Australia: AAPT hacking case study: what would happen if it was an agency under the new law?

A guide to the new privacy landscape for the Commonwealth Government

Recently, AAPT customer data was hacked and published on the internet. Following an own motion investigation, on 15 October, Australian Privacy Commissioner, Timothy Pilgrim, found AAPT had breached the Privacy Act in respect of the incident.

The case provides a useful scenario to examine what would the result be if the same issues arose for an agency under the new law. In particular, the case provides useful guidance around the Commissioner's thinking on:

  • what constitutes "disclosure" and what constitutes "use"
  • what your obligations are when you use a third party server, and
  • what your training obligations are.


This case involved AAPT's company data (including customers' personal information) being accessed and stolen by Anonymous, an international network of "hacktivists", between 17 and 19 July 2012. Anonymous subsequently published the data on the internet.

The data was held on a server managed by WebCentral Pty Ltd, a web-hosting business unit of Melbourne IT. Under the contract between AAPT and WebCentral, WebCentral was required to fully manage and maintain the server, except for the custom application content and data, which was the responsibility of AAPT.

Anonymous accessed the data though the "Cold Fusion" application installed on the server, which was a "customer-managed application" and was AAPT's responsibility under the contract. AAPT was using an old version of Cold Fusion, which was known to have vulnerabilities.

When Melbourne IT became aware of the attack it notified AAPT, which immediately disconnected from the network and took steps to ensure the data could not be further compromised.

Own motion investigations

It is worth noting that this matter involved an own motion investigation in response to media reports of the hacking by Anonymous. Accordingly, agencies cannot rely on the fact that they have not received a complaint as an indication that any privacy breaches will not be pursued.

Under the new provisions, the Commissioner's powers will be enhanced, including through clarifying and strengthening the Commissioner's own motion investigations of any act or practice that may interfere with an individual's privacy or a possible breach of APP1. Further, agencies may also have notification requirements if the mandatory notification legislation is introduced.

Who held the data?

Under NPP4.1, an organisation is required to take reasonable steps to protect personal information it held from misuse and loss and from unauthorised access or disclosure. The question in this case was whether AAPT or WebCentral held the data. The Commissioner took the view that AAPT held the data despite it being stored on WebCentral's server. Accordingly, AAPT had the obligation under NPP4.1.

APP11.1 is the equivalent of NPP4.1 so, in circumstances where an agency outsources the data storage, it will still be likely to be regarded as holding the information under the new provisions and have obligations to protect the information.

Was the publishing of the data a disclosure by AAPT?

An organisation may only use or disclose personal information for the primary purpose of collection under NPP2.1. As the publication of the data was not for the primary purpose of the collection, the Commissioner examined whether the publication amounted to disclosure by AAPT.

As the data was made public through the malicious actions of Anonymous, the Commissioner found that the publication was not a disclosure by AAPT.

APP 6.1 sets out similar requirements about the use and disclosure of personal information as NPP2.1, so this test will remain relevant for the new provisions.

Reasonable steps to protect personal information

The Commissioner found AAPT failed to take reasonable steps to secure the personal information as required by NPP4.1.

In assessing whether reasonable steps had been taken, the Commissioner examined the Cold Fusion application to determine whether it was suitable in the circumstances, the contract between AAPT and WebCentral and AAPT's awareness and management of the privacy protection measures under the arrangements.

The Commissioner noted that AAPT used a seven year-old version of Cold Fusion, which was known to have vulnerabilities. While the security "patches" on the version used by AAPT were upto-date, the failure to use newer versions of the application that did not have the vulnerabilities of the older version, meant that AAPT had not taken reasonable steps to protect the information.

The Commissioner identified several deficiencies in the security of data provisions in the contract between AAPT and WebCentral including:

  • data was not assessed to determine whether it included personal information and its sensitivity
  • existing or emerging security risks were not required to be identified and addressed, and
  • vulnerability scanning and the effectiveness of the Cold Fusion application was not required to be undertaken.

This led to the conclusion that AAPT did not have adequate contractual measures in place to protect the data held on the compromised server.

The Commissioner noted that it was unclear whether AAPT was aware of what personal information was on the server, what Cold Fusion applications were installed and the parts of the server they related to or who was responsible for the maintenance and management of the application.

