Skyrope's Business Transformer Blog

Massachusetts Data Security & Privacy Laws – 201 CMR 17 – What Small Businesses Must Do for Compliance

201 CMR 17If you are a small business owner who does business in Massachusetts and you have not yet heard of the new Massachusetts data security and privacy laws known as 201 CMR 17, then you need  to get up to speed quickly as this law has gone into effect and the compliance deadline has passed at the end of the first quarter of 2010.  Please be advised that we strongly recommend that you consult with a qualified attorney as well as your IT staff or trusted IT service provider to help you comply with the laws. 

A summary of these new regulations can be found here on the Commonwealth’s web site: 201 CMR 17:00 (PDF)

It is important to understand the impetus behind these laws and what caused the state to take such sweeping action.   The TJX breach of 2007 was the major wakeup call that put these regulations into motion.  For months, sensitive information was being stolen from this company without anyone in management knowing what was happening.  When it was finally discovered, there were over 94 million records that were compromised!

After a series of similar incidents, Massachusetts has come down harder on this issue than any state in the union, because legislators don’t want such breaches to happen at any scale, and neither should you, since these are our credit cards numbers (and other personal information) that are being stolen and potentially used for identity theft.

For organizations who conduct any business in Massachusetts, whether they have physical locations in the state or not, and businesses that handle the personal information (SSN, drivers license number, address and phone number, credit card info, financial account info) of any Massachusetts residents, the state mandates specific assets, processes and performance.  If you think about it, that affects everyone from the corner pizza parlor that takes credit cards all the way to the biggest insurance carrier.

The regulations, in summary, require your business to:

  1. Take the necessary steps to protect personal information, both physically and electronically
  2. Comply with specific computer security requirements and put resources into place if they don’t exist
  3. Have the ability to know when a breach happens and report it to the state if it does
  4. Have a written plan that describes your policies and procedures with respect to info security
  5. Have a designated go-to person in the company for compliance with these regulations
  6. Train your employees on these policies and procedures
  7. Require similar performance from all your relevant vendors
  8. Monitor your systems and have them audited for continued compliance

The regulations provide much more detailed information and definitions of terms, and we highly recommend you look them over.  The state promises to impose heavy fines and penalties on companies that do suffer a breach while not in compliance with the laws.  Risks of non-compliance include:

  • Audit and penalties by the state
  • Loss of goodwill and reputation
  • Consumer law suits – torts by individuals whose information has been compromised

Please don’t do what I heard a business owner tell me the other day. He said, “Well, if I don’t do anything, then I won’t know if a breach happens, therefore I can’t report what I don’t know, so I’m good!”

If you want to still own a business after a data breach, I suggest you don’t take this person’s advice. It will be tough enough to make up for your lost reputation when your clients find out you caused their sensitive data to be compromised.  For a quick look at businesses that have reported a breach check out the ID Theft Center .

If you haven’t done your 201 CMR 17 compliance project, it’s not too late! Find a service provider with demonstrable 201 CMR 17 compliance experience, or better yet, a consortium of service providers representing the IT/technical, legal and security aspects of compliance, and protect your small business today so you can get back to work with peace of mind.

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