This past Monday, I had the privilege of speaking (along with several peers) to the Commission on Cyber Security for the 44th Presidency about issues on identity theft, breach disclosure and personal privacy in general. It was an honor to present with such a great group of folks. There were some great discussions/debates and I look forward to the opportunity to present again as the Commission works to streamline its recommendations. My written testimony is below. A special thanks to the folks at Emergent Chaos and to Rich for their comments, which made this a much better piece. Any errors or logical fallacies are, of course, my own.

Thank you for the opportunity to present to you today on the issue of identity theft. Since the advent of CA1386, we have seen 41 other states pass similar legislation mandating to some degree or another that companies must notify customers or the government when they believe they have suffered a loss of personal data. Unfortunately, each and every state has created slightly different criteria for what constitutes personal information, what a loss is, when notification needs be sent and, to whom it must be sent. As a result there are huge disparities among companies on what they do when they discover they’ve suffered a breach.

As much as I prefer to not have even more legislation, I believe that the only solution to this dilemma is to have a uniform federal law that covers the loss of personal information. Rather than preempt state laws, this law should set baseline requirements of:

a) Notification to all customers in a timely fashion. b) Notification to a central organization. c) The gathered data about companies suffering breaches must be a matter of public record and un-anonymized. d) Include notification of any personal information that is not a matter of public record. e) Not have a “get out of jail free” card.

This last point is key. One of the great weaknesses of CA1386 (and several other states’ legislation as well) is that companies don’t have to notify in case the information was encrypted. Unfortunately, the mere use of encryption does not mean the data was actually obfuscated at the time it was stolen, for instance in cases where a laptop is stolen while the user is logged in. Don’t get me wrong- encryption is important. A well-written law will provide a safe harbor for a company that has lost data. If they can establish that it was encrypted following best practices and that key material was not also lost, the company should be protected from litigation as a result of the breach disclosure.

Similarly, many state laws allow companies to choose to not disclose if they believe the data has not been misused. Given that the companies lost the data to begin with, should we really trust their assessment of the risk of misuse, especially when many executives believe it is not in their best interest to not disclose? It is worth noting that following a breach, stock prices do not suffer in the long run and customer loss is approximately 2%.

On the other side of the coin from breach disclosure, we have the problem that people don’t know what personal information companies have about them. Part of the outrage behind the ChoicePoint debacle of several years ago was that people didn’t know that this data was even being collected about them to begin with, and had no real way to find out what ChoicePoint might or might not have collected. In Europe as well as in Australia and parts of Asia such as Japan, companies have to both tell customers what data they have and allow them the opportunity to correct any errors. Additionally, there are strict restrictions on what collected personal information may be used for. I believe that it is time that similar protections be available to Americans as well.