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Judges around the U.S. are wrestling with whether hacked companies should have to pay customers when their personal information gets exposed.
So far, the answer has mostly been no.
But, some federal judges are letting consumer lawsuits proceed, opening a new frontier for corporate liability.
“Companies are seeing [these customer lawsuits] as an increasing threat,” Veta Richardson, president of a trade group for in-house corporate lawyers, told the Wall Street Journal.
Overall, only 5% of data breaches in the U.S. have led to lawsuits, but the highest-profile breaches can spawn hundreds of suits, according to a study by law firm Bryan Cave LLP. The study also showed more than one-third of the lawsuits in 2015 targeted health companies.
Customers must prove the data breach injured them personally—in legal terms, whether they have the “standing” to sue. In some instances, courts are ruling the mere risk of identity theft from a data breach counts as an injury.
Keep reading about the legal issue of injury at WSJ.com.
