Privacy Amendment (Notifiable Data Breaches) Act 2017: When an eligible breach occurs

This is Part 4 in our 6 part series on the new Privacy Amendment (Notifiable Data Breaches) Act 2017, coming into effect in Australia on 22nd February 2018. Click here to read the whole series.

So far, we’ve covered the basics of the NDB Act, what the act involves and who needs to comply, as well as what this legislative change might mean for Australian businesses. This week, we look at what happens in the case of an eligible breach, and how non-compliance will be penalised.

What happens if an eligible breach occurs?

If an organisation experiences a breach, it will be the responsibility of that organisation to ensure it is dealt with correctly and quickly. Organisations have a duty of notification to the Office of the Australian Information Commissioner (OAIC), as well as to the individuals whose information was compromised. If there are reasonable grounds to believe a breach has occurred, notification should be given as soon as practicable, within 30 days.

To notify correctly, the organisation should prepare a statement, including:

• the identity and contact details of the organisation that experienced the breach;
• a description of the breach;
• a description of the type of information involved in the breach; and
• recommendations for possible steps to be taken in response to the breach.

All parties at risk of serious harm must be notified. If it isn’t possible to separately notify only those who are at risk, the organisation should notify all the individuals whose information was involved (or potentially involved) in the breach, even if some may not be at risk of serious harm. If neither of these options is practicable, notification must be published on the organisation’s website (if it has one). The website notice must be publicised sufficiently, so that the individuals are likely to see it and to know that their data has been compromised. 

What are the penalties of non-compliance?

The NDB scheme calls for strict compliance, with non-compliance attracting heavy financial penalties and other consequences. While monetary consequences are the most obvious, there are some serious practical ramifications for businesses that choose not to report an eligible breach. In some cases, the financial cost is only one aspect of a larger problem, such as business interruption and loss of customer trust.

The ramifications of non-compliance and failure to report can include:

• fines of up to $360,000 for individuals;
• fines of up to $1.8 million for organisations;
• legal aid costs;
• costs incurred by business interruption; and
• costs incurred by incident response and efforts to repair customer trust.

It’s important to remember that even correctly reporting a breach is likely to carry lower, though still significant, financial and practical consequences, including:

• damage to reputation and a loss of customer trust (and the cost of repairing reputation);
• financial costs incurred by business interruption; and
• financial costs incurred by incident response.

These consequences are disincentives for businesses to allow a breach to occur, and especially discourage businesses from hiding a breach if it does occur. This is in line with the goals of the NDB Act, which should increase digital security and decrease the instance of data breaches in Australia.

The consequences of reporting a breach, and the penalties for non-compliance, mean that businesses will have a strong incentive to tighten all aspects of digital security. The new consequences of a data breach should spark a systematic change of attitude for many organisations. Data security poses a growing risk with increasing ramifications, and needs to be elevated to boardroom level as the NDB Act is introduced this month.

For more information, click here to download our white paper all about the new Act, including our tips and advice on meeting your data security obligations.

This blog post is intended for informational purposes only. Although every effort has been made to present accurate and current information, accuracy cannot be guaranteed. Please note that the information within this blog post does not constitute legal advice and should not be relied upon as such. For legal or professional advice, contact a solicitor.

Privacy Amendment (Notifiable Data Breaches) Act 2017: Data, compliance and implications

This is Part 3 in our 6 part series on the new Privacy Amendment (Notifiable Data Breaches) Act 2017, coming into effect in Australia on 22nd February 2018. Click here to read Part 1: Introduction to the new legislation. Click here to read Part 2: Eligible data breaches.

In previous posts, we introduced you to the basics of the NDB Act, including what makes a breach ‘eligible’ for reporting under the Act. This week we look at what kind of data the NDB Act will cover, who needs to comply, and the implications this Act will have on Australian digital security in the workplace.

What kind of data does the Act cover?

The Privacy Amendment (Notifiable Data Breaches) Act 2017 applies to all personal information collected and stored by organisations in the course of doing business. Personal information is considered sensitive, or able to cause any type of harm to an individual if it is disclosed without authority. For example, unauthorised disclosure may enable another person or people to commit fraudulent activity resulting in financial crime or identity theft, damage the reputation of an individual or their business, or involve a risk of physical harm.

