Consumer Crossroads: Where Financial Services and Litigation Intersect

In a Privacy & Cyber Bytes Alert, we review takeaways from the recently concluded Mortgage Bankers Association's Conference on Legal Issues and Regulatory Compliance. Lenders and servicers with consumer-facing platforms that collect personal information need to initiate cybersecurity compliance efforts immediately.

We recently reported on the New York State Department of Financial Services' (DFS) first enforcement action under its 2017 cybersecurity regulation ("Part 500"), which prescribes how financial services companies licensed to operate in New York should construct their cybersecurity programs. DFS' statement of charges provides important insight into the agency's priorities and expectations when assessing how a company has addressed and mitigated a data exposure, and offers a roadmap for how other regulators might interpret similar data security laws being implemented across the country. Given increasing regulatory scrutiny and the fact that inappropriate cybersecurity procedures and practices could result in significant financial liabilities, companies should proactively re-assess where they stand in relation to applicable cyber mandates.

After several years of anticipation, the New York State Department of Financial Services (DFS) has filed its first enforcement action under the agency's groundbreaking and first-in-the-nation 2017 cybersecurity regulation (Part 500 of Title 23 of the New York Codes, Rules, and Regulations), which prescribes how financial services companies licensed to operate in New York should construct their cybersecurity programs. This action is a wakeup call to covered entities to fully implement the directives of Part 500.