Sony may face global legal scrutiny over breach

Wed Apr 27, 2011 2:52pm EDT

* U.S. lawyers focused on data breaches eye legal action

* British government watchdog launches investigation

* U.S. state attorneys general also discussing incident

By Tom Hals and Leigh Jones

WILMINGTON, Del./NEW YORK, April 27 (Reuters) - Sony Corp (6758.T) could face legal action across the globe after it belatedly revealed one of the biggest online data breaches ever.

One U.S. class-action lawyer said he was considering filing a lawsuit on behalf of consumers as soon as this week, after hackers accessed personal details on 77 million users of the company's online PlayStation Network gaming service.

Also, a government watchdog in Britain said it had already launched an investigation of the incident, which put credit card information at risk.

In the United States, the Iowa and Connecticut attorneys general, who act as consumer advocates for their states, were discussing the matter with their staff, according to their offices.

"This is a huge data breach and the clients who have called are really upset, not just because of the data breach but it looks like Sony sat on information for as much as five days," said Jay Edelson, an attorney at law firm Edelson McGuire.

Edelson's firm specializes in class-action lawsuits over data breaches. He said he would decide in the next 24 hours whether to sue.

Sony did not immediately return a call on Wednesday seeking a comment.

Sony said on Tuesday that hackers stole names, addresses and possibly credit card details from users of its PlayStation Network. For details, see [ID:nN26297307]

While the Japanese electronics company pulled the plug on the network on April 19, it did not tell the public about the hackers' attack until Tuesday.

The disclosure sparked immediate outrage among gamers [ID:nL3E7FR05U] and revived criticisms of Japan's corporate culture that plagued Toyota Motor (7203.T) during its huge automotive recall in 2010. [ID:nL3E7FR1S8]

"Waiting five days and giving misinformation, which we believe they did, is really going to be problematic for Sony," Edelson said.

That could prove to be critical because Sony's customers were not given the chance to protect themselves, putting the company on the hook if stolen credit-card data was used by the hackers, he said.

A Sony spokesman has said that after learning of the breach it took "several days of forensic investigation" before the company knew consumers' data had been compromised.

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 authorized to discuss the matter publicly.

Britain's Information Commissioner's Office said it had contacted the company and was investigating whether Sony 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.

Sony may come under the toughest scrutiny from non-U.S. regulators, which have stricter consumer privacy laws.

"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."

Burk said subscribers will need to show they suffered damages as a result of the hacking for a U.S. lawsuit to have legs.

"If it was just hacking for fun, then it's going to be tough," he said of the prospects for a potential U.S. lawsuit.

However, users would not have to show damage in other countries, and Burk said Sony could face fines and penalties from privacy commissions outside the United States.

The U.S. 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. (Additional reporting by Diane Bartz in Washington, Georgina Prodhan in London and Dan Levine in San Francisco: Editing by Maureen Bavdek)