Some types of information covered by the Act are listed below. Though the list is not exhaustive, it gives an indication of the nature of private or sensitive information, and is a good starting point for companies to understand the wide scope of the NDB Act. The act can cover:

• Names;
• Telephone numbers;
• Postal addresses;
• Email addresses;
• Identification, such as drivers licence or passport information;
• Medical records;
• Personal opinion statements of a sensitive nature;
• TFN numbers;
• Online identifiers such as IP addresses; and
• Login details for online banking and payment accounts.

Disclosure of any one of these types alone, or several types in one incident, can constitute an eligible breach. A certain number of individuals need not be at risk; the unauthorised access of a single individual’s information can constitute an eligible breach.

Who needs to comply?

The NDB Act will apply to most Australian businesses and government agencies that collect, handle, or store personal information. As an amendment to the existing Privacy Act 1988, the NDB Act will govern any organisations currently operating under that Privacy Act. This includes:

• businesses and not-for-profit organisations with an annual turnover greater than $3 million;
• Australian government agencies;
• health services in the private sector including alternative medicines and fitness institutions;
• child care centres, private schools, and other private educational institutions; and
• businesses that sell or purchase personal information in conjunction with credit reporting bodies.

What are the key implications?

The Act will change the way organisations look at digital security, by creating a strong disincentive for businesses to allow a data breach. The new law leaves no room for a breach to occur without a penalty. If a breach occurs, organisations will be obliged to notify the OAIC and the affected individuals, essentially publicising their failure to keep data safe. Public knowledge of a breach can incur damage to reputation, along with financial costs arising from legal aid and efforts to regain customer trust.

If, however, a breach is discovered not to have been reported correctly, the financial costs rise, including legal costs, clean-up, and fines of up to $1.8 million dollars. It follows that the only solution for businesses under the NDB Act is not to allow a breach to occur.

The Act is intended to create a sense of transparency across Australian organisations, and assure Australians that businesses are taking personal digital security seriously. It should encourage organisations to inspect and improve their digital security practices prior to 22nd February 2018 and to maintain best practice for digital security into the future.

For more information, click here to download our white paper all about the new Act, including our tips and advice on meeting your data security obligations.

This blog post is intended for informational purposes only. Although every effort has been made to present accurate and current information, accuracy cannot be guaranteed. Please note that the information within this blog post does not constitute legal advice and should not be relied upon as such. For legal or professional advice, contact a solicitor.

Privacy Amendment (Notifiable Data Breaches) Act 2017: Eligible data breaches

This is Part 2 in our 6 part series on the new Privacy Amendment (Notifiable Data Breaches) Act 2017, coming into effect in Australia on 22nd February 2018. Click here to read Part 1: Introduction to the new legislation.

In last week’s post, we introduced you to the basics of the NDB act and what it will mean for digital security in Australia. The new legislation, effective 22nd February 2018, calls for mandatory reporting of eligible data breaches to the Office of the Australian Information Commissioner (OAIC) and the individual(s) affected by the breach. This week we discuss what makes an eligible breach ‘eligible’.

What is an eligible data breach?

If you’re familiar with the NDB scheme from our last post, you’ll be acquainted with the phrase ‘eligible data breach’. Under the new legislation, organisations are required to report a data breach if it is considered ‘eligible’. Eligibility depends on the nature of the compromised information and the potential risk that unauthorised disclosure may cause to the individual(s) whose information has been compromised.

An eligible breach occurs when there is unauthorised disclosure of personal information to external entities and the disclosure of information is likely to result in a real risk of serious harm for any of the individuals to whom the information relates.

Events that can constitute an eligible breach could include:

• lost or stolen information in its hard form (such as in computer hard drives or paper records);
• improperly destroyed data that is disposed of insecurely;
• hacked databases;
• employees accessing information that falls outside their authorisation; or
• organisations sending data unintentionally to the wrong recipient.

In order for a potential breach to be eligible, it is not necessary for the occurrence of the breach to be proven. If there are reasonable grounds to suspect a breach has occurred, or data has been lost and can’t be retrieved, the breach is considered eligible for notification due to the potential risk of serious harm.

What is ‘serious harm’?

Serious harm is defined by the explanatory memorandum that accompanies the NDB act. It comes in many forms, and can include:

• financial or economic harm;
• physical harm;
• psychological or emotional harm; and/or
• damage to reputation.

