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Nov 28 2012   4:10PM GMT

Governments Behaving Badly With Personal Data

Sharon Fisher Sharon Fisher Profile: Sharon Fisher

There’s been a couple of instances recently where government agencies have been careless with data, losing access to personally identifiable information such as Social Security numbers.

First, a NASA laptop that “contained records of sensitive personally identifiable information for a large number of NASA employees, contractors and others” was stolen from a vehicle, and while the laptop itself was password-protected, the data on it was not encrypted. In its memo about the incident, NASA didn’t say how many staffers might have been affected.

Second, the state of South Carolina’s Department of Revenue determined that hackers had broken into its database, putting the PII of up to 4 million people and 700,000 businesses at risk — again, because data had not been encrypted — in what is said to be the largest breach ever of a state agency. “Hackers also stole 3.3 million bank account numbers and the tax files of 700,000 businesses,” wrote Reuters. The Social Security numbers of 1.9 million children on parents’ returns were also compromised.

Are you detecting a Trend? Like, maybe, that encrypting PII is a Good Idea?

NASA, which had already lost another laptop in March to a similar theft, is actually in the process of implementing encryption on its systems — the stolen laptop just hadn’t gotten through the process yet. However, the agency expects all of its laptops to be encrypted by December 21, a spokeswoman told the New York Times. The agency didn’t say how much the breach would cost.

With South Carolina, its encryption plans are less clear. Gov. Nikki Haley — who had reportedly claimed the breach wasn’t the state’s fault until an investigation by the security company Mandiant proved her wrong — has been blaming the problem on “antiquated state software and outdated IRS security guidelines” that don’t require encryption. But while the state has implemented some security measures, such as increased monitoring, reports haven’t indicated anything yet about South Carolina installing encryption, though the Republican governor wrote the IRS a Strongly Worded Letter encouraging the federal agency to require states to do so.

“Had I known that IRS compliance meant that our Social Security numbers were not encrypted, I would have been shocked,” Haley was quoted as saying on local news.

Haley said the state also hadn’t encrypted the data because it was complicated. “But it’s highly unlikely that anyone on the security team at the Department of Revenue recommended storing millions of SSNs in plaintext because the alternative–deploying an encryption package–was too complicated,” wrote Dennis Fisher of Threatpost in a scathing rebuttal. “More likely, someone looked at his budget, looked at the price of the database encryption package, and made a hard choice. Lots of businesses, government agencies, non-profits and other organizations face the same choice every year and some of them decide that the cost of the encryption outweighs the potential benefit. And that can work out fine. That is, until something like the South Carolina data breach happens. Then things tend to be not fine.”

If the goal was to save money, they chose…poorly. “The cost of the state’s response has exceeded $14 million,” reported the Post. “That includes $12 million to the Experian credit-monitoring agency to cover taxpayers who sign up — half of which is due next month — and nearly $800,000 for the extra security measures ordered last week. The Revenue Department has estimated spending $500,000 for Mandiant, $100,000 for outside attorneys and $150,000 for a public relations firm. But those costs will depend on the total hours those firms eventually spend on the issue. The agency also expects to spend $740,000 to mail letters to an estimated 1.3 million out-of-state taxpayers.”

Plus, there’s the class action lawsuit, which could amount to $4 billion or more.

Meanwhile, other states such as Georgia and Alabama are hastening to point out that they don’t have any problems like this because they encrypt their data. However, most other states don’t, said Larry Ponemon, chairman of The Ponemon Institute, which researches privacy and data protection.

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