Federal Cybersecurity and Privacy Laws Directory

15 U.S. Code Chapter 98

The Sarbanes-Oxley Act (SOX) requires organizations to prove their cybersecurity credentials.

Applicability:

SOX applies only to public companies. Generally, a public company is one that is listed on a public stock exchange.

The purpose of the legislation and regulations are to make sure these companies produce accurate financial statements from public companies.

Penalties and enforcement:

SOX has very tough penalties. Unlike many other cybersecurity or privacy statutes, SOX has criminal penalties. In theory, a CEO or CFO can be liable for maximum penalties of $1 million and 10 years’ imprisonment for a false certification, and $5 million and 20 years for a willfully false filing.

How to comply with Sarbanes-Oxley:

The following five components of internal controls are generally thought to be required. Read more >>

17 CFR Part 248, Subpart A

SEC rule 30, which is part of Regulation S-P (17 CFR 248.30), is an information security regulation that requires appropriate cybersecurity measures.

Applicability:

SEC rule 30 applies to US and foreign brokers, dealers, investment companies, and investment advisers that are registered with the SEC. These organizations could also be subject to the concurrent jurisdiction of the New York Department of Financial Services (NYDFS) cybersecurity regulations (23 NYCRR 500). Under SEC rule 30, organizations must adopt written policies to safeguard customer records and protect against unauthorized access.

Penalties and enforcement:

Civil fines for violating this regulation can be up to $1,098,190 or triple the monetary gain. This rule can be enforced by an SEC action or by the Financial Industry Regulatory Authority (FINRA). FINRA is a private corporation that acts as a self-regulatory organization for the financial industry. It has the contractual power to fine its members.

How to comply with SEC Regulation S-P:

Rule 30 of Regulation S-P requires organizations to have written policies and procedures that: Read more >>

17 CFR Part 248, Subpart C

SEC Regulation S-ID (17 CFR 248, Subpart C) is a cybersecurity law.

Applicability:

It applies to financial institutions and creditors (including broker-dealers, investment companies, and investment advisers). The purpose of SEC Regulation S-ID is to require organizations to develop programs to detect, prevent, and mitigate identity theft.

Penalties and enforcement:

SEC Regulation S-ID is subject to the same penalty as S-P. Civil fines for violating this regulation can be up to $1,116,156 or triple the monetary gain. This rule can be enforced by an SEC action or by FINRA.

How to comply with the SEC Regulation S-ID

The organization’s written identity theft prevention program must include the following elements: Read more >>

15 U.S. Code Subchapter I

The Gramm-Leach-Bliley Act (GLBA) is both an information security and a privacy law.

Applicability:

The law applies to financial institutions, but the definition is very broad and includes banks, insurance companies, securities firms, non-bank mortgage lenders, auto dealers, and tax preparers.

There is a Security Rule and a Privacy Rule. The Security Rule (16 CFR Part 314) requires organizations to “develop, implement, and maintain a comprehensive information security program that is written in one or more readily accessible parts and contains administrative, technical, and physical safeguards that are appropriate to your size and complexity, the nature and scope of your activities, and the sensitivity of any customer information at issue.” (15 USC §6801 (a))

Penalties and enforcement:

Penalties for violation could exceed $1 million. There is also the possibility of termination of FDIC insurance, which could mean the end of the business for a financial firm.

How to comply with the GLBA:

The methods to achieve compliance are set out in the “Interagency Guidelines Establishing Information Security Standards” (12 CFR Appendix B to Part 30) (see also Federal Reserve Regulations).

These rules were later the basis for rules established under the Federal Information Security Management Act of 2002 (FISMA), and in the HIPAA Security Standards issued by the Department of Health and Human Services. The Security Rule is similar to many recognized cybersecurity frameworks. It requires financial institutions to do the following: Read more >>

15 U.S. Code § 45

FTC Act Section 5 is both an information security regulation (which requires appropriate cybersecurity measures) and a privacy law.

Applicability:

The law applies to almost every organization in the US with the exception of banks and common carriers.

Penalties and enforcement:

The FTC is not shy about imposing civil liabilities, which have even reached $5 billion in the recent case concerning Facebook. It might seem odd that a law passed in 1914 to prohibit unfair or deceptive acts is one of the major sources of cybersecurity and privacy law in the US.  Read more >>

How to comply with the FTC:

The problem is that organizations must engage in all “reasonable and necessary” security practices, but these are generally undefined.

