Introduction
On January 23, 2025, PayPal settled an enforcement action brought by the New York State Department of Financial Services (NY DFS) for failing to comply with cybersecurity regulations required for financial services businesses under the Department’s supervision. The settlement, which included a $2 million fine and required remedial measures, arose out of a cybersecurity incident where hackers gained access to PayPal customers’ sensitive information contained on tax forms in PayPal’s systems. As discussed further below, the incident highlights the importance of implementing an effective cybersecurity program and ensuring that employees are adequately trained to follow the policy in practice.
Summary of the PayPal Enforcement Decision
The NY DFS sets standards for cybersecurity practices among financial institutions through cybersecurity regulations established at 23 NYCRR Part 500. These regulations require all DFS-regulated entities to establish and maintain a comprehensive cybersecurity program to protect consumers’ nonpublic information (NPI) and ensure the security of information systems.