Expect More Cyber Turbulence in 2016

In February 2015, Anthem, the nation’s second-largest health care insurer, disclosed losing records for 80 million employees, customers and partners. That was followed a few weeks later by Premera Blue Cross admitting it lost records for 11 million people. Then in July 2015, the U.S. Office of Personnel Management began a series of mea culpas. OPM ultimately conceded that hackers swiped sensitive personnel records for 21.5 million federal employees, contractors and their family members. Anthem, Premera Blue Cross and OPM were among the high-profile breaches in a year when the Identity Theft Resource Center counted more than 750 publicly disclosed data leaks. ThirdCertainty asked three IDT911 experts -- Brian Huntley, Eduard Goodman and Victor Searcy -- for their 2016 prognostications. (Full disclosure: IDT911 underwrites ThirdCertainty.) Wire fraud and politics 

  Huntley: In the coming year, fraud and theft will plague the merchant payments and ACH wire transfer systems. Small and medium-size businesses are especially vulnerable. If enough SMBs get victimized, it could result in a public outcry about the inherent vulnerabilities in these systems, especially as consumers and small business owners come to realize there is minimal regulatory protections in these types of cases. This being an election year, U.S. presidential candidates will focus on cyber war strategy and armament. Armchair quarterbacking of the 2015 U.S.-China cybersecurity agreement will arise as the centerpiece of this debate. We could see the U.S.-China cyber accord ascend as the basis for peer agreements between other nation states. Meanwhile, the search will continue in different industries for an information security control framework that is akin to what the financial services sector has in the Federal Financial Institutions Examination Council’s (FFIEC) Information Security Guidelines and the health care sector has in the Health Insurance Portability and Accountability Act (HIPAA) of 1996. Data tranfers and children’s privacy

  Goodman: U.S. companies with a European presence will encounter a tremendous amount of uncertainty in 2016 with respect to Europe’s stricter Safe Harbor data privacy rules, relating to the sensitive data transfers to businesses in the U.S. European regulators can be expected to harass the likes of Facebook and Google. And the threat of sanctions for noncompliance with Europe’s tougher Safe Harbor standards could easily filter down to many smaller companies, as well. In another area, the recent hacking of toy maker VTech and Hello Kitty parent company SanrioTown.com signals that the theft of children’s information could become a worrisome new trend. As children obtain earlier access to social media, smartphones and Web-enabled toys, details of their personal information and preferences are rapidly becoming part of the greater data ecosystem. As a result, we will see more breaches that involve the theft of information for individuals under the age of 18. Hopefully, we also will see more public dialogue about the concept of preserving children’s privacy, whether it be school record data, health information or data files containing images, video and audio recordings. Taxpayers targeted—once again

  Searcy: One of the most pervasive identity theft scams involves the filing of a faked federal tax return using an ill-gotten Social Security number. Sadly, this will continue to be true again in 2016. In the 2010 and 2011 tax seasons, the Internal Revenue Service paid out $8.8 billion of taxpayer money to identity thieves. And statistics pulled from a sampling of customers assisted through IDT911’s Resolution Center in 2014 show a 120% increase in tax fraud victims in 2014 and another 134% increase in 2015. We expect this number to grow again in 2016. It can take months for a victim to sort out the mess with the IRS. Worse, there is little stopping criminals from using a victim’s Social Security number and other personal information in other scams. IDT911 stats show that 16% of tax fraud victims also were victims of financial identity theft; 12% of customers experienced multiyear tax fraud; and 16% were victims of both federal and state tax fraud.