Unfortunate Court Ruling Regarding Gramm-Leach-Bliley
“A Federal Court Rules That A Financial Institution Has No Duty To Encrypt A Customer Database“:
In a legal decision that could have broad implications for financial institutions, a court has ruled recently that a student loan company was not negligent and did not have a duty under the Gramm-Leach-Bliley statute to encrypt a customer database on a laptop computer that fell into the wrong hands.
Basically, an employee of Brazos Higher Education Service Corporation, Inc., had customer information on a laptop computer he was using at home. The computer was stolen, and a customer sued Brazos.
The judge dismissed the lawsuit. And then he went further:
Significantly, while recognizing that Gramm-Leach-Bliley does require financial institutions to protect against unauthorized access to customer records, Judge Kyle held that the statute “does not prohibit someone from working with sensitive data on a laptop computer in a home office,” and does not require that “any nonpublic personal information stored on a laptop computer should be encrypted.”
I know nothing of the legal merits of the case, nor do I have an opinion about whether Gramm-Leach-Bliley does or does not require financial companies to encrypt personal data in its purview. But I do know that we as a society need to force companies to encrypt personal data about us. Companies won’t do it on their own—the market just doesn’t encourage this behavior—so legislation or liability are the only available mechanisms. If this law doesn’t do it, we need another one.
EDITED TO ADD (2/22): Some commentary here.
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