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July 10 --In an enforcement action illustrating that even smaller businesses must comply with state breach notification laws, the Vermont attorney general announced July 9 that the Shelburne Country Store has agreed to pay a $3,000 civil penalty after the company failed to notify customers of a data breach of their credit card information.
Mayfield Inc., doing business as the Shelburne Country Store in Shelburne, Vt., operates a retail store and a website that sell gifts, housewares and other items. In November 2013, the store's website was hacked, and the credit card information of 721 website customers was potentially compromised, according to the assurance of discontinuance between Office of the Attorney General and the store.
“Upon being informed of the breach in January 2014, the company quickly fixed the problem, but did not notify consumers until it was contacted by the Attorney General's Office,” the office said in a July 9 statement.
“At this stage of the game, having seen widely reported data breaches at big retailers like Target and dozens of others, we will not accept the excuse that a business did not know of its obligations to report a breach,” Vermont Attorney General William Sorrell (D) said in the statement.
In 2012, Vermont amended its Security Breach Notice Act, Vt. Stat. Ann. tit. 9, § 2435, to set a 45-day deadline for consumer breach notice and add a 14-day notice requirement for the Office of the Attorney General .
Before the Office of the Attorney General contacted the Shelburne Country Store, it “made no efforts to notify affected consumers of the data breach, to notify the Vermont Attorney General of the data breach, or to notify any law enforcement agency,” the office said in the assurance of discontinuance.
“Breaches are far too common for people to say they just didn't know” about their state's data breach notification requirement, Cynthia Larose, a member of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC in Boston and chair of the firm's Privacy & Security Practice, told Bloomberg BNA July 10. “At the very least, understand what the requirements are in your own state.”
Larose described the amount of the fine as a “fair amount” and said the Office of the Attorney General “could have gone much higher.” She said she thinks the office “wanted to make a point.” It is “always good for us to see that regulators are taking this seriously because we're trying to get our clients to take this seriously,” she said.
She added that Vermont has been “very proactive in reaching out to the business community” about the breach notification requirements.
Describing the Shelburne Country Store as a “small mom and pop operation,” Mayfield Inc. Vice President Steve Mayfield told Bloomberg BNA July 10 that the store wasn't aware of the breach notification obligation.
The store has since notified affected customers and offered them an identity theft protection service for one year, Mayfield said. The store's website has also been moved to a hosted platform, which will block access to the website's code, he said.
In addition to the $3,000 fine, the store has agreed to implement and maintain a comprehensive information security program that is compliant with either the Payment Card Industry Data Security Standards or the data security standards of Massachusetts. According to the Vermont Office of the Attorney General, the store has complied with this requirement by moving its website to a hosted platform.
The store has also agreed to conduct an audit of its policies and procedures to ensure that it is complying with Vermont law.
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The assurance of discontinuance is available at http://www.atg.state.vt.us/assets/files/AOD%20filed%207-9-14.pdf.
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