -- because the class representatives are more directly involved in the litigation.)

Joe Stanganelli
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Joe Stanganelli,
User Rank: Ninja
6/29/2017 | 9:32:44 AM
Re: out-of-pocket cost
@Sara: But health data is a more legally protected class of information than whether one is looking to cheat on a partner. Plus, I daresay that Anthem has *waaaaay* more customers than Ashley Madison ever did. On a related note, potential HIPAA violations created tons of potential liability that Anthem wanted to avoid seeing a day in court over. So the difference in the settlement amounts makes sense for these reasons alone.

Also, as I understand it, the Ashley Madison breach involved an insider attack -- which, unfortunately, one can only do so much to prevent. The Anthem breach, however, involved a series of major security missteps. ( See, e.g., enterprisenetworkingplanet.com/netsecur/anthem-could-face-legal-fallout-from-hack.html ). And even then, months passed between the time evidence of a likely attack became known (thanks to independent security researchers) and Anthem actually did anything.
RyanSepe
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RyanSepe,
User Rank: Ninja
6/28/2017 | 12:22:41 PM
Re: out-of-pocket cost
@Dr.T, as Sarah stated when the hard numbers are broken down the numbers aren't a good reflection of how an individual should be compensated for a loss of their information. The numbers are most definitely jokeworthy. But playing devil's advocate, what should the numbers be for a payout for losing personal data? Based on the amount of users would Anthem be able to support this claim and stay in business? 
RyanSepe
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RyanSepe,
User Rank: Ninja
6/28/2017 | 12:18:35 PM
Re: Ashley Madison comparison
@Joe Very much agree with your comparison. Ashley Madison would have tarnished their brand reputation as well. Similar to Arthur Andersen back in the Enron days, these indirect costs can cripple an organizaiton into extinction. We shall see how AM fairs in the years to come.
Sara Peters
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Sara Peters,
User Rank: Author
6/28/2017 | 10:36:21 AM
Re: out-of-pocket cost
@Dr. T:  I'm with you. These settlements sound big at first, but once you factor in the number of people involved, it becomes pretty pitiful.

And yet this is a, comparatively, very big settlement, against a company that actually handled their breach response quite admirably. Other companies that did a lousy job from start to finish and showed no regard for their customers (Ashley-Madison) got away with smaller settlements.

 
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