Data Breaches and Legal Consequence
Name: Soumyadeep Das Bhowmick
Roll: 18730621033
Reg No: 211870130610036
Dept: Artificial Intelligence & Machine Learning
Batch: 2021-25
Year: 4th
Semester: 8th
Subject: Cyber Law & Ethics
Code: PEC AIML 801B
Understanding Data Breaches – Causes and Impact
Data breaches occur when sensitive information is accessed, stolen, or exposed without authorization.
Understanding the root causes and their consequences is crucial for individuals and businesses alike. A
single breach can compromise millions of records, leading to financial loss, reputational damage, and legal
consequences. Organizations must adopt robust cybersecurity measures to prevent such incidents and
safeguard customer data. Below are some key causes and impacts of data breaches:
➢ Weak Security Measures – Poor password management, outdated software, and lack of encryption
increase vulnerability. Companies that fail to implement multi-factor authentication (MFA) and regular
security updates are at higher risk.
➢ Human Error – Employees accidentally leaking data through phishing emails, sending sensitive
information to the wrong recipients, or misconfiguring databases can lead to breaches. Even a simple
mistake, such as using weak passwords, can provide an entry point for hackers.
➢ Cyberattacks – Hackers use malware, ransomware, or brute-force attacks to gain unauthorized access.
Advanced persistent threats (APTs) and zero-day exploits allow attackers to remain undetected for long
periods while exfiltrating sensitive data.
➢ Insider Threats – Disgruntled employees, former staff with retained access, or negligent insiders can
intentionally or unintentionally expose confidential information. Businesses must monitor user access
and implement strict data-handling policies.
➢ Third-Party Risks – Vendors, contractors, or service providers with weak security protocols can serve
as entry points for attackers. Many organizations suffer breaches due to vulnerabilities in third-party
applications or integrations.
➢ Cloud Misconfigurations – As companies shift to cloud-based solutions, improperly configured storage
buckets, databases, or servers can expose sensitive data to the public. Ensuring proper access controls
and encryption is essential for cloud security.
Major Data Breach Incidents and Their Aftermath
Over the years, multiple high-profile data breaches have exposed millions of users’ private information, leading to serious consequences. These breaches
have resulted in financial losses, legal actions, regulatory penalties, and loss of consumer trust. Below are some of the most significant data breaches in
history:
❑ Equifax (2017) – A breach exposed personal data of 147 million people, including Social Security numbers and credit details, resulting in a $700 million
settlement.
❑ Yahoo (2013-2014) – Over 3 billion accounts were compromised, impacting users globally. It remains one of the largest breaches in history, affecting
email credentials, security questions, and personal details.
❑ Facebook-Cambridge Analytica (2018) – User data was misused for political profiling, sparking regulatory scrutiny and raising concerns over privacy
and social media data security.
❑ Marriott (2018) – A cyberattack leaked passport numbers, credit card details, and personal data of 500 million guests, leading to regulatory investigations
and hefty fines.
❑ T-Mobile (2021) – Hackers stole personal data of 40 million customers, including Social Security numbers and driver’s license information, leading to
lawsuits and security reforms.
❑ Target (2013) – A breach exposed 40 million credit and debit card records due to compromised point-of-sale (POS) systems, costing the company $18.5
million in settlements.
❑ Adobe (2013) – 153 million user records, including encrypted passwords and payment details, were compromised, leading to lawsuits and financial
losses.
❑ Capital One (2019) – A hacker accessed sensitive data of 106 million individuals, including credit scores and bank account details, resulting in a $190
million settlement.
❑ Sony PlayStation Network (2011) – A cyberattack exposed personal information of 77 million users, leading to a 23-day network shutdown and damages
exceeding $171 million.
Legal Frameworks and Regulations Governing Data Security
To combat data breaches, various laws and regulations have been enacted worldwide to protect
sensitive information and hold companies accountable. These regulations ensure that organizations
implement strict security measures, follow compliance protocols, and safeguard user data. Non-
compliance can result in severe financial penalties, legal action, and reputational damage. Below are
some of the key data protection laws and frameworks:
➢ General Data Protection Regulation (GDPR) – Enforces strict data protection rules in the EU,
requiring companies to obtain user consent before processing personal data, report breaches
within 72 hours, and pay hefty fines for non-compliance.
➢ California Consumer Privacy Act (CCPA) – Grants consumers in California more control over
their personal data, including the right to know what data is collected, request deletion, and opt
out of data sales.
➢ Health Insurance Portability and Accountability Act (HIPAA) – Regulates healthcare data
privacy in the U.S., ensuring the protection of medical records and personal health information
(PHI).
➢ Payment Card Industry Data Security Standard (PCI DSS) – Establishes security requirements
for organizations handling credit card transactions to protect against fraud and data breaches.
➢ India’s Digital Personal Data Protection Act (DPDPA) – Introduces data privacy rights and
obligations for businesses operating in India, ensuring responsible data handling and imposing
penalties for violations.
➢ Children’s Online Privacy Protection Act (COPPA) – Protects the privacy of children under 13
in the U.S. by regulating the collection and use of their personal information by websites and
online services.
Consequences of Data Breaches – Fines, Lawsuits, and Reputational Damage
When a data breach occurs, affected organizations often face severe legal and financial
consequences that impact their business sustainability.
❑ Regulatory Fines – Non-compliance with data laws like GDPR can result in multi-million-
dollar penalties. Some companies have faced record-breaking fines due to improper handling
of user data.
❑ Lawsuits and Class Actions – Breached companies face lawsuits from affected customers,
stakeholders, and regulatory bodies, leading to costly settlements and legal fees.
❑ Operational Disruptions – Investigating and mitigating breaches requires significant
resources, delaying business activities, causing downtime, and affecting productivity.
❑ Reputational Loss – Customers lose trust in companies with poor data security, leading to
decreased revenue, loss of partnerships, and a long-term decline in brand value.
❑ Increased Cybersecurity Costs – Organizations must invest in stronger security measures
to prevent future breaches, including hiring cybersecurity experts, upgrading IT infrastructure,
and implementing stricter protocols.
❑ Stock Price Decline – Publicly traded companies often experience a sharp drop in stock
value after a data breach, affecting investor confidence and market stability.
❑ Loss of Competitive Advantage – Breaches can expose trade secrets, intellectual property,
and confidential business strategies, giving competitors an edge.
❑ Customer Compensation Costs – Companies may need to offer free credit monitoring,
refunds, or compensation to affected users, adding to financial burdens.
Thank You!
