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4 ways a cyberattack could lead to a lawsuit

On Behalf of | Dec 7, 2023 | Business & Commercial Law |

In the interconnected world of business, the threat of cyberattacks looms large.

Cybersecurity breaches can lead to legal actions that may significantly impact a Florida company’s bottom line.

1. Negligence in data protection

When a cyberattack occurs, customers and stakeholders expect a company to have robust security measures in place. Failure to safeguard sensitive information, such as personal details or financial data, may equate to negligence. In the eyes of the law, a business could hold responsibility for not taking adequate steps to protect against foreseeable cyber threats.

2. Breach of contractual obligations

Businesses often enter into contracts with customers, suppliers or other entities that involve the handling and protection of sensitive information. If a cyberattack results in a breach of these contractual obligations, the affected parties may pursue legal action.

3. Regulatory non-compliance

Various industries are subject to stringent data protection regulations, and failure to comply with these can result in severe consequences. In the aftermath of a cyberattack, regulatory bodies may investigate whether the affected business adhered to the prescribed cybersecurity standards. Non-compliance can lead to fines, penalties and, in some cases, lawsuits.

4. Loss of business opportunities

A cyberattack can not only harm a company’s current operations but also hinder future business prospects. If clients or partners lose confidence in a business’s ability to protect sensitive information, they may choose to sever ties. The resulting loss of revenue and business opportunities could prompt legal action, with affected parties seeking compensation for the damages incurred due to the cyberattack.

A cyberattack costs businesses $4.35 million on average in 2022. Unfortunately, the legal consequences of an attack can extend far beyond immediate financial losses.