Continuing its focus on COVID-19’s impact on its regulated entities, on April 13, the New York Department of Financial Services released new cybersecurity guidance in response to the COVID-19 pandemic. The guidance highlights the heightened cybersecurity risks from the current crisis and NYDFS’ expectations that its regulated entities address those risks as large portions of their workforce have shifted to remote working arrangements.
Companies should take note of two imminent developments in New York in the area of cybersecurity regulation: enforcement of the New York Department of Financial Services Cybersecurity Regulation and the effective date of the Stop Hacks and Improve Electronic Data Security Act. The Regulation and the Act both contain prescriptive cybersecurity requirements and new breach notification obligations on regulated organizations. The Act has a particularly broad reach, impacting any company that owns or licenses private information of New York residents.
In the past two years, multiple state bills that have been introduced in the US to provide for cybersecurity requirements and standards to the insurance sector, with recent legislative activity taking place in particular within the States of Ohio, South Carolina, and Michigan. The entering into effect of multiple state laws in this area may present challenges for insurance providers operating in states where such cybersecurity requirements are provided for.
After a year-long investigation into mobile health apps claiming to be able to measure vital signs or health indicators through smartphone sensors, the New York Attorney General settled claims against three developers alleged to have engaged in “misleading” marketing claims and “irresponsible” privacy practices. Mobile health apps Cardiio and Runtastic claimed that their apps effectively and accurately measured heart rate after vigorous exercise using only a smartphone camera and sensors. The third, Matis, claimed that its app transformed a smartphone into a fetal heart monitor. Concerned that unregulated apps claiming to measure key vital signs and other health indicators may harm consumers if the apps provide inaccurate or misleading results, NY AG Eric Schneiderman brought enforcement actions against the trio of developers.
As Hogan Lovells previously reported, the New York State Department of Financial Services has launched a significant initiative to impose detailed cybersecurity requirements on covered financial institutions. On February 16, NYDFS issued its Final Rules, following the initial proposed rules published in September 2016 and two rounds of feedback via industry complaints and public comment. The Final Rules set forth requirements for a risk-based approach to cybersecurity, and include expectations for reporting on cybersecurity risks and events to senior management and NYDFS.
The New York Department of Financial Services just issued major revisions to the cybersecurity regulations for financial institutions that were due to come into effect on January 1, 2017. To allow covered institutions more time to implement the rules, the effective date will now be March 1, 2017, with a series of staggered implementation dates beyond this. There are several notable substantive changes in the revised rules.
On September 12, New York Governor Andrew Cuomo broke new ground in proposing a state-level regulation that would require banks, insurance companies, and other financial services entities regulated by the New York Department of Financial Services to establish formal cybersecurity programs.