Australia: The end of a long road: Mandatory data breach notification becomes law

Last Updated: 2 May 2017
Article by Nick Abrahams and Jamie Griffin

Most Read Contributor in Australia, April 2017

Personal information is in essence any information that allows an individual to be personally identified.

The Privacy Act 1988 (Cth) ('Privacy Act') regulates the handling of this 'personal information' by all Commonwealth public sector agencies; as well as private sector organisations that have an annual turnover of more than $3 million, are health service providers or which otherwise trade in personal information (together, 'Organisations'). The recent introduction of a mandatory data breach notification regime in Australia has been on the horizon for a number of years.

The road to mandatory data breach notification

In May 2013, the Commonwealth Labor government introduced the Privacy Amendment (Privacy Alerts) Bill 2013 ('2013 Bill') to amend the Privacy Act to introduce a mandatory data breach notification regime. Despite the 2013 Bill having bipartisan support, it was not passed before the 2013 federal election and lapsed as a result.

There were then various subsequent attempts to revive the push to amend the Privacy Act and in February 2015, as part of a report into the Telecommunications (Interception and Access) Amendment (Data Retention) Bill 2014, the Parliamentary Joint Committee on Intelligence and Security ('PJCIS') recommended the introduction of a new mandatory data breach notification scheme. In March 2015, the government indicated that it would support all of the recommendations made by the PJCIS. In December 2015, the Attorney-General's Department released an exposure draft of the Privacy Amendment (Notification of Serious Data Breaches) Bill 2015 ('Exposure Draft') for public comment. It received approximately 45 submissions from industry and consumer groups, regulators, government departments, law reform bodies and major Australian and international companies. Many of the submissions raised similar issues, including concerns about the scope or lack of definition of key terms such as 'real risk' and 'serious harm' and the possibility that multiple breach notices may be required in respect of a single incident.

The Privacy Amendment (Notifiable Data Breaches) Bill 2016 (Cth) (Bill) was subsequently introduced into the Senate on 19 October 2016. The Bill differs from the Exposure Draft in a number of ways, including some changes to address many of the issues raised in the submissions on the Exposure Draft. The Bill was passed in February this year but will not take effect until 22 February 2018, unless an earlier commencement date is proclaimed.

Mandatory data breach notification obligations under the Bill

The Bill amends the Privacy Act to introduce a new legislative requirement that the Privacy Commissioner and any affected individuals be notified when an 'eligible data breach' has occurred. Agencies and Organisations will be required to:

  • conduct an assessment of whether an eligible data breach has occurred within 30 days of becoming aware that there are reasonable grounds to suspect that there may have been such a breach (s 26WH)*; and
  • if an agency or Organisation is aware that there are reasonable grounds to believe that there has been an eligible data breach (s 26WK(2)), they must prepare a statement that contains the identity and contact details of the agency or Organisation, a description of the eligible data breach, the kinds of information affected and recommendations for affected individuals (s 26WK(3)). The statement must then be provided to the Privacy Commissioner (s 26WK(2)(a)(ii)), and each of the individuals to whom the affected information relates or who is at risk from the eligible data breach must be notified. If it is not practicable to directly notify the affected individuals, then the agency or Organisation must publish the statement on its website.

An eligible data breach occurs where:

  • there is unauthorised access to, or unauthorised disclosure of, personal information held by the agency or organisation, or personal information is lost in circumstances where access to, or unauthorised disclosure of, the information is likely to occur; and
  • a reasonable person would conclude that the access or disclosure would be likely to result in serious harm to any of the individuals to whom the information relates (s 26WE(2)).

In assessing whether the access or disclosure would be likely to result in serious harm, the agency or Organisation is required to have regard to a number of factors, including:

  • the kinds of information affected and its sensitivity;
  • whether a security measure (such as encryption) was applied in relation to that data;
  • the likelihood that the security measure could be defeated (including whether the persons who are likely to receive that data have the ability to circumvent the security measure, such as by obtaining or 'cracking' the encryption key);
  • the nature of the potential harm to affected individuals; and
  • any other relevant matters (s 26WG).

