Australia: New mandatory data breach notification laws

Last Updated: 22 May 2017
Article by Dudley Kneller

Australia has recognised the need to manage data breach events more effectively and ensure that affected individuals are notified in relevant circumstances.

Background

On 13 February 2017, the Australian Senate passed the Privacy Amendment (Notifiable Data Breaches) Bill 2016 (Cth) (the Bill). The Governor-General gave formal assent to the Bill on 22 February 2017, which will now see the Bill enacted into law from 22 February 2018.

It has taken some time for Australia to finally introduce a breach notification law. After a series of "false starts" in 2013 and 2014 Australia now has a notification obligation in place for notifying data breaches. Despite updating privacy laws in March 2014, Australia has been lagging behind other countries in relation to data breach notification obligations.

A number of States in the US have had data breach notification laws in place for some time. California, upon which many States have based their own laws, has had legislation in place since 2003. At the time of writing, 48 US States, the District of Columbia, Guam, Puerto Rico and the Virgin Islands have enacted legislation requiring private or governmental agencies to notify individuals of security breaches of information involving personal information.

Whilst there has now been a change in office, in January 2015, then US President Obama proposed a national data breach notification standard in the draft Personal Data Notification and Protection Act. The proposed scheme would require notification if there is any reasonable risk of harm or fraud to individuals following a data breach. It is not clear what plans the current Trump administration has for such a scheme noting it has not been high on the Trump agenda.

The European Union, as well as New Zealand, have both introduced breach notification laws. On 16 June 2015, Canada passed legislation to introduce a national mandatory data breach notification scheme.

It would therefore seem timely that Australia too has now recognised the need to manage data breach events more effectively and ensure that affected individuals are notified in relevant circumstances.

Where does the new data notification law fit in?

The law will complement Australia's existing privacy laws which are set out in the Privacy Act 1988 (Cth) (Privacy Act). The Privacy Act lists 13 Australian Privacy Principles, or APPs, which broadly apply to APP entities and which regulate how those organisations collect, store, manage and disclose personal information in Australia. There are some limited exceptions for organisations with less than $3 million in annual revenue, although the broad nature of the Privacy Act often brings smaller organisations back into play. Those organisations who deal with health related information and those working under Australian Government contracts are necessarily affected.

The details – what, who and how?

What?

The Bill will specifically bolster the operation of APP 11 which requires entities to take such steps as are reasonable in the circumstances to protect personal information they hold from misuse, interference and loss, and from unauthorised access, modification or disclosure.

The Bill is intended to cover data breach events. The Explanatory Memorandum at 7 states that "a data breach arises where there has been unauthorised access to, or unauthorised disclosure of, personal information about one or more individuals (the affected individuals), or where such information is lost in circumstances that are likely to give rise to unauthorised access or unauthorised disclosure."

Who?

As noted above, the law will apply to entities required to comply with the Privacy Act.

How?

An APP entity must notify the Australian Information Commissioner (the Commissioner) and affected individuals once it has reasonable grounds to believe there is an "eligible data breach." An "eligible data breach" occurs when:

  • there is unauthorised access to, or disclosure of, information, and a reasonable person would conclude that the access or disclosure would likely result in serious harm to any of the individuals to whom the information relates; or
  • information is lost in circumstances where unauthorised access to, or unauthorised disclosure of, information is likely to occur and, if it did occur, 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.

Entities must consider whether it is likely that the data breach will result in "serious harm" to any of the affected individuals. In assessing this requirement, if a single individual is likely to suffer serious harm, then the entity will be required to notify under the Privacy Act.

There may be some exceptions which will apply, which are discussed further below. In the meantime it is important to understand some of the threshhold issues.

So what does "serious harm" mean?

The Bill's Explanatory Memorandum provides some guidance for affected entities. Serious harm can include the following:

  • serious physical, psychological, emotional, economic and financial harm, as well as serious harm to reputation and other forms of serious harm that a reasonable person in the entity's position would identify as a possible outcome of the data breach (at 9).

The Explanatory Memorandum does attempt to provide some helpful guidance for entities. It states that whilst individuals may be distressed or otherwise upset at an unauthorised access to or unauthorised disclosure or loss of their personal information, this would not itself be sufficient to require notification unless a reasonable person in the entity's position would consider that the likely consequences for those individuals would constitute a form of serious harm.

It seems therefore that some flexibility in determining when to notify is available to entities which was not otherwise a feature of earlier proposed breach legislation.

What should the notification say?

If an entity suspects that an eligible data breach has occurred, it must undertake an assessment into the relevant circumstances. In the event of an eligible data breach, an entity is required to notify the Commissioner and affected individuals as soon as practicable after the entity is aware that there are reasonable grounds to believe that there has been an eligible data breach (unless an exception applies). The notification must 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.

Whilst details relating to identity, affected information and contact details may sometimes be readily determined (although not in every case) other details may not be so easily included. When a breach event occurs the reality is far from straightforward. Often there is confusion as the organisation tries to establish the extent of the breach, and respond, minimise damage and restore affected systems. The uncomfortable reality is that breach events can evolve over time with sophisticated hackers often updating their own malware to defeat containment strategies from the affected organisation.

This can make it a challenge to comply with the notification obligations to include required information.

We need to notify, but how do we do it?

So you have determined that you need to notify an eligible breach and you are aware of what information needs to be included. But how do you go about it?

There are three options available to notify affected individuals.

An entity can choose one of the following:

  • if it is practicable to do so, take such steps as are reasonable in the circumstances to notify each of the individuals to whom the relevant information compromised in an eligible data breach relates, or
  • if it is practicable to do so, take such steps as are reasonable in the circumstances to notify those individuals who are considered to be at risk of serious harm from the eligible data breach, or
  • if it is NOT practicable to notify via either of the above methods, notify the individuals by publishing the statement on the entity's website and taking reasonable steps to publicise the statement. Examples of this option may include taking out advertisements in newspapers and online, social media platforms etc.

