A Bill introduced on 30 May 2013 into the Federal Parliament adds mandatory data breach notification to the numerous requirements that organisations and agencies will need to address before changes to the Privacy Act 1988 take effect on 12 March 2014.
The Privacy Amendment (Privacy Alerts) Bill 2013 ('Privacy Alerts Bill') will, if passed in its current form, impose new requirements on agencies and organisations to notify the Australian Information Commissioner ('Commissioner') and affected individuals where there has been a 'serious data breach'.
The proposed changes are based on recommendations made by the Australian Law Reform Commission ('ALRC') in 2008 to address its concerns about the increasing potential harm that can be caused by privacy breaches associated with advances in technology and increasing demand and capacity for electronic storage and processing of personal data. The essential rationale behind the ALRC's recommendation was that if individuals are to take action to mitigate the impact of a data breach, they need to be made aware that the breach has occurred.
The Privacy Amendment (Enhance Privacy Protection) Act 2012, which comes into effect on 12 March 2014 gives effect to the majority of the ALRC's recommendations, including for the creation of a new set of privacy principles to replace the existing NPPs and IPPs and a significantly more robust compliance framework. (See Australian privacy reforms will significantly impact your business!).
However, the Government decided to consult further on the recommendation for data breach notification. In October 2012, the AttorneyGeneral's Department released a Discussion paper on the issue, and an exposure draft of the Privacy Alerts Bill was released on a confidential basis to key stakeholders in April 2013. The Bill has been developed and refined in light of that consultation.
Currently private sector organisations and Commonwealth Government agencies (collectively referred to as 'entities') have an obligation to put in place 'reasonable' security safeguards and to take 'reasonable steps' to keep the personal information they hold secure. In the Data Breach Notification Guideline issued in April 2012 ('Guide'), the OAIC warns that those 'reasonable steps' may include the implementation of a data breach policy and response plan that includes notifying affected individuals and the OAIC. The OAIC encourages entities to comply with the Guide which provides general guidance for entities when responding to a data breaches involving personal information that they hold. The obligations in the Privacy Alerts Bill generally reflect the recommendations in the Guide.
THE NOTIFICATION REQUIREMENT
Under the Bill, notification will be required where there is a 'serious data breach'. A 'serious data breach' will arise where there has been either:
- unauthorised access to or disclosure of personal information that results in a real risk of serious harm to the individual to whom the information relates; or
- a loss of personal information in circumstances where unauthorised access or disclosure of personal information would, if it occurred, result in a real risk of serious harm to the individual.
A serious data breach may also arise where particular kinds of personal information (to be specified in regulations) are accessed, lost or disclosed, whether or not it results in a real risk of serious harm. These are likely to include particular types of sensitive information.
'Harm' is defined to include economic harm, financial harm (although there is no indication as to the distinction between economic and financial harm) and harm to reputation and may include injury to feelings and humiliation. A 'real risk' is defined, unhelpfully, as one that is 'not remote'.
The obligation to notify of a data breach relating to personal information applies to entities regulated by the Privacy Act. An entity that discloses personal information overseas will remain accountable for a serious data breach that occurs overseas if it remains liable for such actions under the Australian Privacy Principles.
Parallel notification obligations apply where the serious data breach concerns credit reporting information, credit eligibility information and tax file number information.
An entity is required to notify the Commissioner and "significantly affected individuals" as soon as practicable after the entity forms a belief on reasonable grounds that there has been a serious data breach. The Commissioner also has the power to direct an entity to make a notification.
The matters to be notified include the identity and contact details of the entity, a description of the serious data breach, the kinds of information concerned and recommendations about the steps that individuals should take in response to the serious data breach. Interestingly, there is no mandated requirement for entities to notify individuals of the steps the entity will take to remedy the breach or provide assistance.
An individual is significantly affected where they are at real risk of serious harm due to the loss of, access to or disclosure of their personal information. The entity is required to take such steps as are reasonable in the circumstances to notify the significantly affected individuals. This is an objective test. It allows entities to use their usual method of communication with the individuals and recognises that there may be circumstances where it will not be possible to notify each individual. Regulations may specify conditions where notification of each individual is not required and the entity will instead notify through general publication (place information on its website and in newspaper advertisements).
The Commissioner may of its own initiative or on application of an entity exempt an entity from the notification requirements where it is satisfied it is in the public interest to do so. Exemptions also apply for certain law enforcement or national security related situations.
Failure to comply with an obligation in the Privacy Alerts Bill is deemed an interference with the privacy of an individual which engages the Commissioner's powers to investigate, make determinations, seek enforceable undertakings, and pursue civil penalties for serious or repeated interferences with privacy. The civil penalty available for serious or repeated interferences with the privacy of an individual can be up to $1.7 million for a body corporate and $340 000 for an individuals.
Private sector organisations and Commonwealth Government agencies already have much work to do to prepare for the commencement of the new Australian Privacy Principles and the other changes to the Privacy Act that come into effect on 12 March next year. If the Private Alerts Bill is passed, several more tasks will be added to this'to do' list.
In light of the Private Alerts Bill and the existing Guide, we encourage entities to start putting in place robust procedures for identifying possible privacy breaches, determining whether notification is required and then quickly and efficiently giving the required notifications. These procedures should be firmly embedded in the compliance policies and procedures that entities will be required to put in place.
HOW WE CAN HELP
Please do not hesitate to contact a member of our dedicated privacy team if we can assist with the review/audit of your current policies and procedures relating to data breach notification or if you require assistance to implement policies and procedures that comply with the Guide and, if passed, the requirements under the Private Alerts Bill.
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