Database Hacks - Are Banks Required To Notify You?

Ever wonder if banks are required to tell customersas Bank of America losing data tapes containing
wheninformation
their systems are hacked? You may be shocked tofor over 1 million government employees and the
learn thatbreach of
they are not. The only exception to this standard hasdatabases for LexisNexis and ChoicePoint. It is well
beenknown
database hacks that effect California residents.that numerous other banks have also been hacked
Companiesover the
doing business in California are required to give suchyears, but the information has been hushed up.The
notice under the California Security Breach Informationnew regulations require financial institutions to notify
Act.account holders if the institution becomes aware of
The situation is changing quickly on the federalunauthorized access to sensitive customer
level.Regulations have been issued by federal financeinformation. The
agenciesdirectives apply to banks and savings and loan
that now force banks to tell customers when theircompanies,
personalbut not credit unions.There are two serious loopholes
data has been exposed to unauthorized third parties.in the regulations. First, a
Thefinancial institution that discovers a database breach
regulations are issued pursuant to themust
Gramm-Leach-Blileyonly notify account holders if it is "reasonably possible"
Act, which contains language requiring financial
institutions to prevent unauthorized access and use ofthat personal details will be misused. Second, the
regulations only apply to personal data, not business or
consumer information.The new regulations appear to
be a reaction to severalcommercial accounts.While these new regulations are
recent high-profile data leaks. They include incidentsa positive step, one could
suchdrive a truck through the two loopholes.