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Risk

10/3/2008
08:42 PM
George V. Hulme
George V. Hulme
Commentary
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Fed Stiffens ID Theft Penalties, Schwarzenegger Kills California Breach Bill

Identity thieves, if a new federal ID theft law is enforced, will now face stiffer federal penalties for their crimes. Federal prosecutors also will have increased leeway to pursue more ID theft cases. Also, for the second time in 12 months, California Gov. Arnold Schwarzenegger vetoed a new California Data Breach Bill. Was that a good idea?

Identity thieves, if a new federal ID theft law is enforced, will now face stiffer federal penalties for their crimes. Federal prosecutors also will have increased leeway to pursue more ID theft cases. Also, for the second time in 12 months, California Gov. Arnold Schwarzenegger vetoed a new California Data Breach Bill. Was that a good idea?As anyone who has been following data security is aware, in July 2003 the California Data Breach Disclosure Law (known in those days as SB 1386) went into effect. This law had a profound impact in raising public and policymaker awareness on just how many data breaches were occurring across the country. Before SB 1386, while many security professionals knew there were far more breaches occurring than being reported, it was difficult to find much evidence to prove it. Today, customers are told every time a hacker, or anyone without authorization, for that matter, could have obtained unencrypted account information from a lost notebook, hacked server, or backup tape.

One of the most important aspects of SB 1386 was that it didn't force technological standards, or best practices, on companies. If certain types of data were accessed by someone who was not authorized to see it and that data was not encrypted, a mandatory breech notification to those affected is triggered. The Consumer Data Protection Act, or AB 1656, takes decent steps forward, such as covering health and medical information, as well as forbidding retailers from holding cardholder data, even if that data is encrypted.

But it also does things like mandate specific types of security controls, such as the use of encryption. That's where I part with the bill. The Payment Card Industry Data Security Standard (PCI DSS) mandates plenty of security controls. I don't think merchants need another governing body to begin mandating security technologies. The state of California should mandate reasonable disclosure triggers and prosecute data thieves. For that reason, I'm glad Gov. Schwarzenegger vetoed this bill.

Now, the prosecution of data thieves brings us to the bill President Bush signed last week into law, the The Identity Theft Enforcement and Restitution Act of 2008. No more will federal prosecutors need to show $5,000 in damages to bring charges. This is from Brian Kreb's blog at The Washington Post, Security Fix:

The law makes it a felony, during any one-year period, to damage 10 or more protected computers used by or for the federal government or a financial institution, and directs the U.S. Sentencing Commission to review its guidelines and consider increasing the penalties for those convicted of identity theft, computer fraud, illegal wiretapping or breaking into computer systems.

The new law allows federal courts to prosecute when the cybercriminal and the victim live in the same state. Under current law, federal courts only have jurisdiction if the thief uses interstate communication to access the victim's PC. In addition, the law also expands the definition of cyberextortion.

Identity theft victims could find it easier to win compensation for their trouble as a result of this law, assuming their attackers are brought to justice. The law requires that in cases where convicted identity thieves are ordered to pay restitution, the victim should get a chunk of that money "equal to the value of the time reasonably spent by the victim in an attempt to remediate the intended or actual harm incurred by the victim from the offense."

Unlike AB 1656, I welcome the changes brought by The Identity Theft Enforcement and Restitution Act of 2008. I only hope it's actively enforced, and we see an increase in identity theft prosecutions.

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