·  Legal News, Analysis, & Commentary


A Look at the Legal Consequence of a Cyber Attack

— May 24, 2021

The legal consequences for cyber attacks are severe, and the best defense against them is not dealing with one in the first place.

The Internet is a relatively recent phenomenon, and businesses are adapting as quickly as they can to the new marketplace. As such, not all companies are aware that they are legally responsible for protecting the data of their customers.

Due to the pandemic, more businesses have moved their services and information online. An unintended consequence of this is that cyber crimes are on the rise. Here’s a staggering statistic for you: of all cybersecurity breaches, 95% are caused by human error. This is very concerning given that businesses have a responsibility to protect the data of their customers.

The effects of a cyber attack can be devastating for a business. Cybersecurity isn’t optional—it’s necessary in today’s online landscape.

But if your customer’s information is leaked in a cyber attack, what consequences might there be for your business?


Over the years, many customers have sued businesses for leaking their information due to a security breach—and many of them have done so successfully.

When clients use your services and/or products, they expect that your business will do everything it can to protect their private information. But when hackers target large corporations, millions of customers may have highly sensitive data leaked.

Consumers have a right to privacy. When they entrust their information to a business, they’re entitled to that privacy. Cyber attacks are a direct violation of their rights. This becomes especially evident when industries like healthcare, financing, and dating services are attacked.

Many of us have heard the breaking news stories about what happens when large businesses have been cyber attacked and are required to pay millions in lawsuits to customers. But the same thing can happen to small companies. Businesses of all sizes should be aware that failing to protect the data of customers is a costly mistake. 

A Damaged Reputation

A loss of trust can be detrimental for a business. Why would any client choose a company that’s dealt with security issues over a competitor that hasn’t? Why put their sensitive information at risk?

Beyond the financial losses of a lawsuit, the ramifications of a cyber attack reach further than you might expect.

A black-clad figure faces away from the camera. In the background, the word HACKED is spelled out in red letters against a backdrop of black ones and zeroes.
Public domain image courtesy of CC0

Imagine how damaging it can be if your customers learn that their information was leaked. No amount of promotional offers can make up for that. This goes to show that protecting your online security is more important than ever.

Withholding Information

Once a security breach occurs, many businesses immediately go into damage control mode. They try to pay off the attackers and conceal the fact that a data breach happened.

However, the legal consequences of this action aren’t worth it. Delaying to report a data breach could be seen as intentionally withholding imperative information. In terms of legal consequences, this may cause fines to multiply exponentially.

Any business that endures a cyber attack is legally obligated to disclose it to customers; this allows people to respond by changing their passwords or locking their bank accounts. 

How Secure is Your Business?

As aforementioned, all businesses are responsible for protecting the information of their customers. If a business lacks the proper cybersecurity measures, it may be seen as negligence or evading regulations.

This gives grounds for lawsuits on behalf of the consumer. In addition to a damaged reputation and a loss of clients, your business may also face insurmountable legal fees. Of all small businesses that are cyber attacked, 60% of them shut down within 6 months. A cyber attack could be the nail in the coffin for a business that’s already struggling due to COVID-19.

The specific legal consequences will vary from state to state, but one thing that won’t change is how customers react to a data breach. Learning that your personal information has been exposed to malicious hackers is upsetting. Clients will feel that they’ve been failed by your business and that their security has been compromised. It’s easier to recover from something like an email leak, but what if credit card information and passwords are leaked? This can be devastating for both the customer and the business.

The bottom line is this: find a reputable IT company. The legal consequences for cyber attacks are severe, and the best defense against them is not dealing with one in the first place. Protect yourself against hackers by storing your customers’ data safely with cybersecurity. By doing so, you can avoid harsh legal consequences.

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