The First Circuit's decision may change some data breach laws
An appeals court’s decision may bring a major change in the data breach laws. The court’s decision is to permit negligence and contract putative class action litigation. This is specifically related to a grocery store chain data breach because of the alleged damages incurred.
Maine Law
The First Circuit has held that consumer claims for reimbursement of the cost of identity theft insurance and of fees for replacement of credit and debit cards following a breach of their personal information can be a cognizable injury under certain circumstances. For now, Maine Law recognizes this decision.
Case history
In the year 2007 hackers breached Hannaford’s – a popular grocery store chain – electronic payment processing system and stole up to 4.2 million credit and debit card numbers, with expiration dates and security codes. Fortunately customer names were not stolen. Hannaford made a public announcement about the breach and added that it had received a total of 1,800 reports of fraudulent credit and debit card activity. Some financial institutions canceled/reissued customer cards and monitored the accounts. But some of these institutions assessed fees on the consumers for offering such services. To be on the safer side, some consumers purchased identity theft insurance and/or credit monitoring services. The plaintiffs in the above lawsuit of Hannaford claimed damages that included these fees and services. In addition, allegations included loss of accumulated miles reward points, inability to earn reward points, emotional distress, and the time and effort spent during this period.
As per the initial Maine law time and effort were not to be counted as cognizable offences. Hence previously the court had ruled in Hannaford’s favor dismissing all claims.
The circuit court’s appeal
The First Circuit was trying to assess whether the mitigation damages alleged by plaintiffs for negligence and breach of implied contract could be considered as a cognizable injury under Maine law.
The court’s ruling
First Circuit held that mitigation damages that arise from negligence and breach of implied contract claims can be cognizable under Maine law. But they have to be “reasonably foreseeable” and “reasonable,” and are for actual financial losses rather than just time or effort expended.
The Hannaford decision is a classic example of what a common man can do against a faulty legal system. The legal system is harsh but if you are armed with information and know your rights, you can appeal in the court of law and get your voice heard. Data breach victims can now heave a sigh of relief.
Alertsec helps keep Data Safe
The above case is a clear indication that in the absence of full disk encryption, privacy of people can get affected. To keep your sensitive data safe from thefts and hacking, it is very important to use Data encryption software. Everyday we are reading incidents taking place across global organizations which highlight the need of a data security and recovery software. By a mere investment of $13/month, the information can be secured with no loss what so ever. That is certainly a small price to pay compared to what can happen if you lose confidential or sensitive data. Alertsec Xpress offers a very good and easy-to-use laptop security service that includes more than the traditional software licensing model.
