Privacy Advisor

Ask the Privacy Expert

July 1, 2006

Eduardo Ustaran

Q Are there any EU requirements to notify consumers of a security breach and have there been any breaches there to date?

A This is one of the most frequent questions being asked by North American privacy lawyers these days. From a U.S. point of view, this is an obvious issue to explore given the frantic trend to pass laws similar to California's Security Breach Information Act. This piece of legislation, which was adopted more than three years ago, was a sleeping giant until early 2005 after the ChoicePoint breach. The rest is history. The adoption of laws requiring the notification of breaches to the people affected - or potentially affected - is likely to continue as more states follow California's lead.

However, in the EU, there is only an obligation under Article 17 of the data protection directive that requires the adoption of appropriate technical and organizational measures to protect personal data against security breaches. This is an overarching obligation that demands an appropriate level of security. A contravention of this requirement is a serious matter. In fact, registration requirements concerning security measures in Italy and Spain aside, this is probably one of the provisions of the EU data protection directive that has been implemented more uniformly across member states. However, a simple, negative answer is likely to be met with disbelief by U.S. lawyers, so the question merits a slightly deeper analysis of the EU directive to check whether this type of obligation is actually hidden somewhere.

One possibility to consider is Article 10 of the EU data protection directive, known as the Information Provision Obligation, often seen as the cornerstone of the whole European data protection regime. This obligation is relatively open-ended and refers to the provision of information about the recipients or categories of recipients of the data. It has been suggested that the fact that data has been lost or stolen merits a notification to those affected under this obligation. However, the point of Article 10 is to enable people to make an informed decision as to whether they are happy for the controller organization to have and use their personal information, so turning that into a disclosure requirement following a breach seems to be stretching the law.

On balance, the scope of Article 10 is probably not clear enough to say for sure that following a security breach, European organizations are obliged by virtue of that article to notify individuals. The same applies to the even more generic fairness requirement of Article 6. On the face of the letter of the law, the answer continues to be that EU law does not impose notification obligations following a breach. Indeed, security breaches involving the loss of data are not normally followed by a public notification. Therefore, the only breaches that tend to be revealed are those which receive media coverage - as in the case of a glitch that exposed the passwords of customers of credit card provider Egg during the upgrade of its online security measures at the end of 2005 - or incidents reported by the enforcement authorities.

One notable exemption was the loss of employee data at UK public sector body Jobcentre earlier this year, which was followed by a carefully planned "damage mitigation campaign" that included notifications and regular updates to those affected. This also prompted considerable media attention, but Jobcentre's swift reaction contributed to avoid enforcement action by the regulator.

Before ruling out this type of obligation in Europe, one should look again at the obligations under Article 17 of the EU data protection directive. One of the obvious implications of Article 17 is that any measures adopted must be maintained and re-visited on an ongoing basis. Those measures clearly are not limited to having physical security and firewall technology, but will cover any feasible step to protect the data.

Given that communicating a security breach involving loss of data is likely to contribute to the protection of individuals, there is a strong argument to say that operating a prompt notification procedure following breaches is legally required in the EU and that type of measure should be part of any sensible information security policy. This approach is likely to become the norm in the near future in the EU irrespective of any more explicit notification obligations.

Eduardo Ustaran is a partner in the Privacy & Information Law Unit at London law firm Field Fisher Waterhouse and can be reached at eduardo.ustaran@ffw.com This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .
This response represents the personal opinion of our expert (and not that of his/her employer) and cannot be considered to be legal advice. If you need legal advice on the issues raised by this question, we recommend that you seek legal guidance from an attorney familiar with these laws.