According to the Identity Theft Resource Center, data breaches increased 40 percent in 2016, with a total of 1,093 reported breaches. This trend continued in 2017, with over 1,120 cases reported by October. Businesses, both large and small, are increasingly reliant on the internet for daily operations, creating attractive and potentially lucrative targets for cyber criminals.
With such heavy use of and reliance on computers and the internet by both large and small organizations, protecting these resources has become increasingly important. Learning about cyber attacks and how to prevent them can help you protect your company from security breaches.
Cyber Attacks Compromise Your Company
Cyber attacks include many types of attempted or successful breaches of computer security. These threats come in different forms, including phishing, viruses, Trojans, key logging, spyware and spam. Once hackers have gained access to the computer system, they can accomplish any of several malicious goals, typically stealing information or financial assets, corrupting data or causing operational disruption or shutdown.
Both third parties and insiders can use a variety of techniques to carry out cyber attacks. These techniques range from highly sophisticated efforts to electronically circumvent network security or overwhelm websites to more traditional intelligence gathering and social engineering aimed at gaining network access.
Cyber attacks can result directly from deliberate actions of hackers, or attacks can be unintentionally facilitated by employees—for example, if they click on a malicious link. According to historical claim data analyzed by Willis Towers Watson, 90 percent of all cyber claims stemmed from some type of employee error or behavior. The high-profile Equifax, Snapchat and Chipotle data breaches were all caused by employee error or behavior.
A breach in cyber security can lead to unauthorized usage through tactics such as the following:
- Installing spyware that allows the hacker to track Internet activity and steal information and passwords
- Deceiving recipients of phishing emails into disclosing personal information
- Tricking recipients of spam email into giving hackers access to the computer system
- Installing viruses that allow hackers to steal, corrupt or delete information or even crash the entire system
- Hijacking the company website and rerouting visitors to a fraudulent look-alike site and subsequently stealing personal information from clients or consumers
Cyber attacks may also be carried out in a manner that does not require gaining unauthorized access, such as denial-of-service (DoS) attacks on websites in which the site is overloaded by the attacker and legitimate users are then denied access.
The Vulnerable Become the Victims
The majority of cyber criminals are indiscriminate when choosing their victims. The Department of Homeland Security (DHS) asserts that cyber criminals will target vulnerable computer systems regardless of whether the systems belong to a Fortune 500 company, a small business or a home user.
Cyber criminals look for weak spots and attack there, no matter how large or small the organization. Small businesses, for instance, are becoming a more attractive target as many larger companies tighten their cyber security. According to the industry experts, the cost of the average cyber attack on a small business is increasing exponentially and shows no signs of slowing down. Nearly 60 percent of the small businesses victimized by a cyber attack close permanently within six months of the attack. Many of these businesses put off making necessary improvements to their cyber security protocols until it is too late because they fear the costs would be prohibitive.
Simple Steps to Stay Secure
With cyber attacks posing such a prominent threat to your business, it is essential to create a plan to deal with this problem. Implementing and adhering to basic preventive and safety procedures will help protect your company from cyber threats.
Following are suggestions from a Federal Communications Commission (FCC) roundtable and the DHS’s Stop.Think.Connect. program for easily implemented security procedures to help ward off cyber criminals. These suggestions include guidelines for the company as well as possible rules and procedures that can be shared with employees.
Security Tips for Your Company
Cyber security should be a company-wide effort. Consider implementing the following suggestions at your organization:
- Install, use and regularly update anti-virus and anti-spyware software on all computers.
- Download and install software updates for your operating systems and applications as they become available.
- Change the manufacturer’s default passwords on all software.
- Use a firewall for your internet connection.
- Regularly make backup copies of important business data.
- Control who can physically access your computers and other network components.
- Secure any Wi-Fi networks.
- Require individual user accounts for each employee.
- Limit employee access to data and information, and limit authority for software installation.
- Monitor, log and analyze all attempted and successful attacks on systems and networks.
- Establish a mobile device policy and keep them updated with the most current software and anti-virus programs.
Security Tips for Employees
- Use strong passwords (a combination of uppercase and lowercase letters, numbers and special characters), change them regularly and never share them with anyone. Never repeat a password across accounts.