As you will note from the above, the common consideration is whether it is "practicable" for the entity to notify using the particular option. Consideration such as the cost involved in notifying, time and effort all need to be taken into account.

For data breaches involving a number of affected individuals spread across different states, an organisation may opt to notify via website, print and social media.

For a breach involving a smaller number of affected individuals whom the entity can readily identify as at risk of serious harm the entity is more likely to implement the second option.

In the case of an extensive breach compromising a number of databases containing user or account information it may not be immediately apparent which individuals are impacted. In this case notifying the entire group will allow potentially affected individuals to assess their own situation and take steps to update passwords, retrieve information or close accounts etc.

Every breach situation is likely to be different and it is therefore important that entities have a process in place around effective notification which takes likely breach scenarios into account.

Are there any exceptions to the notification requirements?

The Explanatory Memorandum includes some exemptions which are important to consider.

Certain government agencies including law enforcement bodies will not be required to notify affected individuals if compliance with this requirement would be likely to prejudice law enforcement activities.

If notification would be inconsistent with another Commonwealth law that regulates the use or disclosure of information, an entity will be exempt to the extent of the inconsistency. If compliance would be inconsistent with another law of that kind which is prescribed in regulations under the Privacy Act, an entity will be exempt from the notification requirement.

Finally, to avoid creating a double notification requirement, an unauthorised access, unauthorised disclosure or loss of personal information cannot give rise to an eligible data breach if that access, disclosure or loss has been, or is required to be, notified under the mandatory data breach notification requirement in s 75 of the My Health Records Act 2012 (Cth).

These are fairly limited exemptions. Are there any other exemptions which may be relevant?

Whilst the various exemptions listed above are important and will apply in those limited circumstances, the Bill does include further exemptions which will be of interest to a broader number of entities. An additional exemption applies where entities have taken remedial action following an eligible data breach or potential eligible data breach.

Specifically, this exemption applies where a reasonable person would conclude that, as a result of the remedial action, the unauthorised access or unauthorised disclosure of personal information (including an unauthorised access or unauthorised disclosure following loss of the information) is not likely to result in serious harm to the affected individuals.

An entity that promptly and effectively responds to a data breach through remedial action will not be required to comply with the notification requirements if, as a result of actions taken by the entity, the breach is not likely to, or does not, result in serious harm.

Clearly there is likely to be an inherent tension between entities required to notify under the Bill and the same entities taking all the steps they can to avoid notification by taking remedial action.

It is also open for an affected entity to apply to the Commissioner for an exemption to the notification obligation. Such exemptions are likely to apply in circumstances where an organisation may be assisting a law enforcement body or regulatory body such as the Australian Signals Directorate in relation to enforcement/investigation activities relating to a breach event, or where an organisation is itself working through a complex breach event and where notification may be more prejudicial to affected persons in the circumstances.

Entities may also apply to the Commissioner for an exemption from, or an extension of time to comply with, the notification requirements, and would not be required to comply until the Commissioner has decided the application.

A final exemption will be of interest to entities in a group structure or forming part of a joint venture or similar arrangement. In such circumstances, if more than one entity jointly and simultaneously holds the same particular record of personal information, an eligible data breach of one entity may also be an eligible data breach of each of the other entities. The exemption is intended to assist entities who may be involved in an outsourcing, shared service or joint venture arrangement.

Where one of these affected entities demonstrates its compliance with the assessment and notification obligations in the new Part IIIC, the remaining entities are taken to have also complied.

What are the penalties for failure to comply with the notification requirements?

Failure to comply with an obligation included in the Bill will be deemed to be an interference with the privacy of an individual for the purposes of the Privacy Act.

Such a failure to comply can result in affected individuals filing a complaint with the Commissioner, prompting an investigation of the entity. The Commissioner may also investigate without a complaint being made and may issue a determination requiring the entity to:

  • compensate such individuals for any loss or damage suffered; or
  • take actions to redress any loss or damage or steps to ensure that an entity's conduct is not repeated or continued.

If the failure to comply with notification requirements is "serious or repeated", entities may be liable for penalties of up to $1.8 million ($360,000 for individuals).

Wrap up

The advent of the Privacy Amendment (Notifiable Data Breaches) Act 2017 (Cth) and its incorporation into the Privacy Act tops off a flurry of regulator activity in the privacy space. What began life originally as a Private Member's Bill introduced by Senator Natasha Stott-Despoja in 2007 has evolved over time, been updated, lapsed and subsequently re-introduced, modified and finally passed.

It comes at a time where cyber breach events are on the rise with organisations relying more and more on technology to engage with customers, suppliers and the world at large. With this engagement comes increased responsibility and accountability to manage information securely and ensure it is protected from unauthorised use and disclosure.

The breach notification regime will be a welcome addition to the Commissioner's arsenal. The Australian Privacy and Information Commissioner, Timothy Pilgrim has been waiting patiently. His 13 February 2017 statement is clear in its intent:

The new scheme will strengthen the protections afforded to everyone's personal information, and will improve transparency in the way that the public and private sectors respond to serious data breaches.1

Whilst the Commissioner has been assisting entities to deal with breaches for some time through its "Data breach notification — a guide to handling personal information security breaches"2 and "Guide to developing a data breach response plan"3, we expect such guides to be updated with a new level of vigour. All Australian entities subject to the Privacy Act will need to respond quickly and ensure their processes and procedures adhere to the new notification laws ideally well in advance of the 22 February 2018 date of introduction.

Footnotes

1 Australian Privacy and Information Commissioner, Timothy Pilgrim "Mandatory data breach notification" