In the ugly battle of Web users vs. insurance companies, a lot of blood was spilled this week.

We've known for a while that hell hath no fury like an Internet user scorned. But at the intersection of social media, consumer frustration, anxious lawyers and heavy-handed regulations you'll find a particularly tricky corner of the Web. Insurance firms, which have always been a magnet for complaints anyway, lie at precisely this crossroads.  

Increased competition has led insurers to employ high-profile marketing gimmicks, like geckos or touchdown dances, in an effort to become household names with friendly reputations. That means it's become necessary for them to establish a social media presence. Progressive's "Flo" character, for instance, has her own Facebook page, with hundreds of thousands of fans. But inviting social dialogue sometimes means inviting trouble, as Flo and her handlers found out the hard way this week.

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Progressive encountered a Twitter revolt after the family of a woman killed in a car crash wrote a blog post criticizing the way the firm fought to avoid paying a claim. The post went viral, and the insurance giant then compounded its problems by spitting out automated tweets in response.

Experts who talked about the incident this week said Progressive fell into a trap that often catches large companies as they stumble around the social media world.

"The original response sounded genuine," said Jason Falls, a digital marketing consultant who helped health care firm Humana set up its social media program. "But the fact that they auto-responded the same statement to multiple people showed it was just a copy-and-paste job. More often than not, when that happens, it's not the technology that's to blame. You can blame it on the legal and compliance teams saying, 'You can say this and only this.' It makes you look cold and insensitive."

Both sides have willingly joined the insured-vs-insurers Internet fight. Insurance firms increasingly use the Web as a weapon against fraud, while consumers band together to demand better service, or to appeal denials of coverage. Both can claim victories. There are plenty of stories of insurance investigators who catch disability recipients bragging about completing triathlons on their Facebook pages or tweeting about a great trip to Paris while claiming depression. Meanwhile, earlier this month, a social media firestorm caused Aetna to back down and agree to cover colon cancer treatment costs for an Arizona patient who'd already exceeded his lifetime cap. A flurry of angry tweets really can make a big company reverse course.

'Shame on you'
Fall said he's used to seeing nasty comments pile up on insurance company blogs, Facebook pages and in Twitter feeds.

"It does make me cringe, but I also think it comes with the territory," he said.

It doesn't take long to find cringe-worthy comments on insurance company social media sites. Even days after the initial Progressive firestorm, comments left on Progressive's otherwise happy "Flo the Progressive Girl" Facebook page were dominated by vitriol: "Shame on you," says one. "Has Flo ever wondered why Progressive tries to get killers off the hook?" says another. Many writers called on the actress who plays Flo to quit.

Flo's hardly alone, however. When American Medical News did a survey of health insurance Twitter accounts last year, it found a never-ending stream of complaints:

*"Dear Cigna: How about, for the new year, you do something radical - like processing claims without 500 phone calls from me?"

* "Dear Humana, you've ruined my day. Worse, my wife's day. Way to CYA. I'm paying you to cover mine."

*"@Anthemhealth, so far u didn't send me my ID cards … kept me on hold for 25 mins and ur site isn't lettng me register. Nice service."

Insurance, necessarily, involves rejection. When you are in the business of frequently disappointing people, and making sure your rejections are lawsuit-proof, it's nearly impossible to run a free-spirited social media shop. Rachel Poor, who runs the social media marketing firm Thread Communications, said all heavily regulated industries face the Progressive dilemma.

"I think social media is still a sort of an enigma (to them). They all want to be there, they are told they should be there, but these companies are not used to people talking back to them in such a public forum," she said. "Ultimately, I think it will require insurance agencies to change the way they do business.”

Greg Matthews, a director at social media consulting agency WCG in Austin, said insurance companies often have to go into a Twitter or Facebook fight with one hand tied behind their backs.

