Sony faces legal action across globe over data theft

TOKYO/WILMINGTON: Sony Corp could face legal action across the globe after it delayed disclosing a security breach of its popular PlayStation Network , infuriating gamers and sending the firm's shares down nearly 5% in Tokyo on Thursday.
Sony shut down the network on April 19 after discovering the breach, one of the biggest online data infiltrations ever. But it was not until Tuesday that the company said the system had been hacked and that users' data could have been stolen. In the United States, several members of Congress seized on the breach, in which hackers stole names, addresses and possibly credit card details from 77 million users.
One US law firm filed a lawsuit in California on behalf of consumers. Britain's Information Commissioner's Office said it had contacted Sony and was investigating whether it violated laws that require it to safeguard personal information.
The commissioner's investigation would depend in part on whether Sony stored user information in Britain. "European countries are going to go crazy and be all over this," said Dan Burk, a professor at the University of California, Irvine School of Law. "They are absolutely obsessed about companies holding personal information."
INTERNATIONAL SCRUTINY
In the United States, attorneys general, who act as consumer advocates, had begun investigating the matter or reviewing it with staff in several states, including in Iowa, Connecticut, Florida and Massachusetts, according to their offices. US regulators could get involved as well.
The Federal Trade Commission has been known to pursue companies that failed to safeguard consumer data. It could investigate if it determines Sony failed to tell its customers about the company's privacy policies. A spokeswoman for the agency declined to comment. Sony reported the breach to the FBI's cybercrimes unit in San Diego, which is investigating, a person familiar with the probe told Reuters.
The person was not authorised to discuss the matter publicly. "Gamers are angry that Sony's CEO hasn't come out to explain the situation and investors are disappointed over the company's corporate governance," said Michael Wang, manager of overseas funds at Prudential Financials in Taipei, which owns shares in Sony.
Sony's PlayStation Network, a service that produces an estimated $500 million in annual revenues, provides access to online games, movies and TV shows. Nine out of 10 of PlayStation's users are based in the United States or Europe. Gamers could ditch Sony and analysts said people looking to buy a video game console could steer toward Microsoft Corp's Xbox, which has its own popular online network.
"I am outraged that my personal information may have been accessed by hackers," said Rich Chiang, a PlayStation and Xbox user in Shanghai. Security experts said Sony would need to account for the loss of business, as well as damage to its brand, when it tallies up the cost. Other costs include notifying customers of the attack and bringing in experts to cleanse its network.
Larry Ponemon, chairman and founder of the Ponemon Institute, said the theft could cost Sony more than $1.5 billion, or an average of $20 for each of the 77 million customers whose data was potentially compromised. Poneman's firm specialises in securing information on computer networks.
Sony said the delay in notifying the public was needed to conduct a forensic investigation but it is fast becoming a public relations nightmare akin to Toyota Motor's bungled response to a giant vehicle recall last year, fuelling criticism of corporate Japan's standards of disclosure.