Data breaches and other cyberattacks in recent years have led to an uptick in class action lawsuits against companies by customers whose information was compromised in these events. (Credit: the_lightwriter/Adobe Stock)
A bill has advanced through the Nebraska legislature that would relieve private entities of liability in the event of a cybersecurity event as long as it was not caused by willful, wanton or gross negligence by the entity.
Data breaches and other cyberattacks in recent years have led to an uptick in class action lawsuits against companies by customers whose information was compromised. Recently, Progressive agreed to a $3.25 million class action settlement in response to a suit concerning a breach at one of the insurer’s third-party call center vendors.
Globally, IBM reports the average cost of a data breach increased 10% from 2023 to reach $4.88 million in 2024, which is the biggest recorded year-over-year jump since the pandemic. They attribute this spike in cost to business disruption and post-breach customer support and remediation.
In the end, these costs are often pushed onto customers.
The bill, LB241, was introduced by Senator Bob Hallstrom in January. It defines a cybersecurity event as an event resulting in unauthorized access to, or disruption or misuse of, an information system of nonpublic information stored on an information system. Nonpublic information, in this case, refers to information that is not publicly available but can be used to identify a person, like their social security number, driver's license number, financial account numbers or biometric records.
According to the Unicameral Update, Hallstrom stated that the increase in data breach class action suits has led to higher cybersecurity premiums for businesses with little or no payout for customers whose data was stolen. He argued that data breaches are something to which all companies are vulnerable and that they should not have to face class action suits if they are only accused of negligence, but not willful negligence.
Opponents of the bill argued that not only could the bill challenge state and local-level protections for consumers but that it would also be difficult to prove willful negligence in a legal context.
LB241 advanced to a second round of debate with a vote of 33-9.
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