"Particularly in health care or financial services, there are privacy-related issues that you just can't discuss," he said. For example, if a patient complains about an uncovered medical procedure, the insurance company can't publicly talk about the patient. "People want you to be transparent and authentic all the time, but you just can't. ... It can be terribly frustrating.”

Falls said companies he works with expect the occasional public flogging after turning on a Twitter account, and they manage to survive by planning ahead.

"The thing I've tried to do with any client opening up its customer service channels -- you have to have a crisis communications plan mixed with a customer service plan," he said.  "You have to anticipate what will happen. ... Companies that dive in without a plan of attack for those situations are finding it difficult."

No stiff upper lip?
Automatic and formulaic responses have gotten many companies through old-fashioned media crises, Falls said. For example, journalists are often tolerant of canned answers, he noted -- but they typically don't fly on social media. If a Twitter response doesn't sound like it's written by a real person in response to a real person, the company is likely going to take a hit to its reputation. On the other hand, when million-dollar settlements might be at stake, no insurance company lawyer is going to be comfortable with a social media employee free-lancing responses. So Falls suggests a middle path.

"You have to have a lawyer on staff who can be on call and help your social media team craft communications in crisis situations," he said. "When you have a big publicity problem, you have your legal team working hand-in-hand with PR. Why wouldn't you do the same thing in the social media world?"

In general, he recommends that firms post a detailed, formal response on a website, and instruct their social media writers to tweet or post links to it, while adding personal notes separately. 

There are challenges, however: Many lawyers and companies don't have the stiff upper lip needed to ride out a social media crisis.

"Any industry that's heavily regulated will always have a layer of legal and compliance teams that have to be trained, and have to buy in," he said. "It can be done with the right legal team. But if you have a team that constantly says ‘no,’ it'll never work."

Matthews said effective social media must also be fast, and that's often unfamiliar territory for insurance firms.

"It means really changing processes that companies use. Rather than convening the executive committee for two days to make a decision about things, boil it down to the two or three people who can actually make a decision in hours and not days," he said.

It also means knowing who the influencers are in certain topics ahead of time, and planning to engage those people immediately when a crisis hits.

"It's not that hard to know these days who are the folks likely to be influential in this conversation," Matthews said. "You know what the top 10 issues that you might face are, and you know who is likely to be the most influential when those stories break, the people who might take your side or be opposed. ... Ask yourself how do you engage them. What is the content you can bring to bear that articulates your position rather than letting the public run wild. You can never control the conversation, but you can make sure your side is heard."

Finally, and most important, companies have to actually deliver on their promises, perhaps in a way they never have before, Matthews said. If a Twitter user complains and is asked to call customer service by a social media worker, that customer service experience had better be positive, Matthews warns. Otherwise, the angry consumer will have heavy new ammunition for waging a social media war.

"It really helps you find your skeletons in the closet," he said. "You have to have a mindset that you are grateful your customers are telling you what you are doing wrong, and you have the opportunity a chance to fix it. I know a lot of companies, maybe most companies, don’t feel that way, but that’s the only way to be successful in social media.”

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Has the U.S. government been caught with its virtual hands in the world's cookie jar? And might it lose control of the Internet as a consequence?

If you were among the forces on the planet wanting to wrest control of the Internet from the U.S.-friendly agencies that manage it, that's the story you'd surely want to tell. 

But things are rarely what they seem.  The barrage of Flame news – including word that Flame and Stuxnet appear to have common authorship -- should not be viewed in a vacuum.

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A group of nations led by China, Russia and several Middle Eastern countries would love to see the end of U.S. dominance over the operational control of the Internet, and these nations think they have found their vehicle for accomplishing that: A U.N. body called the International Telecommunications Union.

 

The organization, which manages international telephony agreements, will meet in Dubai in December and attempt to extend its charter to take operational control of the Internet away from the U.S.-dominated nonprofit International Corporation for Assigned Names and Numbers, or ICANN. 