- Protect private information by not disclosing it unless necessary, and always verify the source if asked to input sensitive data for a website or email.
- Don’t open suspicious links and emails; an indication that the site is safe is if the URL begins with https://.
- Scan all external devices, such as USB flash drives, for viruses and malicious software (malware) before using the device.
Securing Your Company’s Mobile Devices
Gone are the days when contact names and phone numbers were the most sensitive pieces of information on an employee’s phone. Now a smartphone or tablet can be used to gain access to anything from emails to stored passwords to proprietary company data. Depending on how your organization uses such devices, unauthorized access to the information on a smartphone or tablet could be just as damaging as a data breach involving a more traditional computer system.
The need for proper mobile device security is no different from the need for a well-protected computer network. Untrusted app stores will continue to be a major source of mobile malware which drives traffic to these stores. This type of “malvertising” continues to grow quickly on mobile platforms.
Most importantly, stay informed about cyber security and continue to discuss internet safety with employees.
Don’t Let it Happen to Your Company
According to the DHS, 96 percent of cyber security breaches could have been avoided with simple or intermediate controls. Strengthening passwords, installing anti-virus software and not opening suspicious emails and links are the first steps toward cyber security. In addition to the listed tips, the FCC provides a tool for small businesses that can create and save a custom cyber security plan for your company, choosing from a menu of expert advice to address your specific business needs and concerns.
A data breach could cripple your small business, costing you thousands or millions of dollars in lost revenue, sales, damages and reputation. Contact Scurich Insurance today. We have the tools necessary to ensure you have the proper coverage to protect your company against losses from cyber attacks.
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Technology can be a risk, especially when it involves your password. You hear about all of the hack attempts on the large corporations, but you don’t hear about the every day person that get’s targeted by a cyber attack. Simply visiting a website could enable your attacker access to your computer. This should push you to protect your most valuable asset, your password! Don’t give the hackers an easy target by not following the simple tips on improving your password.
Improve Your Password
- Change your password every 30-45 days.
- Choose a password between 8-16 characters.
- Use at least two special characters (!@#$%^&*) randomly within your password
- Avoid using family or pet names, dates or common phrases within your password.
- Never reuse or repeat a password across accounts.
Stay Away from COMMON Passwords
Protect yourself (and your company) by making sure you’re not using one of the top 25 most commonly stolen passwords of 2017, as determined by IT security firm SplashData.
- 123456
- password
- 12345678
- qwerty
- 12345
- 123456789
- letmein
- 1234567
- football
- iloveyou
- admin
- welcome
- monkey
- login
- abc123
- starwars
- 123123
- dragon
- passw0rd
- master
- hello
- freedom
- whatever
- qazwsk
- trustno1
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It’s that time of year: Feb. 1 marks the deadline for you to tabulate your annual OSHA Log Summary (OSHA Form 300A) and post it in a common area wherever notices to employees are usually posted.
The summary must list the total number of job-related injuries and illnesses that occurred during the previous calendar year and were logged on the OSHA 300 Form. And don’t forget to leave the Summary posted until April 30.
If you need additional assistance, have questions about recordability, or would like to compare your loss performance trends against national benchmarking data, contact us today at 831-661-5697 for more information.
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On Dec. 22, 2017, President Donald Trump signed into law the Tax Cuts and Jobs Act (Act). The Act makes significant changes to the federal Internal Revenue Code (Code), including changes that impact employee benefits. Effective for 2018:
- Employers cannot deduct expenses associated with qualified transportation fringe benefit programs;
- Employees cannot exclude bicycle commuting reimbursements from their gross income; and
- Moving expense reimbursements are not deductible for employers and cannot be excluded from employees’ gross income.
In addition, effective for 2018 and 2019, the Act creates a federal tax credit for employers that provide paid family and medical leave.
Because most of the Act’s provisions became effective on Jan. 1, 2018, employers should start working with their tax advisors to determine how the tax changes will impact their businesses.
Qualified Transportation Fringe Benefits
Code Section 132 allows employers to provide certain transportation benefits to employees on a tax-free basis. These benefits include qualified parking, transit passes, and transportation to and from work in a commuter highway vehicle (“vanpooling”). Prior to 2018, bicycle commuting reimbursements also qualified for this tax exclusion.
