Security Product Liability Protections Emerge

In what may be the first signs of a major shift in security, WhiteHat and FireEye in the past couple of weeks have announced product liability protection for their security customers.

While the two vendors are taking different approaches to liability protection, the underlying theme is offering organizations who buy their products and services some guarantee of financial protection in the wake of a data breach. WhiteHat has enhanced its full-refund warranty guarantee policy for its Sentinel Elite Web vulnerability assessment service by doubling breach loss coverage to $500,000. FireEye, meantime, has obtained US Department of Homeland Security certification of its Multi-Vector Virtual Execution engine and its Dynamic Threat Intelligence cloud offering under the agency's SAFETY Act program, which protects its customers from lawsuits and other litigation in the wake of a major cyberattack.

Several security experts long have touted the concept of security- and other software vendors offering product liability protections to shield users from the fallout of exploited bugs in those products, or failures of them to catch attacks. Dan Geer, CISO for nonprofit In-Q-Tel, most recently called for legal measures that force software makers to accept liability responsibility for vulnerabilities.

WhiteHat Security first rolled out its warranty program last August, guaranteeing a full refund if it misses a bug that leads to a customers' website getting hacked. It initially offered up to $250,000 in breach loss coverage, a figure that it has now doubled. WhiteHat's customers are required under the policy to fix the bugs it finds, and if they suffer a breach via a bug WhiteHat missed, they get their money back, plus coverage of up to $500,000 in losses from the attack. No WhiteHat customers have filed claims as yet under the warranty program.

Jeremiah Grossman, founder of WhiteHat, says the timing is right for security product guarantees, and he is urging other security vendors to do the same. "Also, the tipping point for me is watching the growth rate for cybersecurity insurance," which current makes up about one-third of security spending, he says.

"So cyber insurance has one-third of the pie. Customers are not approaching a point of spending that on pure downside protection. This is a big missed opportunity for information security," he says.

Grossman got the inspiration for security guarantees after a conversation with his father a few years ago. His dad asked whether WhiteHat's Web vulnerability assessment service was like insurance, and that struck a chord with Grossman. "I said, 'Not really. Our job is to protect our customers,'" Grossman recalls of the conversation. "That stuck with me: we're [security vendors] not accountable for those we purport to protect."

FireEye, meanwhile, is the first major cybersecurity firm to be certified under DHS's SAFETY Act, which was originally created in 2002 by the DHS to foster anti-terrorism technology development and protects both the vendors and customers of those technologies from legal threats in the wake of attacks. One of the first security vendors to attain certification under the Act was MorphoTrust USA, a document authentication vendor. To date, the certification has not been well-known in the cybersecurity realm.

If FireEye Multi-Vector Virtual Execution engine and Dynamic Threat Intelligence customers suffer a cyberattack, they are protected from lawsuits or legal claims that ensue, provided that the DHS Secretary deems the attack damaging and harmful economically or with the intent to cause harm.

Brian Finch, outside counsel to FireEye, says while it's up to DHS to define the attack, major cybercriminal hacks could indeed fall into that category. "It provides a number of procedural defenses to FireEye as a vendor and its customers" in the wake of a major attack, he says.

FireEye general counsel and senior vice president Alexa King says the SAFETY Act certification offers the company's customers another level of protection. The certification process itself is "incredibly rigorous," King says.

"It took us almost a year," she says. "It's not for the faint of heart. Not all technologies [from vendors] are going to make it through" the vetting process by the DHS, she says.

One of the big protections it offers is relief from unnecessary litigation. "A lot of claims [for breaches] are baseless," Finch notes. "This manages to help limit some of the really expansive litigation out there."

Any legal claims filed related to MVX or DTI would be "limited" or "dismissed" for FireEye customers, and FireEye itself would be exempt from any "applicable" litigation associated with the certified products, the company said.

[The SAFETY Act can offer a layer of legal protection for cyber security vendors, providers, and enterprise security policies in the wake of an attack, an attorney says. Read DHS Anti-Terrorism Program Could Provide Cyberattack Liability Protection.]

Both WhiteHat and FireEye say their liability offerings also give them a value-add in their markets, and go hand-in-hand with cybersecurity insurance policies.