Even as news of Flame first hit, an ITU working group was meeting in Geneva to finalize the agenda for the Dubai meeting. At almost the same time, there was a hearing in an obscure congressional subcommittee where experts rang alarm bells about an ITU coup.

The argument that the U.S. should not be in a position of power as far as overseeing the Internet will be bolstered by a world set aflame by news that the U.S. may have exploited its technological advantage to attack sovereign nations with Flame and Stuxnet.

Some technology experts say the Dubai meeting could very well decide the direction of the world's most valuable resource - information - for the rest of the 21st century:   The future of Internet anonymity, free speech and perhaps freedom itself could be at stake.

"I think there is a political story that is being missed here," said Chris Bronk, a former State Department official who worked in that agency’s Office of eDiplomacy and is now a professor at Rice University. "There's much more to this. … Stuxnet was better than bombs in the short run, but this could hurt the U.S. down the road.”

Conspiracy theorists -- including several interviewed for this story who requested that their comments remain off the record -- point out that the world learned about Flame from a Moscow-based antivirus company (Kaspersky Labs), and the ITU chose Flame as the subject of its first-ever international cyber-warning, claiming for the first time an important role in cybersecurity affairs.  They see the grand publicity surrounding Flame as little more than a power grab by the ITU in advance of the Dubai meeting, dubbed the World Conference on International Telecommunications (WCIT).

“If you want to be cynical, this is definitely a play by an international group to try to gain control over arguably the world’s most valuable resource,” said Paul Rohmeyer, a Stevens Institute of Technology professor who specializes in cybersecurity and international issues, and one of the few members of the conspiracy camp willing to connect the dots publicly.

But you don't have to draw such a direct connection to see the relationship between Flame and ITU's desire to find and flex new power. Kaspersky Labs, the Russian firm that continues to publish the most informative details about Flame, has a solid reputation in the security research world, and there’s no reason to believe it is acting on behalf of Russian national interests. Still, it's impossible not to view Flame -- and recent revelations about Stuxnet -- without understanding the diplomatic backdrop.

“If I were advising Russia, I would be all over the place waving these stories around,” said Eneken Tikk, formerly the legal and policy advisor for NATOs Cooperative Cyber Defense Centre in Estonia.  “It seems like a great opportunity to increase pressure on talks around cyber threats to international peace and security and gather a coalition of potential victims to say, ‘We see the U.S. establishing itself on the Net in offensive way, we need an international umbrella to do something.’”

If the U.S. is guilty of escalating cyberwar by writing computer code that disabled critical Iranian computers, there is no question that forces around the globe will try to exploit the news to their own ends. While most analysts have focused on the potential that Flame invites other countries to counterattack the U.S. with similar cyber-bombs, the real threat might be the rationale it could provide for ending the free-flow of information around the Web.

“It's very concerning from a purely political standpoint. You can see why a group like ITU would be incentivized to release this news,” Rohmeyer said. “I’m guessing that's what they are trying to set up. They are building their case for internationalization. They have everything to gain and the established order, which is U.S.-based, has everything to lose.”

U.S. officials aren't blind to the threat; they've made very public warnings about it. In February, Federal Communications Commission member Robert McDowell wrote an op-ed piece in the Wall Street Journal where he criticized the ITU:

"The most lethal threat to Internet freedom may not come from a full frontal assault, but through insidious and seemingly innocuous expansions of intergovernmental powers," he wrote. "Scores of countries led by China, Russia, Iran, Saudi Arabia, and many others, have pushed for, as then-Russian Prime Minister Vladimir Putin said almost a year ago, 'international control of the Internet' through the ITU."

McDowell also testified before that congressional subcommittee on May 31, and warned that "pro-regulation" forces led by China and Russia are far more organized than U.S. allies.

"While precious time ticks away, the U.S. has not named a leader for the treaty negotiation," he said.

Some in Congress were even more blunt:

“If we're not vigilant, just might break the Internet," said Rep. Greg Walden, R-Ore.

