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Data Breaches - Life is short. Notify your Breaches.

posted 8th December 2017
Recent data breaches of large-scale entities such as Ashley Madison and the Australian Red Cross Blood Service have highlighted the difficulties organisations face in keeping personal information secure. The consequences for entities who do suffer such a breach can be extreme: simply look at the fallout from the Ashley Madison saga, which resulted in substantial fines and compensation payouts, not to mention significant reputational damage.

However, many organisations are unaware of upcoming changes to the Privacy Act. From 22 February 2018, entities will have duties to disclose to individuals when their personal information may have been compromised in a data breach.

If you are involved with an entity which collects personal information, it is critical to ensure that the information is stored securely, that you are prepared in the event of a breach and your privacy policy is updated.

Who must comply with the new regime?
The entities who must comply with the mandatory disclosure regime are those with an annual turnover of more than $3 million. Understandably, this applies to a large amount of businesses, government agencies and other organisations across Australia in a variety of different fields and industries.

When does the obligation to notify arise?
A data breach occurs when personal information is disclosed to someone not authorised to access it. Typical data breaches include hacks of databases, the loss of devices containing personal information and mistakenly providing personal information to the wrong person.

Notification obligations arise as soon as the particular entity is aware of reasonable grounds for believing that there has been a data breach which is likely to result in serious harm.

There is no obligation to notify of an eligible data breach where an entity has taken remedial action which will prevent the likely risk of serious harm. It is therefore important for entities to respond quickly to data breaches, as they may relieve themselves of their disclosure obligation where appropriate action is taken.

What constitutes serious harm?
‘Serious harm’ is not a limited definition, and can extend to physical, psychological, emotional, financial or reputational harm (covering a wide range of matters including identity theft, financial loss, threats and loss of business or employment opportunities).

What is the process required for notification?
Once an eligible data breach has occurred, the entity must prepare a statement that includes the following information:

  1. the identity and contact details of the entity;
  2. a description of the eligible data breach;
  3. the kind of personal information concerned; and
  4. recommendations about the steps affected individuals should take.

The statement must be completed as soon as practicable and given to the affected individuals and the Office of the Australian Information Commissioner. The OAIC has prepared a draft, pro forma statement which can be found here.

What should you be doing?
The changes are right around the corner, so it is important for you to make sure you have appropriate policies and procedures in place that you are actively implementing. If you don’t think a breach could happen to you, think again. A recent breach exposed the records of 50,000 Australian workers, including employees of the Department of Finance, the Australian Electoral Commission and AMP among others, and was caused by the mistake of a third party contractor.

Where your organisation collects personal information, make sure it is stored securely. Don’t collect any information you don’t need or use, as this simply increases the risk of breach. Get a procedure in place to deal with a data breach, including any assessment and notification requirements, and make sure you follow it. Considering the large change, it may also be time to update your privacy policy to reflect the legislation.

If you need assistance in updating or adopting the right policy, please contact the Corporate and Commercial Team. Be wary, as penalties may apply to those organisations which do not comply with their notification requirements.

For more information contact the Corporate and Commercial Team:

Alice Tay Partner Corporate and Commercial
(02) 6279 4426

Nicholas Scotton Lawyer Corporate and Commercial
(02) 6279 4414

This material has been prepared for the general information of clients of Meyer Vandenberg Lawyers. Its is not intended to take the place of professional advice and readers should not take action on specific issues in reliance upon any matter of information contained in it.