Based on the known deficiencies in the version of the application used, the inadequate contractual arrangements in place and the lack of knowledge and management of the security measures in place, the Commissioner found that AAPT had failed to take reasonable steps to secure the personal information.

To address these issues, the Commissioner recommended AAPT:

  • conduct regular reviews of all IT applications held internally or with external providers to ensure AAPT is aware of applications held
  • take steps to ensure all IT applications held internally or externally, which hold or use personal information, are subject to vulnerability assessment and testing and regular vulnerability scanning
  • clearly allocate responsibility for management of applications
  • conduct regular audits of AAPT's IT security framework to ensure security measures are working effectively, and that policies and procedures relating to data security are being complied with
  • undertake steps to ensure appropriate classification of data it holds either internally or externally, including whether it includes personal information and the sensitivity of that information, and
  • review the terms of the contracts it has with IT suppliers that hold or manage AAPT data to ensure clarity around which party has responsibility for identifying and addressing data security issues (such as vulnerabilities associated with old versions of IT applications).

As APP11.1 imposes the same requirements on agencies as NPP4.1 did on AAPT, agencies in AAPT's position would also be in breach of the new provision (along with existing IPP4). The recommendations made by the Commissioner provide some useful guidance on what he regards as "reasonable steps" in the circumstances to discharge your obligations under the new provisions.

Reasonable steps to destroy or permanently de-identify personal information that was no longer in use

The Commissioner found AAPT had breached its obligation to destroy or permanently de-identify personal information that was no longer in use.

To comply with this obligation an organisation is required to develop systems or procedures to identify information it no longer needs and a process for how the destruction or deidentification of the information will occur.

In AAPT's case, the Commissioner noted that these policies were available on the company's internet; however, they were not followed in this case and that there was a low awareness among staff of them. As a result, AAPT had not taken the reasonable steps required by NPP4.2. Importantly, this finding highlights that having a policy that complies with the requirements is not enough. Organisations also have an obligation to train their staff to comply with the policy and take reasonable steps to ensure that the policy is implemented.

This area of information destruction and de-identification is one of the key areas where the obligations of organisations and agencies differ. Under APP6.2, the obligation to destroy or de-identify the personal information does not apply to information contained in a Commonwealth record, to ensure that the agency's obligations under the Archives Act can be complied with.

Penalties for breach

As the case involved breaches of NPPs, the Commissioner was unable to impose a penalty on AAPT.

Under the new APPs, which impose the same requirements on agencies as the NPPs in question (with the exception of record destruction), the Commissioner has enhanced enforcement powers included in the ability to accept and compel compliance with enforceable undertakings and, in the case of serious or repeated breaches, seek civil penalties of up to $1.7 million.

Key lessons

The AAPT case highlights the following key points:

  • agencies continue to have privacy obligations for personal information, even when it is stored on third party servers and is not physically "held" by the agency, such as a "cloud" application
  • a malicious act by a third party may result in the Commissioner commencing an "own motion" investigation into whether the agency is in breach of its privacy obligation, it does not require a complaint by a third party or for something to be done by the agency or its service provider
  • where personal information is held by a third party, contractual arrangements for data protection and security need to be clear and adequate, and
  • it is not sufficient for an agency to simply have privacy policies and procedures. It must also ensure staff are trained and regularly made aware of and implement those policies and procedures.

The Commissioner's recommendations also provide a timely reminder of the sort of steps agencies are required to take to fulfil their privacy obligations.

The case provides useful guidance around the Commissioner's thinking on:

  • what constitutes "disclosure" and what constitutes "use"
  • what your obligations are when you use a third party server, and
  • what your training obligations are.

Privacy contacts for the Commonwealth Government

Our privacy services

Our Privacy team works closely with many departments and agencies to:

  • tailor privacy audits to ensure they address the particular policy and legislative requirements of the agency
  • review privacy audit results and identify compliance gaps
  • remedy any compliance gaps in a practical and pragmatic way
  • tailor privacy policies and procedures to ensure full compliance
  • implement privacy training specific to agency requirements and work with other stakeholders to devise training and evaluation processes, and
  • ensure contractual arrangements adequately protect against privacy liability.

Related links

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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