The dire-sounding warnings aren't coming solely from U.S. government officials, either.  Even the so-called “father of the Internet,” Vint Cerf, expressed grave concern that day in Congress.

“(The Dubai meeting) holds profound—and I believe potentially hazardous— implications  for the future of the Internet and all of its users," he testified. "If all of us do not pay attention to what is going on, users worldwide will be at risk of losing the open and free Internet that has brought so much to so many.”

Nor is the alarm coming just from the U.S. Toomas Hendrik Ilves, president of Estonia, rang alarm bells on Friday during the International Conference on Cyber Conflict in Tallinn.

“The outcome of (the Dubai meeting), and related processes, will help determine the topography of the Web for the next two decades,” he said. “While this conference may fall into the domain of ministries of commerce and communications, make no mistake, there will be major cybersecurity ramifications. More ominously, we will face calls to limit free expression as we know it on the Web today.”

But as Western nations try to draw battle lines, the reality of Flame and Stuxnet muddies the argument considerably.  The U.S. risks losing moral high ground through stories about such cyberattacks.

"When we had plausible deniability for Stuxnet, we could make the argument more easily,” Bronk said. “This completely cuts at the knees the Internet freedom agenda.  How can the U.S. use clandestine cyberattack to go after a threatening regime, and then push the free agenda? "

As Rohmeyer sees it, the combination of U.S. cyberattacks and the Dubai meeting puts the Internet at “an age-old crossroads.”

What might change mean?
The ITU has its roots in an organization created during the 1860s to standardize cross-border telegraph traffic in Europe. It became a U.N. body after World War II, focused almost entirely on simplifying international telephony. Only recently has it tried to extend its charter to Internet traffic, most notably with the creation of an agency called The International Multilateral Partnership Against Cyber Threats, or IMPACT, based in Kuala Lumpur. Modeled after national computer emergency response teams, IMPACT’s stated mission is to share time-critical computer vulnerability and virus information around the globe. The U.S. has so far refused to join ITU’s IMPACT. Russia, China, Iran and about 140 other nations are members.  

IMPACT tried to take the lead in international dissemination of information about Flame, using the virus as cause for its first-ever warning.

How might ITU change the way the Internet works? No one knows, of course, but there are obvious reasons for concern.  Chinese officials have repeated stated they want an Internet where users must register by IP address, effectively ending anonymity and, perhaps, Internet-based uprisings. 

McDowell warns that Russia, Tajikistan and Uzbekistan asked the U.N. General Assembly to create an “International Code of Conduct for Information Security” to mandate “international norms and rules standardizing the behavior of countries concerning information and cyberspace.”  Even  ITU’s head of corporate strategy, Alexander Ntoko, raised eyebrows  earlier this year in Cancun when he predicted that anonymity online would end.

“Why countries are interested in the ITU varies. … China and Russia, their motivations are not very friendly to human rights or openness,” said Cynthia Wong, a lawyer for Center for Technology and Democracy. “Other places feel like they don't have a voice in the current process. “

One of the main criticisms of the process is a lack of transparency and the limitations on participation of non-governmental groups, according to complaints publicized but the Center for Technology and Democracy and human rights groups.  But it’s clear the ITU plans new ways to raise revenue, which might lead to some form of a per-click tax, according to witnesses who testified before Congress at that May 31 hearing.  wong also expects the ITU to push for mandatory standards for packet delivery – Net standards have been voluntary so far -- which could be a precursor for giving nations more control over incoming and outgoing Internet traffic at their borders.

One state, one vote
“Part of the problem with ITU process is that it's so opaque, so it is really hard to understand what might be at stake,” Wong said.  “But what we do know is Russia and some of the Arab states have put cybersecurity on the table.  There are proposals for greater regulation of traffic routing for security purposes.  Depending on how such regulations are implemented, it could be used to justify greater intrusions on privacy and fundamentally change how the Internet currently works technically.”

