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Database Security Breaches: Legal Liability

By Alan J. Haus
June 28, 2005

Many businesses compile extensive computer databases of information on their customers. California, for instance, imposes responsibilities on companies of all sizes if there is a breach of the security of that information. While this law has been in force since July 2003, it received widespread publicity only this year, in the wake of security breaches at LexisNexis, ChoicePoint and other companies.

And the recent report of a possible compromise of information among as many as 40 million MasterCard customers demonstrated in frightening clarity the potential for digital data breaches as more and more information is stored and manipulated electronically by more and more people. For many companies, the issue has an impact on operations and marketing, quite aside from the dangers of potential legal liability.

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