Credit: anthony kelly
In a study released yesterday morning, nine out of 10 corporate board members said that regulators should hold businesses liable for breaches if they haven't taken reasonable steps to secure customer data.
This was a surprise to Veracode, the company that conducted the study jointly with the New York Stock Exchange.
"I think they feel that their companies are making reasonable efforts to secure customer data," said Chris Wysopal, CTO and CISO at Boston-based Veracode "And they want the people who are the bad actors policed. The people who are giving the industry a bad name by not protecting customer data."
So far, there has been one related case, he said, where the FTC has stepped in. Late this summer, The US Court of Appeals has ruled that the FTC mandate to protect consumers against fraudulent, deceptive and unfair business practices extends to oversight of corporate cybersecurity efforts -- and lapses -- in a case involving Wyndham Hotels and Resorts. Hackers broke in three times between 2008 and 2010 and stole more than 600,000 bank card numbers from the company.
Nearly 50 percent of respondents who were aware of that lawsuit said that the case has influenced their discussions about cybersecurity liability.
There have also been court cases allowing class-action lawsuits against companies, and three out of five respondents said that they expect the number of these breach-related lawsuits to increase.
But it is still too early to tell exactly what guidelines companies are going to be expected to follow, though the ongoing legal actions may start to provide some clarity.
"That is going to be the basis for what is considered reasonable," Wysopal said.
But corporations don't want to be left holding the bag, either, when the problems are caused by third parties.
According to the survey, 90 percent of the respondents also said that third-party software providers should be held liable when vulnerabilities are found in their packaged software.
"People don't want to absorb the risk that is in the software," said Wysopal. "But we are going to have some challenges changing the status quo."
Typically, published user license agreements absolve software providers from liability, he said. But it does happen that a corporate customer is able to negotiate a contract where the software developer accepts some responsibility.
"I've seen those, but it's not common place right now," he said. "An example might be a large manufacturer, say, that has a software company writing software for one of its devices. I've seen certain levels of care in delivering that software put into place and if defects are found then the product liability will then fall back on the supplier."
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