October 3, 2022

Volume XII, Number 276


October 03, 2022

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Wegmans Settles With NYAG for $400,000 Over Data Incident

The New York Attorney General recently announced a data security-related settlement with Wegmans Food Markets. The issue arose in April 2021 regarding a cloud-based incident. At that time a security researcher notified Wegmans that the company had an Azure cloud storage container that was unsecured. Upon investigation, the company determined that the container had been misconfigured and that three million customer records had been publicly accessible since 2018. The records included email addresses and account passwords.

Of concern for the AG, among other things, were that the passwords were salted and hashed using SHA-1 hashing, rather than PBKDF2. Similarly, the AG found concerning the fact that the company did not have an asset inventory of what it maintained in the cloud. As a result, no security assessments were conducted of its cloud-based databases. The NYAG also took issue with the company’s lack of long-term logging: logs for its Azure assets were kept for only 30 days. Finally, the company kept checksums derived from customer driver’s license information, something for which the NYAG did not feel the company had a “reasonable business purpose” to collect or maintain. 

The NYAG argued that these practices were both deceptive and unlawful in light of the promises Wegman’s made in its privacy policy. It also felt that the practices were a violation of the state’s data security law. As part of the settlement, Wegmans agreed to pay $400,000. It also agreed to implement a written information security program that addresses, among other things:

  1. asset management that covers cloud assets and identifies several items about the asset, including its owner, version, location, and criticality;
  1. access controls for all cloud assets;
  1. penetration testing that takes into account cloud assets, and includes at least one annual test of the cloud environment;
  1. central logging and monitoring for cloud assets, including keeping cloud logs readily accessible for 90 days (and further stored for a year from logged activity);
  1. customer password management that includes hashing algorithms and a salting policy that is at least commensurate with NIST standards and “reasonably anticipated security risks;” and
  1. policies and procedures around data collection and deletion.

Wegmans agreed to have the program assessed within a year of the settlement, with a written report by the third-party assessor provided to the NYAG. It will also conduct at-least-annual reviews of the program. As part of that review it will determine if any changes are needed to better protect and secure personal data.

Putting It Into Practice: This case is a reminder for companies to think not only about assets on its network, but its cloud assets, when designing a security program. Part of these efforts include clearly identifying locations that house personal information (as defined under security and breach laws) and evaluating the security practices and controls in place to protect that information. The security program elements the NYAG has asked for in this settlement signal its expectations of what constitutes a reasonable information security program.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 195

About this Author

Kari Rollins Intellectual Property Lawyer Sheppard

Kari M. Rollins is a partner in the Intellectual Property Practice Group in the firm's New York office.

Areas of Practice

Ms. Rollins focuses her practice on privacy and complex commercial litigation matters. She has successfully represented clients in the financial services, audit and accounting, food services, retail, and fashion industries before state and federal courts, as well as in front of state attorneys general, federal regulators, and U.S. and international commercial arbitration forums....

Liisa Thomas, Sheppard Mullin Law Firm, Chicago, Cybersecurity Law Attorney

Liisa Thomas, a partner based in the firm’s Chicago and London offices, is Co-Chair of the Privacy and Cybersecurity Practice. Her clients rely on her ability to create clarity in a sea of confusing legal requirements and describe her as “extremely responsive, while providing thoughtful legal analysis combined with real world practical advice.” Liisa is the author of the definitive treatise on data breach, Thomas on Data Breach: A Practical Guide to Handling Worldwide Data Breach Notification, which has been described as “a no-nonsense roadmap for in-house and...