“This company had sufficient cause to believe that the private information contained in the missing computer had been acquired by a person without valid authorization. Had the sensitive personal information fallen into the hands of criminals with the intent of identity theft, there would have been ample time to victimize hundreds of thousands of consumers. The law requires prompt notice to prevent such disastrous results,” said Cuomo, in a release.

The punishment was reimbursement of $60,000 to Cuomo's office for the cost of the investigation, as well as the agreement to ensure proper notification in the future, as well as the implementation of practices to improve data security.

While the fine and Scout's Honor promise will have little impact on CS Stars' quarterly report, what we have now is a state-level precedent for lawmakers to go after corporations who do not follow their state's flavor of data breach notification legislation. Cuomo's victory is just swell for New York consumers, but it is the nightmare that all corporations were fearing. It gives the power for state officials to demand that national corporations comply with the minutiae of individual notification requirements.

This development gives great credence to the notion that data privacy must be addressed at the federal level. This is sure to be an increasingly important Congressional issue as more settlements of the like come to the fore.