New York Department of Financial Services settles charges against EyeMed with a $4.5 million penalty and remedial cybersecurity plan

In January 2022, DataBreaches reported that New York announced a $600,000 agreement with EyeMed that resolved a 2020 phishing incident that compromised the personal information of approximately 2.1 million consumers nationwide, including 98,632 in New York.

But that was not the end of enforcement action and monetary penalties for EyeMed. Now the state’s Department of Financial Services (DFS) has fined EyeMed $4.5 million for violating DFS’s Cybersecurity Regulation.

The Department’s investigation into the 2020 phishing incident found that,

among other things, EyeMed had violated the Department’s cybersecurity regulation by failing to implement multi-factor authentication (“MFA”) throughout its email environment. Moreover, EyeMed failed to limit user access privileges by allowing nine employees to share login credentials to the affected email mailbox and failed to implement sufficient data retention and disposal processes, resulting in over six years’ worth of consumer data being accessible through the affected email mailbox. Had these controls been in place, the July 1, 2020 cybersecurity event could have been prevented or been limited in scope.

Those compliance failures were not the only failures DFS found. They also discovered that EyeMed failed to conduct an adequate risk assessment, which could have identified the user access privilege and data disposal risks associated with the email mailbox that was subjected to the phishing attack.

As a result, EyeMed’s cybersecurity certifications for the calendar years 2018 through 2021 were improper.

As part of the settlement, EyeMed agreed to undertake significant remedial measures to improve data security.  To review the EyeMed consent order, visit the DFS website.

Any entity doing business in New York who is not paying attention to DFS enforcement actions may be in for a rude awakening. The EyeMed monetary penalty and corrective action plan are not the first enforcement of this kind. In March 2021, DFS announced that Residential Mortgage Services would pay a $1.5 million penalty for failure to notify state residents of a data breach in 2019. And in August, DFS announced a $30 million penalty against Robinhood for “significant” cybersecurity violations.

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