The FTC has established a regulation, the Safeguards Rule (16 CFR 314), for companies within its jurisdiction that have to comply with the GLBA. This rule is the same as the Security Rule (see above) and would be a good start to determine a company’s responsibilities under the Act.

45 CFR Part 160, 45 CFR Part 164

HIPAA has security, privacy, and breach notification rules.

Applicability:

The law applies to health care providers, health plans, health care clearing houses, and, in certain cases, business associates of these types of businesses called covered entities. As a result, the Act can cover organizations as diverse as health insurance companies and pharmaceutical companies. Unlike other laws, HIPAA has very specific rules to determine compliance.

Penalties and enforcement:

Fines depend on the nature and extent of the violation, as well as the extent to which the organization has attempted to protect information. The largest fine to date was more than $16 million. Fines have been increasing dramatically recently. In 2018 the total number of fines reached a record $28 million.

How to comply with HIPAA:

The security rule requires that: Read more >>

48 CFR 252.204-7012

Applicability:

This regulation applies to US Department of Defense (DoD) contractors. It requires contractors and subcontractors that possess, store, or transmit “covered defense information” to provide adequate security to safeguard the covered defense information on unclassified information systems.

Penalties and enforcement:

Failure to comply may result in debarment.

How to comply with DFAR:

Unlike many other cybersecurity laws, the Regulation mandates compliance with a specific cybersecurity standard: the National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, “Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations” (see Appendix D of NIST 800-171 for reference to other cybersecurity frameworks, including ISO 27001).

Compliance with NIST SP 800-171 is mandatory for minimum compliance: Read more >>

15 U.S. Code Chapter 91, 16 CFR Part 312

COPPA is a privacy and cybersecurity law.

Applicability:

COPPA applies to websites and online services that are directed at children under the age of 13. It also applies if the operator of the site has actual knowledge that children under the age of 13 are using a website. The purpose of the Act is to regulate how these websites collect, use, and/or disclose personal information from and about children.

Penalties and enforcement:

The Act is enforced by the FTC. Fines have been increasing, with the largest fine to date reaching $5.7 million.

How to comply with COPPA

Before websites and online services can collect any information about children, they must do the following: Read more >>

21 CFR Part 11

The Food and Drug Administration (FDA) Regulations for the Use of Electronic Records in Clinical Investigations is a cybersecurity law.

Applicability:

It applies to organizations involved in clinical investigations of medical products, including sponsors, clinical investigators, institutional review boards (IRBs), and contract research organizations (CROs).

Most, if not all, of these people and organizations are also health care providers, so their operations would most likely fall under the HIPAA rules as well. The Regulations concern the IT systems of these organizations, including any electronic systems used to create, modify, maintain, archive, retrieve, or transmit records used in clinical investigations.

Penalties and enforcement:

The Regulations are enforced by the FDA, which will conduct investigations and audits. Since these records are to be used for validating the research by the FDA, the Regulations are geared more toward the integrity part of the confidentiality, integrity, availability triad.

How to comply with FDA

The Regulations require the following:

• Systems ensure accuracy, reliability, and consistent performance
• Limiting system access to authorized individuals
• Audit trails
• Establishing and adhering to written policies that hold individuals accountable
• Training

17 CFR Part 39, Subpart B, 17 CFR 39.18 - System safeguards

Applicability:

The CFTC Regulation applies to derivatives clearing organizations. These entities act as a medium for clearing transactions in commodities for future delivery or commodity option transactions. There are about 27 worldwide. These markets are at the heart of the global financial system.

Penalties and enforcement:

SEC regulation S-ID is subject to the same penalty as S-P. Civil fines for violating this Regulation can be up to $1,098,190 or triple the monetary gain. This rule can be enforced by an SEC action or by FINRA.

If this is accurate, please apply the same edits from earlier regarding the increase in the penalty.

