Social Engineering Fraud and Cyber Insurance – Are You Covered?

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Spoofing and phishing are part of what is known as social engineering fraud. Social engineering fraud is typically a type of computer fraud where an employee is misled into believing he or she is communicating with a vendor and is tricked into sending money due that vendor to the fraudster. Many organizations take proactive measures to protect themselves through enhanced IT measures, employee training and the purchase of computer fraud and other types of cyber insurance.

A recent district court action in Washington illustrates how social engineering works and highlights the importance of understanding the limitations of the types of insurance coverages companies may have. The case is currently on appeal before the 9th U.S. Circuit Court of Appeals.

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Enforcement Actions Launched by Securities and Exchange Commission – Heightened Scrutiny of Blockchain and Cryptocurrency Companies

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A recent flurry of activity by the Securities and Exchange Commission (SEC) in court, and strong talk on the Hill, gives a clear indication that the U.S. regulatory agency is making a significant push to rein in the current wild-west atmosphere of investments in Blockchain and cryptocurrency companies.

In the wake of the DAO Report issued by the SEC in July 2017, the agency released several Investor Alerts to warn the public of the risks associated with investing in initial coin offerings (ICOs), including an alert to warn investors to be careful about advertisements by celebrities promoting ICOs and other Blockchain-related investments. Moreover, the SEC chairman and his counterpart at the Commodity Futures Trading Commission (CFTC) have recently released statements and op-eds and appeared before the U.S. Senate Banking Committee to elevate the awareness of lawmakers and the public of some of these risks.

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FTC Settlement with PayPal Resolving Allegations That Venmo Made Misrepresentations to Consumers and Violated the Gramm-Leach-Bliley Act

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The FTC has entered into a Consent Agreement with PayPal, Inc., settling allegations that PayPal, through its operation of Venmo, had violated Section 5 of the FTC Act and the Gramm-Leach-Bliley Act’s (“GLBA”) Privacy and Safeguards Rules.   PayPal operates Venmo, a payment and social networking application and website that allows consumers to make peer-to-peer payments, which also shares information regarding such payments through a social network feed.  The agreement will be subject to public comment for 30 days.

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New Initiative Examines Ethics of Research Using ‘Pervasive’ Data

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Data – big or small – has tremendous potential for use (and misuse).  For example, using mobile apps to keep track of one’s own physical activity or caloric intake may empower individuals to improve their health.  Should other parties (e.g., that app’s developer, physician, employer, insurance company, online friends) be able to access the same information, and if so, under what conditions? As another example, expressing one’s own feelings and preferences on a social media platform may strengthen bonds within a professional community or a family group, expedite academic collaborations, and/or improve an individual’s sense of belonging.  However, may those same messages – freely expressed in a public domain – be re-purposed for a study of mental health trends or for marketing strategies; and if so – when/how/by whom, or why/why-not?  Questions like these touch on a host of ethical and legal issues that only recently began to be explored in depth, even as new norms of individual behavior, human interactions, and treatment of data are evolving.     

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DOJ Announces Federal Indictment in Massive Cyberfraud Enterprise

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The Department of Justice announced the unsealing of a federal indictment charging 36 individuals for their alleged roles in the Infraud Organization, an Internet-based cybercriminal enterprise that is alleged to have engaged in a large-scale cyberfraud.   The indictment alleges that the enterprise caused more than $530 million in actual losses to consumer, businesses, and financial institutions.

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European Commission Issues GDPR Guidance

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The European Commission (EC) recently issued online guidance on the General Data Protection Regulation (GDPR), a sweeping European Union (EU) data protection legislation that will take effect on May 25, 2018.  The guidance is intended to be used as a tool to help businesses as well as the EC, national data protection authorities, EU Member States, and other national administrations prepare for the GDPR.  To date, only 2 EU Member States – Germany and Austria – have adopted the relevant national legislation to be in compliance with GDPR.

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