New Cyber Liability Rules for Businesses: What CFPB's Latest Issuance Means for You
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- Topic: Understanding Cyber Liability Insurance & Its Role in Protecting Your Business
- Key Takeaways:
- The Consumer Financial Protection Bureau (CFPB) has clarified rules on data protection liability for financial institutions and service providers.
- Businesses can be held liable for insufficient data protection if customer information is stolen and leaked, such as addresses, emails, social security numbers, and more.
- A cyber liability policy may help cover damages, fines, and penalties if your company faces a data breach. Not all policies cover these expenses, so ensure your policy includes this type of coverage.
- Best practices to prevent breaches are essential. Cyber liability policies often require businesses to follow these practices, such as proper network monitoring and security protocols.
- The CFPB now considers inadequate data protection a unfair act, meaning companies that fail to protect sensitive customer data could be violating the law.
- Best practices include strong authentication methods, password management, and regular software updates. Businesses should actively engage in security practices to avoid liability.
- Substantial injury from a data breach, even affecting a few customers, can lead to penalties. Even the risk of harm is enough for a violation.
- Businesses must take steps to prevent harm, including seeking legal advice, working with cyber liability insurance providers, and ensuring their security practices meet current standards.
- Government oversight can come from federal consumer financial law enforcement or customer complaints. Companies must demonstrate they’re following best practices to avoid penalties.
- Actionable Advice:
- Get legal advice and work with a reputable cyber liability insurance provider.
- Follow best practices for data protection and seek external feedback to ensure your practices are up-to-date.
- Even if your company follows best practices, having a cyber liability insurance policy ensures you're covered in case of an unexpected breach.
Disclaimer: The information provided is not legal advice. Consult a qualified attorney for legal guidance on cyber liability and data protection.
