Eight months after a significant data breach involving customer data was reported to Panera Bread company by a security researcher and within a day of an article being published laying out the nature and extent of the breach, the company on April 2, 2018 acknowledged the data leak. However, it insisted that fewer than 10,000 consumers had been affected in contrast to the more than 7 million customers several security researchers estimate were affected.
The story is not so much the vulnerability in Panera’s online food ordering system that exposed the customer’s information, nor the fact that Panera may not have been aware of the breach before the researcher contacted it, but rather about Panera’s delay disclosing the breach and its refusal to acknowledge the magnitude of the customer information leaked. Panera is likely to become the poster child for what not to do in addressing a data breach. For example, Panera does not have a dedicated method to accept vulnerability reports from security researchers, it ignored numerous communications from the security researcher that attempted to alert the company to the breach and became defensive about his report, including accusing the security researcher of being a scammer of some sort. Perhaps the greatest surprise is it waited eight months to acknowledge the leak and to set about fixing it. In the meantime more customers were likely affected by the disclosures of personal information. In addition, the reputational harm to Panera because it failed to respond quickly and forcefully, could be significant.
A national standard that includes a set notice period for businesses to disclose data breaches to customers would have avoided the situation Panera finds itself in. The delay could create substantial risk that customers take legal action against the company. For nearly the last ten years many U.S. data security and breach notification laws have been introduced in the Congress but none have passed. Currently at least one Senate and one House bill have been introduced. H.R. 5388, the Data Accountability and Trust Act and S. 2179 the Data Security and Breach Notification Act have been introduced. Both bills contain provisions that generally require consumers to be notified of any breach within 30 days after its discovery.
Panera is not alone in having delayed in reporting breaches. Equifax and Target are among the many in that category. In fact, in 2017 Uber actually paid two hackers to keep quiet about a cyberattack that exposed the data of 57 million Uber riders and drivers. State and federal lawmakers and security experts all agree that the lack of transparency by businesses, governmental entities and other organizations is a problem that needs to be addressed. While many state legislatures have passed data breach notification periods, the Congress has been unable to pass legislation to address this and other issues resulting from the many significant data breaches that occur almost daily. While it is not clear that consumers have changed their online activity because of these breaches, that day may come.