Most would expect that when an entity experiences a data breach, that entity would take reasonable and appropriate steps to investigate the breach and mitigate harm. Making credit monitoring services available to affected persons is a typical way companies attempt to mitigate harm, and that is exactly what the Plymouth County Correctional Facility did when one of its prisoners hacked into its personnel records. Including these monitoring costs in a restitution award to the prison facility was proper, the U.S. Court of Appeals for the First Circuit ruled in United States v. Janosko.
Charged under the criminal provisions of the Computer Fraud and Abuse Act (CFAA), the inmate who hacked into the prison’s records while incarcerated pleaded guilty
not only to causing such “damage” but also to causing “loss” by his damaging conduct, § 1030(a)(5)(B)(i).
The Court found that the "near juxtaposition of “loss” to “damage” inflicted on items or systems of equipment indicates some broader concept of forbidden effect and consequent scope of restitution" and that the definition of "loss" under the CFAA includes “any reasonable cost to any victim, including the cost of responding to an offense.” In this case, recovery by the prison facility was further enabled under the Mandatory Victims Restitution Act which mandates restitution for “expenses incurred during … the investigation or prosecution of the offense.”
Actually recovering these costs from this or any other hacker will likely be difficult. However, companies are increasingly experiencing breaches and are getting better at being able to identify those committing the breach, which often times are employees or former employees. This decision provides support for those companies seeking to recover the costs they incur when taking appropriate steps to investigate these data incidents and mitigate harm when a breach is found to have occurred. As this court noted:
It should go without saying that an employer whose personnel records have been exposed to potential identity thieves responds reasonably when it makes enquiry to see whether its employees have been defrauded. This act of responsibility is foreseeable to the same degree that indifference to employees’ potential victimization would be reproachable. It is true, of course, that once they were told of the security breach, the individual employees and former workers involved in this case could themselves have made credit enquiries to uncover any fraud, but this in no way diminishes the reasonableness of the Facility’s investigation prompted by the risk that its security failure created. And quite aside from decency to its workers, any employer would reasonably wish to know the full extent of criminality when reporting the facts to law enforcement authorities.