Qualified transportation expenses paid by either the employer or employee can be excluded from an employee’s gross income, up to certain limits. For 2018, the tax exclusion limits are $260 per month for qualified parking expenses and $260 per month for transit passes and vanpooling expenses, combined.
Beginning in 2018, the Act eliminates the employer deduction for expenses associated with a qualified transportation fringe benefit program. The Act also eliminates the deduction for any expenses incurred in connection with providing transportation to an employee in connection with travel between the employee’s residence and place of employment, except as necessary for ensuring the employee’s safety.
However, with the exception of bicycling commuting expenses, the tax exclusion for employees has not changed—qualified transportation benefits are still excludable from employees’ gross income. The tax exclusion for bicycling commuting benefits is suspended for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026.
Qualified Moving Expense Reimbursements
Before 2018, employers could pay or reimburse an employee’s eligible moving expenses related to starting employment at a new principal place of work on a tax-free basis. The Act suspends this income exclusion from 2018 through 2025 tax years.
It also suspends the employer deduction for qualified moving expense reimbursements for the same period of time. However, the income exclusion and deduction still apply in the case of a member of the U.S. armed forces on active duty who moves pursuant to a military order and incident to a permanent change of station.
Employer Credit for Paid Family and Medical Leave
The Act creates a new temporary tax credit for employers that provide paid family and medical leave to their employees. The tax credit, which applies to wages paid in 2018 and 2019, is equal to a percentage of wages paid to employees who are on family and medical leave. Paid leave that is provided as vacation leave, personal leave, sick leave, or required by state or local law is not taken into consideration.
To qualify for the tax credit, an employer must have a written policy in place that provides at least two weeks of paid family and medical leave for full-time employees (proportionally adjusted for part-time employees) and a rate of payment that is at least 50 percent of an employee’s normal pay rate.
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On Dec. 22, 2017, President Donald Trump signed into law the tax reform bill, called the Tax Cuts and Jobs Act, after it passed both the U.S. Senate and the U.S. House of Representatives.
This tax reform bill makes significant changes to the federal tax code. The bill does not impact the majority of the Affordable Care Act (ACA) tax provisions. However, it does reduce the ACA’s individual shared responsibility (or individual mandate) penalty to zero, effective beginning in 2019.
As a result, beginning in 2019, individuals will no longer be penalized for failing to obtain acceptable health insurance coverage.
ACTION STEPS
Although the tax reform bill eliminates the ACA’s individual mandate penalty, this repeal does not become effective until 2019.
As a result, individuals continue to be required to comply with the mandate (or pay a penalty) for 2017 and 2018. A failure to obtain acceptable health insurance coverage for these years may still result in a penalty for the individual.
The Individual Mandate
The ACA’s individual mandate, which took effect in 2014, requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. The mandate is enforced each year on individual federal tax returns. Starting in 2015, individuals filing a tax return for the previous tax year indicate, by checking a box on their returns, which members of their family (including themselves) had health insurance coverage for the year (or qualified for an exemption from the individual mandate). Based on this information, the IRS then assesses a penalty for each nonexempt family member without coverage.
Effect of the Tax Reform Bill
The tax reform bill will reduce the ACA’s individual mandate penalty to zero, effective beginning with the 2019 tax year. This effectively eliminates the individual mandate penalty for the 2019 tax year and beyond. As a result, beginning with the 2019 tax year, individuals will no longer be penalized for failing to obtain acceptable health insurance coverage for themselves and their family members.
Impact on Years Prior to 2019
Although the tax reform bill eliminates the ACA’s individual mandate penalty, this repeal does not take effect until 2019. As a result, individuals continue to be required to comply with the mandate (or pay a penalty) for 2017 and 2018. A failure to obtain acceptable health insurance coverage for these years may still result in a penalty for the individual.
Therefore, nonexempt individuals should continue to maintain acceptable health coverage in 2017 and 2018, and should indicate on their 2017 and 2018 tax returns whether they (and everyone in their family):
- Had health coverage for the year;
- Qualified for an exemption from the individual mandate; or
- Will pay an individual mandate penalty.
In addition, keep in mind that individuals who are liable for a penalty for failing to obtain acceptable health coverage in 2018 will be required to pay that penalty when they file their federal income taxes in 2019. As a result, some individuals may be required to pay the individual mandate penalty in early 2019, based on their noncompliance for the 2018 tax year.
