Evan Schuman's StorefrontBacktalk

Attorney Mark D. Rasch is the former head of the U.S. Justice Department’s computer crime unit and today serves as Director of Cybersecurity and Privacy Consulting at CSC in Virginia.

When a retail chain suffers a data breach, as in many aspects of life, no good deed goes unpunished. Conventional wisdom—reinforced by a host of legal requirements throughout the country—is that you should notify all potentially affected customers about the breach as soon as possible. But that’s often not the best approach.

The earliest preliminary data breach information is invariably wrong. Some IT alarmists immediately assume the sky is falling, while the initial reports from more politically oriented CYA folk arethat nothing of importance was touched. A recent report from the Ponemon Institute actually said that rapid responses to data breaches increase the cost of those breaches.

Why would early responders suffer a greater dollar loss? Many reasons. First, by rushing to respond, companies may be over-notifying. This might occur if individuals are notified about a potential data breach when no actual breach existed. A classic example of this was the theft of a laptop computer containing millions of records pertaining to veterans. The Veterans Administration, upon learning of the theft from a contractor, notified all of the affected individuals, at a cost of millions of dollars. Indeed, the VA had to borrow printing and mailing facilities from the IRS.

A few weeks later, the VA recovered the stolen laptop intact and discovered that no VA records had actually been touched. A delayed response in that case would have not only saved money but also prevented what turned out to be needless worry.

Given all of this, what exactly does it really mean to legally notify as soon as possible? In New York state, the General Business Law Section 899-aa states that “the disclosure shall be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement or any measures necessary to determine the scope of the breach and restore the reasonable integrity of the system.”

In the Lone Star state, Texas law similarly states that “The disclosure shall be made as quickly as possible, except as necessary to determine the scope of the breach and restore the reasonable integrity of the data system.”

The general theme to all of these statutes is for the retailer or entity suffering the breach to notify “as quickly as possible.” However, not only does no one seem to define exactly what “as quickly as possible” means but, more importantly, none of these statutes says why that should be done.

In the movie Apollo 13, flight controller Gene Krantz is informed that the spaceship is coming in shallower than its projected orbit, which could lead to the ship bouncing off the atmosphere and into space. Krantz is asked whether they should inform the crew. He asks if there is anything the crew can do about it, and when he is told there isn’t, he replies, “Then they don’t need to know, do they?”

When evaluating how to handle a data breach incident—whether, when and how to make a notification—a good rule of thumb is what I call the “grandmother rule.” If the data subject were your grandmother, what would she want to know and when?

This is not meant to be patronizing or to underestimate grandmothers. The goal instead is to understand the true purpose of data breach notification requirements so data subjects can take precautionary actions to insulate themselves—and, therefore, you—from further injury.

If you are told that your credit card number was stolen (but not yet used), you would likely obtain a replacement card, examine your upcoming bill for unauthorized charges and be done with it. Maybe—just maybe—you would refrain from shopping at the store that suffered the breach. But, in general, we have not seen customers punish retailers for data breaches.