However, in cases where remedial action has been taken (such as when an individual who receives a misdirected email or letter agrees to destroy that communication without reading it) and a reasonable person would conclude that the remedial action would mean that the access, disclosure or loss of the information would not be likely to result in serious harm to any affected individuals as a result, then the notification obligations would not apply (s 26WF).

New powers of the Privacy Commissioner

If the Privacy Commissioner is aware that there are reasonable grounds to believe that an eligible data breach has occurred (s 26WR(1)), then it will have the power under the new amendments to require the affected agency or Organisation to make a data breach notification.

The Privacy Commissioner also has the power to declare that an agency or Organisation does not have to comply with these notification obligations and can also extend the time for compliance with the notification obligations (s 26WQ). The Commissioner may make such a declaration on his or her own initiative. The affected agency or Organisation can also apply to the Privacy Commissioner for such a declaration.

The Commissioner must consider the public interest and any relevant advice given by law enforcement or security agencies.

Data held by offshore service providers

The new mandatory data breach notification obligations may also apply where the data which is the subject of the data breach is held by a service provider outside Australia. Australian Privacy Principle 8.1 under the Privacy Act allows personal information to be disclosed outside Australia if the Australian agency or Organisation has taken reasonable steps to ensure the offshore recipient handles that information in accordance with the Privacy Act, such as by entering into a binding contract with the offshore recipient that imposes equivalent privacy obligations on the offshore recipient.

Where an Organisation or agency in Australia has disclosed personal information to an offshore recipient under Australian Privacy Principle 8.1, an eligible data breach that occurs offshore in relation to that transferred personal information is deemed to be an eligible data breach that affects the Organisation or agency in Australia (s 26WC(1)). This provision would potentially apply to Australian agencies or Organisations that hold personal information in cloud computing platforms that are located outside Australia.

Penalty for failure to report a breach

A failure to report an eligible data breach (either when required by the relevant provision of the Privacy Act as amended, or when the agency or Organisation is directed to make a notification by the Privacy Commissioner) will be deemed to be an interference with the privacy of the individuals affected by the eligible data breach (s 13(4A)). This means that a failure to notify affected individuals of an eligible data breach could be the subject of a complaint to the Privacy Commissioner (Privacy Act, s 36).

Where the failure to make a notification of the eligible data breach amounts to a serious or repeated interference with privacy, the Privacy Commissioner has the power to seek civil penalty orders of up to $360,000 in the case of individuals and up to $1.8 million in the case of bodies corporate (ss 80W & 80X).

Possible consequences of the new regime

Privacy compliance and cyber security are likely to become even more critical risk issues for company boards and senior government officials between now and when the Bill comes into effect on 22 February 2018.

Prospect of class actions and representative complaints

There is a very real prospect of class actions being initiated following the occurrence of any notified data breach. This has been the case in the United States following the introduction of data breach notification obligations in most states, where a notification of the occurrence of a data breach is often quickly followed by a class action being filed on behalf of the affected individuals. It is certainly possible Australia will follow down this path with the introduction of mandatory data breach notification laws.

The Privacy Act does contain a representative complaint mechanism that allows an individual to make a representative complaint to the Privacy Commissioner, so it is possible that the new data breach notification obligations could lead to an increase in the number of representative complaints. A representative complaint can be made on behalf of all affected individuals if the class members have complaints against the same entity, the complaints arise out of the same or similar circumstances and the complaints all give rise to a common issue of law or fact. It is not necessary to specify the number of class members or to obtain the consent of the class members before the representative complaint is lodged.

Given that the affected Organisation or agency would have had to identify the affected individuals as part of notifying them of the occurrence of the data breach, formulating a representative complaint or identifying a class of plaintiffs for a class action by reference to the individuals who receive a data breach notification may be a relatively straight forward exercise.

Increased demand for cyber risk insurance

The introduction of mandatory data breach notification obligations may also lead to an increased demand for cyber risk insurance, which is a relatively new type of insurance policy in the Australian market. Depending on the policy, cyber risk insurance may cover 'first party' loss or costs for the agency or Organisation (such as legal expenses, forensic IT experts' costs and any fines or penalties) as well as third party losses and claims.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.