Privacy Enforcement Actions
Lenovo Corporation, in a stipulated final judgment, agreed to pay $3.5 million to settled a multi-state investigation resolving allegations that it had illegally preinstalled ad-injecting software that compromised the security of its computers. This case marks the first time that California has held a hardware manufacturer accountable for software preinstalled on its products. As part of the settlement, Lenovo is required to adopt advanced measures to prevent future misconduct, including making clear and conspicuous disclosures about how pre-installed advertising software will operate, obtaining a consumer’s affirmative consent before using such software, and providing a reasonable and effective means for consumers to opt-out, disable or remove the software. California will receive $389,204, the largest share of the 32 states involved in the settlement. The settlement was negotiated and finalized in coordination with the Federal Trade Commission.
Target Corporation, in a stipulated final judgment, settled a multi-state investigation in response to allegations that over 40 million customers had their payment card information compromised during the 2013 holiday season after the company failed to provide reasonable data security. Target agreed to pay a record $18.5 million; California received more than $1.4 million, the largest share of any state. As part of the settlement, Target is required to adopt advanced measures to secure customers’ information. The settlement requires Target to employ an executive to oversee a comprehensive information security program and advise its CEO and Board, encrypt or otherwise protect payment card information to make it useless if stolen, and adopt other technological measures. In addition, today’s settlement in part requires Target to integrate business practices recommended in the Attorney General's Data Breach Reports previously published by the California Department of Justice.
Wells Fargo Bank
Wells Fargo Bank, in a stipulated final judgement, agreed to an $8.5 million settlement for violating California privacy laws by recording consumers' phone calls without a timely disclosure to consumers, as required by sections 632 and 632.7 of the California Penal Code. This investigation and subsequent settlement agreement was a collaboration between the Attorney General's Office and five District Attorney Offices throughout the state. Wells Fargo, a California-based bank, agreed to pay $7,616,000 in civil penalties and $384,000 in prosecutors' investigative costs, as well as contribute $500,000 to two organizations that advance consumer protection and privacy rights in California. In keeping with California's strong privacy-protection standards, Wells Fargo also agreed to make clear, conspicuous, and accurate disclosures when recording confidential communications between the bank and its customers, as well as implement an internal compliance program to ensure policy changes.
Houzz, an online platform for home remodeling and design, agreed to resolve allegations that the company violated California privacy laws by recording incoming and outgoing telephone calls without notifying all parties on the call that they were being recorded. As part of the stipulated judgment, the company agreed to appoint an individual to serve in a Chief Privacy Officer capacity who will oversee Houzz's compliance with privacy laws and who will report any significant concerns to the Chief Executive Officer and/or other senior executives, to conduct a privacy risk assessment addressing its efforts to comply with applicable privacy laws governing its U.S. operations; and to pay $175,000.
Comcast agreed to a stipulated final judgment to resolve allegations that the company posted online the names, phone numbers and addresses of tens of thousands of customers who had paid for unlisted voice over internet protocol ("VOIP") phone service. Comcast agreed to improve how it handles customer complaints, strengthen its restrictions on vendors' use of personal information about customers, and provide a simple disclosure form to customers. The company Comcast must pay $25 million in penalties and investigative costs to the California Department of Justice and the California Public Utilities Commission, and approximately $8 million in additional restitution to customers whose numbers were improperly disclosed.
Aaron’s agreed to a stipulated final judgment to resolve allegations that the company permitted its franchised stores to install spyware on laptop computers rented to customers without their knowledge or consent, as well as charging improper late fees, overcharging customers who paid off contracts early and omitting important contract disclosures. Aaron’s agreed to refund $25 million to California customers and to pay $3.4 million in civil penalties and fees.
Kaiser Foundation Health Plan, Inc.
Kaiser agreed to a stipulated final judgment after it delayed notifying its employees after an unencrypted USB drive was discovered at a Santa Cruz thrift store that contained over 20,000 employee records. Kaiser paid $150,000 in penalties and attorneys’ fees, and agreed to comply with California’s data breach notification law in the future, provide notification of any future breach on a rolling basis, and implement additional training regarding the sensitive nature of employee records.
Citibank agreed to stipulated final judgment arising out a breach of its Citibank Online website via a known technical vulnerability that affected over 80,000 California account holders. Citibank paid $420,000 in penalties and attorneys’ fees to California and $55,000 to the Connecticut Attorney General. Citibank also agreed to improve their security procedures, conduct an independent audit of Account Online, and provide credit monitoring for affected individuals for two years.
Anthem Blue Cross
Anthem agreed to a stipulated final judgment as a result of it printing Social Security Numbers on mailings to its customers that were visible on the envelope. Anthem paid $150,000 in penalties and attorneys’ fees and agreed to implement new technical safeguards for its data management system, restrict employee access to members’ Social Security numbers and provide enhanced data security training for all of its associates.
Privacy Amicus Filings
Fraley v. Facebook, Inc.
The Attorney General filed a brief for the State of California as amicus curiae in support of neither party, in Fraley v. Facebook on appeal from the U.S. District Court for the Northern District of California, arguing that California law protecting publicity rights of minors remained valid and enforceable.