Effect on Other ACA Provisions
Despite the repeal of the individual mandate penalty, employers and individuals must continue to comply with all other ACA provisions. The tax reform bill does not impact any other ACA provisions, including the Cadillac tax on high-cost group health coverage, the PCORI fees and the health insurance providers fee. In addition, the employer shared responsibility (pay or play) rules and related Section 6055 and Section 6056 reporting requirements are still in place.
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Businesses gather a lot of information from their customers, including personal identifying information (PII). Because of the sensitivity of this information, many states have adopted standards that businesses must follow to safeguard PII. These standards often include data security breach notification requirements.
In California, these laws are enforced by the California attorney general’s office. This Cyber Security Law Summary provides an overview of California’s data breach notification requirements. Businesses can use this information to understand their responsibilities in protecting PII of California customers.
Cyber security Responsibilities
California law requires businesses and individuals that own, license or maintain PII about Californians to safeguard that information. Businesses must implement reasonable security procedures and practices to protect PII from unauthorized access, destruction, use, modification or disclosure.
Under California law, “owning” and “licensing” includes retaining an individual’s PII in an internal account for the purpose of conducting transactions with the individual in question.
Businesses that disclose PII to a third party must have a contract in place requiring the third party to implement and maintain reasonable security procedures and practices.
The responsibility to safeguard PII begins when the information is first acquired and remains in effect until the information is properly disposed of. This means that businesses must also take reasonable steps to dispose of customer records that are within their custody.
Adequate disposal methods include shredding, erasing and otherwise modifying the records where the information is stored to make them unreadable or undecipherable. Businesses can use any means necessary to dispose of PII properly.
Affected Entities
Breach notification requirements apply to individuals and businesses in California that own, license or maintain PII about Californians. Under these laws, a business is any group that is organized, chartered, or holds a license or authorization certificate under California law or the law of any other state, the federal government or of any other country. This definition of business includes any sole proprietorship, partnership, corporation, association and financial institutions. The term also includes any entity that disposes of records.
Certain businesses are exempt from California’s breach notification law, including:
- Health care providers, health care service plans or contractors regulated by the Confidentiality of Medical Information Act;
- Financial institutions that are subject to the California Financial Information Privacy Act;
- Businesses governed by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy and security rules;
- Entities that obtain information under an agreement authorized by the vehicle code and that are subject to the confidentiality requirements of the vehicle code; and
- Businesses that are regulated by state or federal laws that provide greater protections to PII than what is required under California’s breach notification laws. This last exemption is possible because compliance with stricter state or federal laws will be considered compliance with California laws.
Affected Information
Under the breach notification law, PII includes an individual’s first name or first initial and last name in combination with one or more of the following:
- A Social Security number;
- A driver’s license number or California identification card number;
- An account, credit or debit card number, in combination with any required security code, access code or password that would permit access to an individual’s financial information;
- Medical information (meaning any information regarding an individual’s medical history, mental or physical condition, or medical treatment or diagnosis by a health care professional);
- Health insurance information (meaning an individual’s health insurance policy number or subscriber identification number, any unique identifier used by a health insurer to identify the individual, or any information in an individual’s application and claims history, including any appeals records); and
- Information or data collected through the use or operation of an automated license plate recognition system.
PII also includes a username or email address, in combination with a password or security question and answer that would permit access to an online account.
PII does not include publicly available information that is lawfully made available to the general public from federal, state or local government records.
What is a Security Breach?
Under the law, a security system breach is an unauthorized acquisition of computerized data that compromises the security, confidentiality, or integrity of the PII maintained by another person or business.
Determining whether a breach took place under the law depends on whether the affected information was encrypted or unencrypted, as shown in the table below.
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Encrypted Information |
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Unencrypted Information
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Notification must be given if:
- The business reasonably believes the information has been acquired by an unauthorized person;
- The encryption key or security credential was, or is reasonably believed to have been, acquired by an unauthorized person; and
- The business that owns or licenses the PII reasonably believes that the encryption key or security credential could render that PII readable or usable.
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- Notification must be given if the business reasonably believes that the information was acquired by an unauthorized person.