Compliance:

To protect themselves, derivatives clearing organizations must develop an extensive and robust information security program that includes the following: 

• An annual compliance report that must be sent to the board and CFTC
• Vulnerability testing of independent contractors twice every quarter
• Internal and external penetration testing at least annually
• Control testing once every three years
• Annual security incident response plan testing
• Annual enterprise technology risk assessment (ETRA)

18 U.S. Code Chapter 119 and 18 U.S. Code Chapter 121

The Electronic Communications Privacy Act (ECPA) together with the Stored Communications Act (SCA), also known as the Wiretap Act, are privacy statutes.

Applicability:

Originally designed to limit warrantless surveillance, these acts forbid the intentional use, disclosure, or access to any wire, oral, or electronic communication without authorization.

Penalties and enforcement:

The acts provide criminal penalties that could be used to jail malicious hackers. They also provide a private right of action. Read more >>

How to comply with the ECPA and SCA

• Policies should prohibit recording or disclosing any oral or electronic communications without obtaining consent from both parties
• Policies should prohibit surveillance of non-employees unless there is consent
• Policies allow surveillance, including video and email interception of employees, if there is a valid business reason for doing so

Applicability:

The Privacy Shield was developed to protect EU residents’ data held and processed by organizations in the US. The protection of an individual’s data in the US does not come anywhere near what the EU considers adequate.

Since an enormous quantity of data is exchanged between the US and the EU, the US government and EU commissioners came up with a method to circumvent the previous Data Protection Directive with a program called Safe Harbor. The Safe Harbor agreement was overturned on October 6, 2015 by the European Court of Justice (ECJ), so the EU commissioners and US government had to act quickly to come up with an alternative that would meet the requirements of the EU’s General Data Protection Regulation (GDPR). Read more >>

Penalties and enforcement:

Non-compliance with the GDPR can lead to fines of up to 4% of annual global revenue or €20 million – whichever is greater.

How to comply with the EU-US Privacy Shield:

To self-certify to the Privacy Shield, a company must undertake the following:

• Confirm that it is eligible. Most companies outside of the financial sector are
• Develop a Privacy Shield-compliant privacy policy statement and make sure that the organization’s privacy policy conforms to the Privacy Shield principles
• Identify the organization’s independent recourse mechanism to enforce the privacy policy
• Make sure that the privacy policy is publicly available
• Make sure the organization has a compliance verification mechanism
• Designate a contact within your organization regarding the Privacy Shield
• Submit your organization’s self-certification to the Department of Commerce

5 U.S.C. ch. 5 § 552a

The Privacy Act is a privacy act.

Applicability:

The FPA applies only to agencies of the US Federal Government. It governs the collection, maintenance, use, and dissemination of personally identifiable information about individuals that is maintained in systems of records by federal agencies.

It prohibits the disclosure of information from a system of records controlled by the federal agency without the written consent of the subject individual, unless the disclosure is permitted under one of 12 statutory exceptions. Until recently, it only applied to lawful residents of the US.  Read more >>

Penalties and enforcement

Covered persons, which includes lawful residents of the US and citizens of certain foreign countries designated by the US Secretary of State, may sue in a US federal district court for actual damages or $1,000 (whichever is greater), attorney fees, and court costs. The court may also require the federal agency to amend or correct any information on file concerning the covered person.

How to comply with the FPA:

All US federal agencies must:

• Not disclose any record that is contained in a system of records by any means of communication to any person, or to another agency, without a written request from, or the prior written consent of, the individual to whom the record pertains
• Allow any individual to gain access to their record or to any information pertaining to them that is contained in the system, and permit them and, if they request, a person of their own choosing to accompany them, to review the record and have a copy made
• Maintain any record concerning any individual, making reasonable efforts to ensure such records are accurate, relevant, timely, and complete
• Assure fairness in any determination relating to the qualifications, character, rights, or opportunities of, or benefits to, the individual

H.R. 4081

The proposed Consumer Privacy Protection Act of 2017 has been designed to ensure the privacy and security of sensitive personal information, to prevent and mitigate identity theft, to provide notice of security breaches involving sensitive personal information, and to enhance law enforcement assistance and other protections against security breaches, fraudulent access, and misuse of personal information.

Applicability:

It will apply to organizations that collect, use, access, transmit, store, or dispose of sensitive personally identifiable information of 10,000 or more US citizens during any 12-month period.

Penalties and enforcement:

Civil penalty fines will not exceed $5 million unless the violation is found to be willful or intentional, in which an additional $5 million can be imposed.