In other words, such proposals would make it easier for nations to control Internet traffic.

Practically speaking, it will be difficult for ITU to grab control over the central tool governing the Web – the domain name system – in Dubai. That system is currently operated by ICANN. But a sizable block of non-U.S. countries agreeing to mandatory routing standards could still wield considerable power. Treaty negotiations are one state, one vote. The U.S. government could make a reservation with something in the treaty, but if ITU standards become mandatory, all Internet users could be impacted. One potential outcome would see a “splitting” of the Internet, where traffic from nations following one standard is denied by a bloc of nations following another.

But Wong’s chief concern currently is that groups like hers aren’t welcome in the proceedings. On May 17, the Center for Democracy and Technology and 20 other non-governmental agencies from around the world sent a letter of protest to Secretary-General Dr. Hamadoun Touré, who is running the meeting, saying “there has been scant participation by civil society” in the run-up to Dubai.  But Wong thinks the influential Internet protests around SOPA demonstrate that no government agency will be able to pull a fast one on a recently empowered digital constituency.

“One of the lessons you can pull from SOPA is this: The time when governments can go behind closed doors and make important decisions about how we use the Internet is gone. That’s not acceptable anymore,” she said. “There is a community of users who are paying attention, and are really concerned about the future of the Internet. They are not going to find it acceptable anymore to use these old ways of creating laws. And it behooves governments involved in this to pay attention to that.” To that end, several groups have collaborated to create WCITLeaks.org, to encourage anonymous uploading of conference-related documents.

The experience of SOPA might make the Flame and Stuxnet sagas even more important. Could the potential for Internet users to rise up against U.N. control of the Net be blunted if the alternative seems to be continued control by the U.S., its image damaged by Flame and Stuxnet?  Rohmeyer thinks so: Like many technology experts, he’s skeptical of claims that Flame is the most powerful virus ever created. As others have pointed out, Flame is so large that it’s clearly not designed for stealth operation – whoever created it almost begged for it to be found. He thinks a big part of the publicity around Flame is a function of this battle for control of the Net.

“Is the U.S. releasing viruses so powerful that it needs to lose its control of the Internet?” he said. “I don't think by itself the release of Flame rises to threshold. I’m dubious of is effectiveness, and suspicious of those claims.” 

There are also open questions about ITU’s ability to take operational control over the Internet and cybersecurity.

'No country is an island on the Internet'
“The ITU has been kind of like one big group hug,” said Rohmeyer.  “Do U.N. groups have a track record of success with this kind of operation? The ITU was a standard-setting body for telephony. Once you move out of the connectivity realm into operational controls – wow! That gives them an enormous amount of power. ICANN seems to be functioning. When I woke up this morning, the Internet seemed to be working. I don’t think (ITU) has been in this business before.”

Not everyone in the U.S. is against giving ITU more control over cyberspace.  Jody Westby, who launched the Central Intelligence Agency’s famed In-Q-Tel technology investment arm and is now a highly sought-after U.S. cyberexpert, penned a column for Forbes last week strongly endorsing U.S. participation in IMPACT.

“No country is an island on the Internet, and the U.S. cannot expect to be able to adequately respond to cyberattacks or malware infiltrations without the input and involvement of others around the globe,” said Westby, who disclosed that IMPACT was previously a client of her consultancy firm. “The U.S.’s ‘our way or the highway’ attitude in the important area of cybersecurity appears petulant.”

She also said that, absent U.S. participation, other nations will look to Russia and China for leadership.

“The U.S. appears as the shirking nation state quietly standing on the sidelines while being accused of engaging in cyberwarfare tactics,” she said.

But Rohmeyer was was among those who wondered aloud what was in it for the U.S.

“There is no upside for the U.S. (in participation),” he said. “Is the Internet going to be managed better? Will it be more open?”

