Sony's Half-Right Breach Tactics: Shutdown A Win, Notification A Fail

Sony announced on Tuesday (April 26) that its PlayStation Network game service and online store had been breached a week before and that intruders had gained access to the personal information of 77 million users. That included names, addresses, birthdates, E-mail addresses and—maybe, just maybe—credit-card numbers. Sony apparently didn't think card numbers were exposed, but "out of an abundance of caution," decided to warn customers. A word of advice, Sony: Next time you want to show an "abundance of caution," do it before someone breaks in and steals 77 million customers' worth of personal data.

Actually, Sony's response to the breach was half right. As soon as it learned it had been attacked, Sony took down the game network, so thieves couldn't use stolen passwords and the company's forensics people could search for evidence uninterrupted. What Sony got wrong was waiting a week before announcing the breach and issuing the payment-card warning. In fact, Sony could have given its customers a heads-up almost immediately—and without making a public announcement.

Let's be fair to Sony, though: It was only a week, not months, before the company went public about the breach. It started investigating immediately, and it shut down its online business during the investigation, which was a very effective way of preventing thieves from buying anything using the stolen credentials—at least, buying anything from the online PlayStation Store.

On the other hand, some customers were very unhappy about the delay in notifying them. And the day after the announcement, the obligatory class-action lawsuit was filed, complaining that Sony failed to secure the data, failed to notify customers promptly and "unreasonably delayed in bringing the PSN service back on line." (Good to see someone still remembers what's important.)

But what was Sony to do? Conventional wisdom says that publicly announcing the breach will tip off the thieves. Conventional wisdom also says (as do the laws of some states) that notifying affected card holders "as soon as possible" is the way to go. On the other hand, immediately notifying 77 million customers that their payment-card accounts might be compromised—but probably weren't—probably would have been premature and certainly would have been confusing.

There was another way to attack the notification problem, though—one that might have scored Sony points for fast notification while pushing responsibility off to someone else: Sony could have immediately notified the issuing bank of each payment card that the account had a chance of having been compromised.

Sony could have automated that process and pumped out a list of compromised numbers to every issuing bank. Then the banks would have had the option of gauging the risk and deciding whether to notify customers. Sony still would have taken the hit for the security breach, and the responses of the banks would have been all over the map—some would have taken longer to notify customers than the week it took Sony to decide to send out its 77-million-E-mail notification blast, while others might have contacted customers immediately and still others may have done nothing.

That approach would have had the advantage of not tipping off the thieves—no public announcement, not even a reason to connect the compromised accounts to Sony if banks decided to notify their customers—and at the same time getting word out to payment-card holders. If that had shaved a few days off the account-cancellation schedule for customers who preferred to err on the side of caution, those customers would be just that much happier.

Blocking thieves by shutting down their ability to use stolen passwords is good. Starting the wheels turning immediately to notify users when a breach occurs is better—especially if it shifts responsibility from a retailer onto issuing banks.

Then again, preventing thieves from stealing all that customer information in the first place would be best of all.