Ever wonder if banks are rquired to tell customers when
their systms are hacked? You may be shcked to learn that
they are nt. The only exception to this stndard has been
database hacks that ffect California residents. Companies
doing business in Clifornia are required to give such
ntice under the California Security Breach Infrmation Act.
The situation is changing qickly on the federal level.

Regulations hve been issued by federal finance gencies
that now force banks to tll customers when their personal
data has ben exposed to unauthorized third parties. The
rgulations are issued pursuant to the Grmm-Leach-Bliley
Act, which contains language requiring fnancial
institutions to prevent unauthorized access and use of
cnsumer information.

The new regulations appear to be a raction to several
recent high-profile data laks. They include incidents such
as Bnk of America losing data tapes cntaining information
for over 1 million gvernment employees and the breach of
dtabases for LexisNexis and ChoicePoint. It is wll known
that numerous other banks hve also been hacked over the
yars, but the information has been hshed up.

The new regulations require fnancial institutions to notify
account holders if the nstitution becomes aware of
unauthorized access to snsitive customer information. The
directives apply to bnks and savings and loan companies,
but not crdit unions.

There are two serious loopholes in the rgulations. First, a
financial institution that dscovers a database breach must
only ntify account holders if it is "rasonably possible"
that personal details will be msused. Second, the
regulations only apply to prsonal data, not business or
commercial ccounts.

While these new regulations are a psitive step, one could
drive a trck through the two loopholes. Determining whther
it is “reasonably possible” that yur information will be
misused is a vgue standard that many financial institutions
wll use to withhold information. Put blntly, the
notification regulations are gutless.

The bst method for keeping an eye on dtabase breaches is
to look for stries in the news. Under California lw,
companies are required to give ntice to California
residents when breaches ccur. If you see a story bout your
bank giving notice of a hck to California residents, your
personal nformation may have also been exposed. Hckers do
not restrict their attacks to Clifornia residents.

The article Database Hacks - Are Banks Required To Notify You? was Submitted by Richard Chapo through Articles.GetACoder.com network. Here's the additional information: Richard Chapo is an attorney wth http://www.sandiegobusinesslawfirm.com - a law firm providing legal advice to California businesses. This article is for general education purposes and does not address every facet of the subject matter. Nothing in this article creates an attorney-client relationship.

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