Many experts think the end result of Dubai will mean the already tense balance between bottom-up governance, where private firms dictate policy through collaboration, and top-down governance, where governments mandate Internet policies, will grow even more stressed. So will the tension between anonymity, free speech and U.S.-friendly control on one side, they say, vs. accountability, control, and Chinese/Russian/Arab interests on the other. McDowell, from the FCC, has repeatedly warned that even a positive outcome for the U.S. in Dubai offers little reason to celebrate. 

“Given the high profile, not to mention the dedicated efforts by some countries, I cannot imagine that this matter will disappear,” he testified before Congress. “Similarly, I urge skepticism for the ‘minor tweak’ or ‘light touch.’ As we all know, every regulatory action has consequences.”

Phillip Hallam-Baker, writing in the online magazine CircleID, compared the balancing act to the uneasy management of the Church of the Holy Sepulchre in Jerusalem, where power is shared awkwardly among various Christian groups and squabbles are common.

“Backing ICANN appears to be the only sensible course for the U.S. But the problem with this approach is that the U.S. cannot risk ICANN itself being captured by hostile powers, and that in turn means that the U.S. cannot ever release its de facto control of ICANN,” he wrote. “It is an inherently unstable situation that is only maintained through constant vigilance on all sides. “

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It should be clear by now that nothing online is sacred, and no security company is safe from hackers. VeriSign Inc., the firm at the center of so many critical systems on the Web, was infiltrated by hackers in 2010.  Because details of the attack, first disclosed Thursday by Reuters, are so vague we are left to assume the worst -- and the worst is pretty bad.

It's possible that the VeriSign hackers could turn the Web upside down and create an Internet where nothing would be what it seems.  A hacker website could look and act just like your bank's website. Your PC could easily be tricked into downloading automatic software updates that would appear authentic but actually contain viruses. And no matter what web address you typed into your browser, you could be redirected to a criminal's website half-way around the world.

But there's important context to this story which might ratchet down the "Oh My God!" factor considerably.  For starters, there is reason to believe that VeriSign's revelation is nothing more than evidence companies are starting to comply with rules forcing them to disclose such incidents: In other words, similar successful hacks like this may have occurred in the past but simply went unreported.  We'll discuss the evidence for that in a moment. First, let's look at the possibilities raised by the VeriSign attack.

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VeriSign is involved in two distinct, fundamental Internet security structures that could be impacted by this attack.  A successful attack on one would be serious, but a raid on the other could threaten the Internet itself. So let's start there.

VeriSign's most critical function is its role in the Domain Name System address book, which governs what happens when Web users type common name Web addresses into their browsers.  There are 13 "root"  DNS servers placed strategically around the planet for redundancy. VeriSign operates two of them. Should a hacker gain access to this part of VeriSign's business, he or she could theoretically poison the other 11 root DNS servers, and the bad data would eventually spread to the other DNS servers. The consequences could be dire: It could mean that everyone who typed "msnbc.com" into a Web browser would be sent to a computer controlled by criminals, instead of the real msnbc.com website.  A computer criminal with destructive intensions could theoretically ruin the database that maps names with IP addresses and effectively shut down parts of the Internet. It has long been discussed that these root name servers are perhaps the most vulnerable point of the attack on the Internet

But it's more likely that the agencies controlling the other 11 root Domain Name Servers would be able to regain control of the DNS table and restore the system within a day or two, if not within hours. As you might imagine, root DNS servers do disagree from time to time and there is a process for handling that.

It's also important to note that VeriSign, in the SEC disclosure which started this incident, claims that its DNS servers were not attacked by hackers.

"Access was gained to information on a small portion of our computers and servers. We have investigated and do not believe these attacks breached the servers that support our Domain Name System ("DNS") network," the firm wrote in the filing.

VeriSign's other crucial function is issuing digital certificates through its VeriSign Authentication Services group. Certificates impact your computer use every day because they tell your PC that a company's website or software is really what is says it is. Certificates are a crucial part of the SSL system that ultimately displays a friendly looking lock when you visit your online bank.  They also identify the legitimacy of software updates sent to your computer by software makers.  Many modern PCs won't install software unless it is digitally signed. 

