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An Alabama man has been sentenced to spend six months in prison for illegally accessing the personal information of over fifty women. For over two years, Kevin Maldonado engaged in a hacking technique called “phishing,” creating fake email accounts impersonating email providers and requesting numerous women to change their email passwords. He was then able to obtain passwords and access private information, including personal photographs. Maldonado then stored the stolen information on his personal computer. Maldonado pleaded guilty in February 2017 to computer intrusion, and was sentenced to six months in prison and three years of supervised release.

Although extensive, Maldonado’s phishing technique is a common strategy employed by hackers to gain personal information. Phishing scams are fraudulent email messages that appear to come from legitimate sources. In 2016, according to the FBI’s Internet Crime Complaint Center, there were more than 19,000 victims of phishing and related scams. Email users can guard against these scams by verifying information sent in emails, like the name of the company, sender and url links embedded in the email message. Personal firewalls and security software can provide even more protection if needed.

To view information from the SEC on protection from phishing scams, click here.

To view the U.S. Attorney’s press release click here.

On April 4, 2017, President Trump signed legislation repealing the Federal Communications Commission’s (FCC) privacy protections adopted in October 2016. The regulations, set to go into effect later this year, would have required internet service providers (ISPs) to adopt stricter consumer privacy protections than websites like Google and Facebook. Among other things, the regulations would have required ISPs to obtain consent before sharing sensitive customer proprietary information, take reasonable measures to secure customer proprietary information, provide notification to customers, the FCC and law enforcement in the event of data breaches, and not condition provision of service on the surrender of privacy rights.

The regulations were opposed by many ISPs who felt that they would be at a disadvantage to companies like Amazon, Google and Facebook, who are regulated by the Federal Trade Commission (FTC). Because these companies offer internet services, and do not provide internet connection, they are subject to the less restrictive FTC regulations. While many ISPs have promised not to sell proprietary customer information, these promises are voluntary. President Trump’s repeal leaves the states as the only real possible enforcer of ISP privacy regulations.

On March 10, 2017, the White House Office of Management and Budget (“OMB”) released its 2016 Federal Information Security Modernization Act (“FISMA”) Annual Report to Congress. The FISMA Report describes the current state of Federal cybersecurity. It provides Congress with information on agencies’ progress towards meeting cybersecurity goals and identifies areas that need improvement. Additionally, the report provides information on Federal cybersecurity incidents, ongoing efforts to mitigate and prevent future incidents, and progress in implementing adequate cybersecurity programs and policies.

According to the FISMA report, agencies reported over 30,899 cyber incidents that led to the compromise of information or system functionality in 2016. However, only sixteen of these incidents met the threshold for a “major incident” (which triggers a series of mandatory steps for agencies, including reporting certain information to Congress). The report categorizes the types of agency-reported incidents. The largest number of reported incidents (more than one-third) was “other,” meaning the attack method did not fit into a specific category or the cause of the attack was unidentified. The second largest was loss or theft of computer equipment. Attacks executed from websites or web-based applications were the third most common type of incident.

Despite these incidents, the report notes that there were government-wide improvements in cybersecurity, including agency implementation of:

  • Information Security Continuous Monitoring (“ISCM”) capabilities that provide situational awareness of the computers, servers, applications, and other hardware and software operating on agency networks;
  • Multi-factor authentication credentials that reduce the risk of unauthorized access to data by limiting users’ access to the resources and information required for their job functions; and
  • Anti-Phishing and Malware Defense capabilities that reduce the risk of compromise through email and malicious or compromised web sites.

Federal agencies will look to continue these cybersecurity improvements in 2017.

To view the Report, click here.

In a recent opinion, the Second Circuit ruled against the United States government and in favor of protecting data stored overseas. In Microsoft v. United States, the Second Circuit held that the Stored Communications Act (SCA) does not authorize courts to issue warrants against internet service providers (ISPs) for the seizure of customer email content stored exclusively on foreign servers. The case began in December 2013 when the government obtained a warrant to gain access to a Microsoft customer’s account on a server in Dublin, Ireland. Microsoft argued that the United States lacked the authority to obtain the data due to its location in an overseas server. The United States countered, arguing that the SCA warrant required Microsoft to turn over the data because, although the data was stored in an overseas server, Microsoft had access to it in the United States. Ultimately, the Second Circuit decided in favor of Microsoft. The Court held that the data was located in Ireland and the SCA was not meant to be applied extraterritorially.

On January 24, 2017, the Second Circuit denied rehearing the case. Although the decision was reached in a tie (4-4 vote), the rehearing request was denied due to a rule requiring a majority vote for granting of petitions. The decision garnered four dissents, with each dissenter essentially arguing that the issue rested on the location of the disclosure of the information, which would take place in the United States, and not the location of the information itself.

Microsoft v. United States raises important data privacy questions that will likely reappear in future cases. Asking courts to apply dated technology statutes and answer the complicated question of where virtual data is physically located leaves no straightforward answer. The United States government might get another shot to revisit this question in the near future, but it will have to be through the Supreme Court.