Cybersecurity and Data Breaches

June 27, 2023

ACI Worldwide and its subsidiary, ACI Payments, will pay a $25 million civil penalty for improperly initiating around $2.3 billion in unlawful mortgage payment transactions, impacting nearly 500,000 homeowners with mortgages serviced by Mr. Cooper f/k/a Nationstar. ACI offers payment processing services across a wide range of industries. ACI conducted tests of its electronic payments platform on April 23, 2021. Rather than using deidentified, dummy data, ACI used client data files from Mr. Cooper instead, causing massive overdraft fees and other negative financial consequences to the unsuspecting borrowers. The CFPB found ACI in violation of the Consumer Financial Protection Act and the Electronic Fund Transfer Act, for illegally initiating withdrawals from borrower bank accounts, and improperly handling sensitive consumer data. ACI must pay the $25 million as well as adopt and enforce reasonable information security practices, and is prohibited from processing payments without obtaining proper authorization. CFPB

May 18, 2023

Google has agreed to pay almost $40 million to the State of Washington for misleading consumers about its location tracking practices.  The company had led consumers to believe they had control over their location data, but in reality, regardless of consumers’ stated preferences, the company collected, stored, and profited from consumer location data.  AG WA

May 17, 2023

EyeMed Vision Center has entered into a settlement agreement with the states of Florida, New Jersey, Oregon, and Pennsylvania to resolve allegations of compromising the personal and medical information of about 2.1 million people in a data breach in June 2020.  In addition to paying $2.5 million, Eyemed has agreed to implement additional security measures to protect the privacy of its customers, including reporting all data breaches immediately.  NJ AG; OR AG

October 12, 2022

The owner of popular fashion ecommerce websites SHEIN and ROWME, Zoetop Business Company, Ltd., has agreed to pay $1.9 million to settle charges that it failed to properly safeguard consumer information, failed to protect accounts impacted by a data breach, and downplayed the extent of the breach to consumers.  In June 2018, attackers stole the names, email addresses, hashed passwords, and credit card information of 39 million SHEIN consumers worldwide, but Zoetop failed to alert more than 32.5 million of them that their login credentials had been compromised.  Two years later, Zoetop discovered that 7 million ROWME consumers were also affected.  AG NY

October 4, 2022

Sebastian Vachon-Desjardins, a Canadian man who participated in a ransomware attack that affected victims around the world—including companies, municipalities, emergency services, hospitals, law enforcement, school districts, and higher education institutions—has been sentenced to 20 years in prison and ordered to forfeit $21.5 million; a restitution order will be issued at a later date.  According to the government, Vachon-Desjardin’s NetWalker ransomware had taken advantage of the COVID-19 pandemic to specifically target organizations in the healthcare sector.  USAO MDFL

September 20, 2022

Morgan Stanley Smith Barney LLC (MSSB) has agreed to pay $35 million to the SEC to settle charges of failing to protect the personal identifying information (PII) of some 15 million customers.  Between 2015 to 2020, MSSB failed to properly encrypt PII or properly dispose of devices and servers containing PII.  As a result, decommissioned devices containing unencrypted PII were resold by a third party via an internet auction site, and 42 decommissioned servers containing unencrypted PII went missing entirely.  SEC

July 27, 2022

Three registered broker-dealers have been ordered to pay civil penalties based on SEC findings that each had deficiencies in its programs to prevent customer identity theft, in violation of the SEC’s Identity Theft Red Flags Rule, or Regulation S-ID.  J.P. Morgan Securities LLC will pay $1.2 million, UBS Financial Services Inc. will pay $925,000, and TradeStation Securities, Inc. will pay $425,000.  The SEC found that the broker-dealers’ cybersecurity policies failed to detect identity theft red flags in connection with customer accounts or to incorporate those red flags into their programs, and that the firms failed to adequately train staff, failed to review and update the policies as required, did not include appropriate board oversight, and failed to oversee service provider arrangements.  SEC

July 26, 2022

Wawa, Inc. agreed to an $8 million settlement for a 2019 data breach which occurred due to Wawa’s failure to deploy reasonable information security measures. Hackers accessed Wawa’s network and extracted sensitive customer information, impacting stores in 6 states and the District of Columbia. In addition to the payment, Wawa is required to implement new security practices to secure customers’ sensitive personal information, including providing resources necessary to implement their security program and providing security awareness and privacy training. FL AG, VA AG, NJ OAG

July 8, 2022

Aerojet Rocketdyne Inc., which provides propulsion and power systems for vehicles belonging to the Department of Defense and NASA, has agreed to pay $9 million to resolve a whistleblower lawsuit.  According to Brian Markus, a former employee, the company misrepresented its compliance with the cybersecurity requirements of contracts with those agencies, in violation of the False Claims Act.  For bringing a successful qui tam case, Markus will receive a relator’s share of $2.61 million.  USAO EDCA