A hacker who could influence the way VeriSign issues certificates would be a massive problem for both consumers and corporations.

"VeriSign is one of the most important enterprise trust authorities in the world, which delivers people safely to more than half the world's websites,” wrote Catalin Cosoi, Chief Security Researcher at Bitdefender Labs. “A certificate issued by VeriSign will automatically be accepted by both browsers and operating systems. This kind of incident practically voids all the security provided by 64-bit operating systems,"

In other words, hackers would have an easy time loading viruses onto PCs around the world.

That's terrible, but it's not new. Virus writers have been compromising certificate issuers with abandon for the past 18 months. It's one of the reasons that Stuxnet computer virus managed to infect millions of PCs worldwide.  That also means structures are in place to deal with fraudulent certificates.

"The worst case scenario would be several phishing attacks with valid certificates that browsers will render as legit," Cosoi said. "This would potentially yield a huge level of data that could be exploited for financial gain. However, it’s important to remember that a strong anti-phishing solution will keep you protected."

Of course, it's not even clear from VeriSign's filing that its certificate business was compromised.  Complicating matters further: Symantec Corp. purchased most of that business from VeriSign last year. For its part, Symantec said on Thursday that the assets it acquired in the sale were not compromised.

"We want to make it very clear that Symantec takes the security and proper functionality of its solutions very seriously. The Trust Services (SSL), User Authentication (VIP) and other production systems acquired by Symantec were not compromised by the corporate network security breach mentioned in the VeriSign, Inc. quarterly filing," said Symantec spokeswoman Nicole Kenyon in a statement to msnbnc.com.

Of course, it’s possible that one of Verisign’s other business unit – it provides extensive security consulting, for example – was the hackers’ only target.  That seems unlikely, however, given the target-rich environment the offers to computer criminals.

To be sure, many experts think the Verisign attack is serious business.

"The SEC filing says 'Information stored on the compromised corporate systems was exfiltrated.' That sounds like a targeted attack to me," said Mikko Hypponen, chief technology officer at F-Secure.com. "Like the one against Google. And RSA. And Lockheed-Martin."

But it's possible the VeriSign admission, buried in the SEC filing, is little more than paperwork which puts in print something that security professionals have long understood: No firm is safe from hackers.  This might be at once comforting and disturbing: In October of last year, the SEC issued guidelines that called out public firms for under-disclosing security leaks and hinted strongly that fines would come when firms failed to report successful hacker attacks. The VeriSign quarterly report was issued soon after, and it's easy to imagine the disclosure is more routine than anyone would like to admit.  In fact, Stewart Baker, a lawyer at Steptoe & Johnson, predicted as much in a blog earlier this month.

"With enforcement so easy, and the harm from breaches so tangible, so serious and so likely to bring headlines, no one should expect the enforcers to go easy on companies that have been slow to disclose. Instead I expect a growing wave of cases based on companies' failure to make timely disclosure of ongoing breaches," he wrote.

Clearly, admission by VeriSign that executives at the firm were unaware of the breach shows a terrible lack of coordination inside the firm. And it's scary to read this admission, too: "Given the nature of such attacks, we cannot assure that our remedial actions will be sufficient to thwart future attacks or prevent the future loss of information."

Still, it’s important to note that we are talking about attacks that could be a year old, and whatever they were, criminals are already deep in the process of exploiting them. Sad to say there’s nothing most consumers can do in response to this report.

In health news, there’s always the complicated issue of increased diagnosis vs. increased incidence. Is a new disease on the rise, or are we simply better at finding cases of it? The VeriSign incident raises the same question.

But the deeper truth here is probably something that professionals have known for some time: In the cat and mouse game between hackers and security firms, hackers are winning and, in some places, it's starting to look like a blowout.  

 

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