Agencies' responses to data breaches vary

Responding to a data security breach requires making challenging, risk-based judgments on the costs and benefits associated with public notification and credit monitoring for those affected, according to a new report from a government watchdog agency.

"Agencies have made varying decisions about how and when to offer credit monitoring," Government Accountability Office reviewers wrote following a study (GAO-07-657) of cases where large amounts of personal information was compromised at federal agencies. "As a result, affected individuals may not always receive a consistent level of support from the federal government."

Reviewers said the Office of Management and Budget should develop guidelines on how agencies should weigh the costs of credit monitoring or other services for those affected by a security lapse against the potential for the breach to cause serious harm.

When a laptop computer and hard drive were stolen from the home of a Veterans Affairs Department employee last year, putting personal data on 26.5 million people at risk, VA spent more than $14 million on a call center and other services for those affected. The department also requested extra appropriations to cover the estimated $160 million expense of a year of credit monitoring, but officials concluded that the service was not needed after the laptop was recovered.

GAO found that the Transportation Department inspector general's office decided credit monitoring was too expensive following a data breach. Contractors for the Education and the Health and Human Services departments did not inform those affected that credit monitoring was available, but provided it to those who asked.

Some agencies have used data breach analysis services, which assess whether an incident is likely to result in identity theft and determine whether ID theft cases can be traced to a particular data loss.

GAO recommended that OMB issue guidance on how to decide which security-related services to offer; in a response to the report, OMB agreed with the suggestion.

Reviewers found that OMB already had circulated guidance on how agencies should respond to other aspects of a data security lapse, including notifying key officials.

But in a discussion of public notification decisions, GAO listed factors that weigh against public announcements. Reviewers warned that public notification of a security breach when there is little risk of harm could "create unnecessary concern and confusion," and sending frequent notices could desensitize consumers to warnings. The report also noted that "the costs associated with notification are not insignificant for either agencies or individuals."

At the same time, GAO said, "notification has clear benefits such as allowing the affected individuals the opportunity to take steps to protect themselves."

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