The Law Commission has released its fourth and final report on privacy law. One of its key recommendations is data breach notification, or as the Commission puts it:
… notification should be mandatory in cases where notification will enable people to take steps to mitigate a risk of significant harm, or where the breach is a serious one (for example, because the information is particularly sensitive).
Notification should be made to the individual whose information has been compromised, and also to the Office of the Privacy Commissioner.
This would be a major – and welcome – change from the status quo, which is that agencies (e.g. companies holding personal information) are generally under no legal obligation (unless such obligation is assumed) to report data breaches. Sir Geoffrey Palmer commented on the situation last year:
Another subject on which we are contemplating some changes is data breach notification… Currently holders of personal information, both public and private sector agencies, are under no legal obligation to notify individuals or the Privacy Commissioner when an individual’s personal information is compromised – if, for example, it is lost or obtained by computer hackers. … This means that agencies are not required to notify individuals whose personal information has been compromised, no matter how sensitive the information and no matter how serious the risk of harm that could be suffered as a result.
A data breach notification regime, while imposing some compliance cost on organisations, is a necessary thing in today’s world.
Recently I had my own example of when such a regime might have been useful, when my bank informed me that I had “suspicious activity” on my credit card – a large transaction from Portugal. What was curious was that I had only had that card for a few months, and had not used it much at all (and not online at all). The card could have been physically copied somehow, but if one of the few merchants who I had used it with had lost the data via hacking, there is no obligation for them to advise me of the loss – nor any other information that may have been lost with it.
The example of credit cards was specifically mentioned by Law Commissioner Professor John Burrows in announcing the recommendation:
“People have a right to know if their information has been compromised in a serious way”, said Law Commissioner Professor John Burrows. “Then they can take measures to protect themselves (such as cancelling credit cards), or can at least prepare themselves for any consequences of the breach.”
It will be interesting to see how the details of such a regime are eventually formulated.