Taking Steps to Prevent a Data Breach Is Essential to the Success of Your Company

TechLawLogy™: eDiscovery and Privacy Blog

Braxton Padgett
Thursday, 09 November 2017

Data breaches can have a devastating impact on those that are affected. Nowhere, perhaps, has this been more evident than with the 2015 data breach of AshleyMadison.com, a website designed to connect individuals who are looking to cheat on their spouse or significant other. That particular data breach resulted in the leak of the personal information of AshleyMadison.com’s 37 million users. Much of this information was subsequently posted on the internet, leading to turmoil in the lives of those affected and for AshleyMadison.com itself.

A data breach can have huge financial and reputation costs for your company.

Since the breach, AshleyMadison.com has faced an ongoing class action lawsuit that is nearing the finish line. In July, U.S. District Judge John A. Ross issued a preliminary approval of an $11.2 million settlement to end the litigation. Class members who submit a timely claim will be eligible to receive up to $3,500. While the plaintiffs have pushed for final approval of the deal, a single member of the class has recently objected to the settlement, arguing that the company should be shut down for good. The case will go to final hearing on November 20th, and, despite the single objection, will most likely be approved.

In addition to this settlement, the 2015 data breach resulted in the Federal Trade Commission (“FTC”) launching a major investigation into AshleyMadison.com’s business practices. During the investigation, the FTC discovered that the company had been creating fake profiles on its platform and selling services that were not actually delivered. The fake profiles were intended to lure in customers, who would then pay to chat and send virtual gifts to what they believed were real individuals. The site also charged users a $19 fee to fully delete their information, even though the information still remained on their servers at the time of the breach. The FTC noted in the complaint that while users were assured of the privacy of their data, the company in fact had no written privacy policy and inadequate procedures in place to monitor the security of the website.

Ensuring your company has a strong privacy policy in place can help prevent data breaches from occurring.

As the AshleyMadison.com case makes clear, the cost of a data breach can be incredibly steep for any company. Not only has AshleyMadison.com faced steep legal fees and a costly settlement, but the trust of its users has forever been compromised. Had the company had an adequate privacy policy in place, it could have avoided this nightmarish scenario, which has driven the company to the brink of closure. If your company is entrusted with sensitive information, there are a few key points that you should consider:

  • Implement a Privacy Policy. Ensure the you have an adequate privacy policy in place that employees are aware of and strictly adhere to. Doing so could prevent a data breach from ever occurring.
  • Take Steps to Mitigate the Damage. If you believe that your company has experienced a data breach, immediately take whatever measures are necessary to stop any further information from leaking.
  • Seek Legal Advice. A lawyer who is trained in privacy and data security laws can help navigate a company through the resulting turmoil of a data breach or provide counsel on ways to prevent one from ever occurring.

If your company has experienced a data breach, needs assistance creating a privacy policy, or you have general questions about privacy laws, please Contact Us.

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Watson LLP is a United States based law firm practicing in the areas of intellectual property, entertainment law, litigation, government investigations, and eDiscovery. The firm has offices in Atlanta, Los Angeles, New York, and Orlando. For more information, please visit www.watsonllp.com.

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