Evan Schuman's StorefrontBacktalk

If you are told that your personal information (name, address, social security number) has been compromised, then you will need to run credit reports, have full credit freezes and generally look for signs of ID fraud.

The problem for companies suffering a data breach is that the law requires notification as soon as possible—whether that is good for the customer or not. That Ponemon report offered some interesting numbers, although the methodologies behind these types of reports is highly suspect. Ponemon said that 43 percent of companies notified data breach victims within one month of discovery of the breach last year, a figure that had been 36 percent the year before.

You would think this would decrease overall retail costs and liabilities, but no. Indeed, the report claimed that those who responded quickly in 2010 had a per-record cost of $268, up $49 from the $219 of the year before. Conversely, the “slow responders” paid $174 per record, down $22 from 2009.

What was the report’s rationale? “Moving too quickly through the data breach process may cause cost inefficiencies for the organization, especially during the detection, escalation and notification phases. The notable increase in companies responding quickly to breaches, despite the additional cost, may reflect pressure companies feel to comply with commercial regulations and state and federal data protection laws.”

This suggests that companies are trying to do what they believe is both the “right thing” and what the law requires with respect to data breaches. Many laws require companies to “promptly” notify data subjects of the breach or potential breach of their personal information, and some states may further define both what constitutes “promptly” and the manner in which such notifications must be made. Most state laws also have a law enforcement exemption—that is, you are permitted to delay or defer notification if you are requested to do so by law enforcement.

The problem with that exception is it’s a Holland Tunnel size loophole. Why? Law enforcement—whether it’s police, FBI or, especially, the Secret Service—love to keep details as quiet as possible for as long as possible. In a chase for cyberthieves, you want the suspects kept in the dark as long as possible. If it’s at all possible to have the suspects think the attack hasn’t been detected yet, they may be more easily caught if the thieves get careless.

None of this means that delay is always—or even usually—the appropriate response. Remember that the purpose of notification is to allow the data subjects to mitigate their (and indirectly the retailer’s) damages. What companies should be doing is following normal procedures to determine the scope, nature and extent of a breach, the nature of the data subject to the breach, the time that has already elapsed from the date that the information has been presumably compromised, and the date the entity became aware of the breach, and then make a rational, informed and justifiable decision about when, how, and who to notify.

In Douglas Adams’ Hitchhiker’s Guide to the Galaxy, Ford Prefect advises, “Don’t Panic.” That advice works as well in law as in intergalactic transportation.

If you disagree with me, I’ll see you in court, buddy. If you agree with me, however, I would love to hear from you.