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Database Hacks - Are Banks Required To Notify You?

Ever wonder if banks are required to tellcontaining  information
customers  when
for over 1 million government employees and
their systems are hacked? You may be shockedthe  breach  of
to  learn  that
databases for LexisNexis and ChoicePoint. It
they are not. The only exception to thisis  well  known
standard  has  been
that numerous other banks have also been
database hacks that effect Californiahacked  over  the
residents.  Companies
years, but the information has been hushed
doing business in California are required toup.The new regulations require financial
give  suchinstitutions  to  notify
notice under the California Security Breachaccount holders if the institution becomes
Information  Act.aware  of
The situation is changing quickly on theunauthorized access to sensitive customer
federal level.Regulations have been issued byinformation.  The
federal  finance  agencies
directives apply to banks and savings and
that now force banks to tell customers whenloan  companies,
their  personal
but not credit unions.There are two serious
data has been exposed to unauthorized thirdloopholes  in  the  regulations.  First,  a
parties.  The
financial institution that discovers a
regulations are issued pursuant to thedatabase  breach  must
Gramm-Leach-Bliley
only notify account holders if it is
Act, which contains language requiring"reasonably  possible"
financial
that personal details will be misused.
institutions to prevent unauthorized accessSecond,  the
and  use  of
regulations only apply to personal data, not
consumer information.The new regulationsbusiness  or
appear  to  be  a  reaction  to  several
commercial accounts.While these new
recent high-profile data leaks. They includeregulations  are  a positive step, one could
incidents  such
drive a truck through the two loopholes.
as Bank of America losing data tapes



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