If information has been compromised and could potentially cause any type of harm — to a single individual or to many individuals — it should be reported.

There are many situations in which serious harm can result from the disclosure of personal information, and the potential harm varies according to the information and to the individuals in question. For example, serious harm can result from the disclosure of:

• financial information, resulting in financial fraud;
• identity information, resulting in identity theft or fraud;
• addresses or contact information of certain individuals, resulting in potential physical or emotional harassment and harm;
• statements made under a confidentiality agreement, resulting in potential reputation damage; or
• sensitive medical information, resulting in potential reputation damage.

These are only some examples of the situations in which individuals can experience serious harm as the result of a data breach. Under the new legislation, it would be prudent for organisations to ensure they report any breach presenting even a remote risk of serious harm, in order to avoid the harsh penalties that may apply for non-compliance.

When is there a real risk of serious harm?

Assessing if there is a risk of serious harm relies on factors like:

• the nature and sensitivity of the information that has been/ may have been disclosed;
• the security measures or encryption still protecting the compromised information;
• the type of person or people who obtained the information; and
• the nature of the potential harm that may result from unauthorised disclosure.

If a reasonable person, an objective bystander, would see a probable risk of harm for the individual(s) whose information has been compromised, it is considered that there is real risk of serious harm.

If an organisation has experienced a data breach in which data is lost, stolen, improperly disposed of, or accessed without authority, and the information could carry a real risk of serious harm to an individual or individuals, it is considered an eligible breach and must be reported to the OAIC within 30 days.

For more information, click here to download our white paper all about the new Act, including our tips and advice on meeting your data security obligations.

This blog post is intended for informational purposes only. Although every effort has been made to present accurate and current information, accuracy cannot be guaranteed. Please note that the information within this blog post does not constitute legal advice and should not be relied upon as such. For legal or professional advice, contact a solicitor.

Privacy Amendment (Notifiable Data Breaches) Act 2017: Introduction to the new legislation

This is Part 1 in our new 6 part series on the new Privacy Amendment (Notifiable Data Breaches) Act 2017, coming into effect in Australia on 22nd February 2018.

Australians will see changes in digital security practices in 2018 in the face of new privacy protection laws. The Privacy Amendment (Notifiable Data Breaches) Act 2017 ("NDB") is an important new addition to legislation that will change the nature of digital security for Australian businesses, and ultimately for all Australians. The NDB Act is an amendment to the Privacy Act 1988, and introduces mandatory reporting in the case of an eligible data breach.

Under the new law, if a known or suspected data breach involves a real risk of serious harm to one or more individuals, the breach must be reported to the Office of the Australian Information Commissioner (OAIC) and to the affected individual(s).

How will the NDB increase privacy protection?

The NDB scheme is designed to encourage organisations to increase digital security by creating strong disincentives for data holding entities to allow a security breach.

The NDB is therefore a principles-based approach to increasing privacy protection. It functions as a self-regulating system by increasing the potential consequences of weak digital security. Businesses don’t want to publicise data breaches; doing so involves an expensive cleanup and inevitable loss of confidence from customers. However, unreported breaches could now incur penalties up to $1.8 million in fines, as well as negative publicity and legal aid costs.

With organisations soon obliged to report a breach, they will increase digital security in order to avoid one. Under the new law, data holding entities will be inclined to take data security more seriously than ever before.

Who is affected by the NDB?

The NDB Act, as an amendment to the Privacy Act 1988, is applicable to all entities operating under the Privacy Act, including:

• entities deemed to hold information disclosed to overseas recipients;
• credit reporting bodies and credit providers;
• organisations that hold tax file information;
• government organisations, health providers, and educational institutions; and
• businesses or not-for-profits with an annual turnover greater than $3 million.

The NDB directly affects organisations, but all Australians stand to benefit from the scheme. Because of the heavy penalties and reputation risk involved, and the wide scope of the NDB in business, Australians can assume that this new digital security legislation will reduce the incidence of data breaches. Additionally, it will promote transparency in privacy protection; it will offer affected individuals the opportunity to mitigate the negative effects of compromised personal data.

What are the key changes to current legislation?

The current Privacy Act leaves data breach notification at the discretion of data holding organisations. A business can decide whether or not it wishes to report data breaches to the OAIC, or to individuals whose personal information has been exposed by a data breach. Often, individuals are not warned when their data is accessed by potentially malicious parties, meaning they may be unable to take preventative action.