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Data Breach Notification
California law requires businesses to provide written notice of a breach to the security of their systems if they own or license computerized data that includes PII.
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Who must be notified?
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Businesses must notify any person whose PII was compromised as a result of a data breach (as defined above).
In addition, any business that is required to notify more than 500 California residents as a result of a single breach must submit a single sample copy of that notification to California’s attorney general.
Businesses that maintain, but do not own or license, PII must inform the entity that owns or licenses the information of any security breach if the PII was, or is reasonably believed to have been, acquired by an unauthorized person.
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Mandatory Notification Content
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A valid data breach notification must be written in plain language and must be titled “Notice of Data Breach.” This notification must include the following information (if available at the time the notification is sent):
- The name and contact information of the reporting person or business subject to these requirements;
- A list of the types of PII that was or is reasonably believed to have been compromised by the breach;
- The date of, the estimated date of or date range for the breach;
- Whether notification was delayed as a result of a law enforcement investigation;
- A general description of the breach incident;
- The toll-free numbers and addresses for the major credit reporting agencies (if the breach exposed a Social Security number, driver’s license number or California identification card number);
- An offer to provide appropriate identity theft prevention and mitigation services for affected individuals for at least 12 months (if the entity providing the notification was the source of the breach); and
- Instructions on how to take advantage of the 12-month identity prevention and mitigation services offered (as applicable).
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Optional Notification Content
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The following information may be included in a breach notification at the discretion of the entity sending the notice:
- Information about what has been done to protect individuals whose information has been breached; and
- Advice on steps affected individuals may take to protect themselves.
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When to Send the Notification
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Data breach notifications must be made as soon as possible, without unreasonable delay. Timely notifications must take into account legitimate needs to cooperate with law enforcement, determine the scope of the breach and restore a reasonable integrity of the data system. For example, the notification requirement may be delayed if a law enforcement agency determines that the notification will impede a criminal investigation.
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How to Send the Notification
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Under California law, breach notification can be sent in print, electronically or through a substitute notice, as defined below.
The use of electronic notices is acceptable, as long as all timing, content and formatting requirements are met. Electronic notifications must also follow federal laws regarding electronic records and signatures in commerce.
A valid substitute notice must include:
- An email notice (when the business has an email address for the affected individuals);
- Conspicuous posting, for a minimum of 30 days, of the notice on the internet website page of the business, if the business maintains one. Conspicuous posting means providing a link to the notice on the home page or first significant page after entering the business’ website. The link must stand out from the surrounding text by using larger type, contrasting type, font or color to the surrounding text. The text may also stand out by using symbols or other marks that call attention to the link; and
- Notification to major statewide media.
Substitute notice may also be provided if the business demonstrates that the cost of providing notice would exceed $250,000, the affected class of subject persons to be notified exceeds 500,000 or the business does not have sufficient contact information.
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Required Format
The notice must be designed to call attention to the nature and the significance of the message. This includes making sure that the title and headings are clearly and conspicuously displayed and using a font type that is 10 point or larger.
In addition, the data breach notice must organize the information according to the following headers:
- What happened
- What information was involved
- What we are doing
- What you can do
- For more information
Safe Harbor
A business that maintains its own notification procedures as part of an information security policy for the treatment of PII is in compliance with the notification requirements mentioned above if it:
- Notifies individuals in accordance with its policies in the event of a breach; and
- The notification takes place within the time constraints mentioned above.
Enforcement
Businesses cannot waive any of the responsibilities imposed on them by California’s breach notification laws. Any business that fails to comply with these requirements may be required to pay damages and penalties to injured customers by a civil court. Any business that violates, proposes to violate or has violated notification requirements may be subject to these sanctions.
The amount of damages depends on the extent of the harm or injury caused to the customer. The penalty is typically $500 per violation, but a court may order the penalty to be as much as $3,000 per penalty for willful, intentional or reckless violations.
A “customer,” for these purposes, is any individual who provides personal information to a business for the purpose of purchasing or leasing a product or obtaining a service from the business.
Unless the violation is willful, intentional or reckless, a business that fails to provide adequate, complete and accurate notification to affected individuals can raise a complete defense against court penalties if it strives to remedy inadequate, incomplete or inaccurate notifications within 90 days of discovering an issue.
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