Exploring the major legal repercussions of a data breach under new data protection laws, we’ve gathered insights from a privacy expert and a managing attorney. While they provide expert perspectives, we’ve also included additional answers to present a well-rounded understanding. From consumers filing lawsuits to mandatory cybersecurity audits, here are the key legal consequences organizations might face.
- Consumers May File Lawsuits
- Fines and Legal Battles
- Criminal Charges Against Executives
- Contractual Breaches with Vendors
- Mandatory Cybersecurity Audits
Consumers May File Lawsuits
In California, tech companies that are responsible for large amounts of personal data are held accountable by the state’s laws. The requirements are basic security measures. They have to implement the recommended controls, use multi-factor authentication, use encryption, and encourage individuals to file a fraud alert on their personal information. When they fail to meet basic security requirements and have data breaches, consumers may file suit against them.
Large companies with a large user base could be bankrupted by these suits, so it is taken very seriously. Many other states are looking to pass similar laws, especially states that contain companies that deal in big data.
Privacy Expert at Cyber Insider, Cyber Insider
Fines and Legal Battles
The sheer amount of fines a company will have to pay has gone up. Under the General Data Protection Regulation (GDPR), which is a prominent data-protection law in the European Union, organizations can be fined up to 4% of their annual global revenue for non-compliance. Meta was fined $1.3 billion for moving people’s personal data from Europe to the U.S. without permission.
Also, if someone’s personal data gets stolen, they can sue the company. Affected customers can sue for various reasons, including negligence, breach of contract, and violations of privacy laws. So it’s not only fines from regulators but also expensive legal battles with customers that may just force them to shut shop.
Managing Attorney, Douglas R. Beam, P.A.
Criminal Charges Against Executives
Criminal charges against responsible executives can be one of the harshest repercussions of a data breach. In some cases, top executives may be found legally responsible for negligence or misconduct. Facing criminal charges can result in severe penalties, including fines or imprisonment.
This also tarnishes the personal and professional reputations of those involved. Ensuring legal compliance and robust data security can prevent such dire outcomes.
Contractual Breaches with Vendors
Contractual breaches with third-party vendors can result from data breaches, leading to legal and financial complications. When a company fails to secure data, it often violates agreements with other businesses they work with. This breach can result in loss of trust and potentially expensive litigations.
Furthermore, it can disrupt business relationships and operations. Take proactive steps to maintain strong data security to uphold these contracts.
Mandatory Cybersecurity Audits
Mandatory cybersecurity audits and oversight often follow after a data breach. Regulatory bodies or independent firms may conduct audits to assess the company’s security measures. These audits can be thorough and time-consuming, revealing other potential vulnerabilities that must be fixed.
This increased oversight can also lead to higher operational costs. Act now to implement strong cybersecurity protocols and avoid the need for these audits.
