Legal Alert - Practical Lessons from Recent Data Security Breaches


by Timothy J. Toohey

Recent data breaches at popular Internet sites, including the theft of millions of user passwords by hackers at business networking site LinkedIn and dating site eHarmony, are a timely reminder of the substantial financial and other consequences businesses potentially face from unauthorized access to private data. Although the exact costs for large breaches such as the theft of the 8 million LinkedIn and eHarmony passwords, allegedly obtained by Russian hackers, are difficult to determine, a recent study estimates that the average cost of breaches involving less than 100,000 records is $194 per capita, including costs of detecting and reporting the breach, notifying and assisting consumers, and opportunity costs such as turnover of existing customers.

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