When the NDB scheme commences next month, this will change. If an eligible data breach occurs, organisations will be legally obliged to report to the OAIC and to individuals at real risk of serious harm. Not to do so will incur heavy financial penalties and a likely loss of trust from the Australian public and partner organisations.

Under current legislation, there is no time limit within which a breach must be handled. Under the NDB, if an organisation experiences a confirmed breach, or has reasonable grounds to suspect a breach has occurred, it must conduct an expeditious assessment within 30 days.

When does the NDB come into effect?

The Privacy Amendment (Notifiable Data Breaches) Bill 2016 was passed by the House of Representatives in February 2017. The key amendments will commence on 22nd February 2018. Any organisation that experiences an eligible data breach from this date will be required to follow the reporting procedures of the NDB.

Regulatory bodies and data security experts suggest businesses take immediate steps to safeguard their digital security in preparation for the change. For some tips on how to strengthen your organisation’s digital security, see our post 10 Tips to Secure Your Company’s Data Against Cyber Threats. 

For more information, click here to download our white paper all about the new Act, including our tips and advice on meeting your data security obligations.

This blog post is intended for informational purposes only. Although every effort has been made to present accurate and current information, accuracy cannot be guaranteed. Please note that the information within this blog post does not constitute legal advice and should not be relied upon as such. For legal or professional advice, contact a solicitor.

Data Protection Day: A timely reminder that data protection laws are changing

Data Protection Day falls on January 28th, acting as an annual international reminder of the importance of digital security. Since 2006, Data Protection Day (or Data Privacy Day) has reminded organisations to start each year with strong digital defences. The coming year will see significant changes to data protection legislation worldwide; new data protection laws are being introduced that will change the way organisations and individuals view and manage privacy protection.

The incidence of cyber crimes and identity theft has increased rapidly in recent years, inciting these large-scale legislative changes and making the message of Data Protection Day more potent in 2018 than ever before.

The changes will raise global awareness of data security in 2018. Changes to European Union law will govern any organisation worldwide that handles EU data subjects, demanding the attention of every international business. This year will see companies worldwide inspecting their data privacy policies, prevention practices, and breach response procedures in order to prepare for the changes.

What will change in 2018?

The two jurisdictions undergoing the most change this year are likely to be Australia and the EU, introducing the Privacy Amendment (Notifiable Data Breaches) Act 2017 (NDB) and the General Data Protection Regulation (GDPR), respectively. Canada is also working towards enacting data breach notification regulations this year, the Breach of Security Safeguard Regulations, similar to the NDB act in Australia.

The NDB act and the GDPR share a common goal: to increase privacy protection, to minimise the frequency of data breaches, and to create transparency in data handling and processing procedures. While the objectives of the two laws are similar, they are designed to achieve success in different ways.

The new Australian privacy law takes a principles-based approach, encouraging organisations to increase data protection in order to avoid an eligible data breach, and therefore to avoid fines and negative publicity. The new EU privacy law takes a practice-based approach, making increased data protection a legal obligation, rather than a suggested precaution against a data breach and its consequences. The GDPR also offers far greater financial penalties for non-compliance.

As well as clearly outlined steps to be taken by data processors, the GDPR involves several regulations not included in Australian law, including:

• the mandatory appointment of protection officers where data is processed regularly;
• a minimum standard of information technology systems and privacy protection programming;
• the right to data portability (the right of a data subject to request access to, and share, their data) and;
• the right to erasure (the mandatory destruction of data, once it is no longer relevant, or upon request).

Because of the comprehensive nature of the GDPR, it is set to become the gold standard of privacy protection legislation, and will have a pervasive impact on privacy protection worldwide.

A summary of the GDPR and the NDB Privacy Amendment

How can your business prepare for the changes?

Staying informed about which legislative changes might affect your business is the first step to success as these new laws come into play. Access our best-practice guide to securing your business against cyber threats, for further steps you can take in-house. Contact Avtel Data Destruction for information on our unique and secure data destruction method that complies with new legislation.

This blog post is intended for informational purposes only. Although every effort has been made to present accurate and current information, accuracy cannot be guaranteed. Please note that the information within this document does not constitute legal advice and should not be relied upon as such. For legal or professional advice, contact a solicitor.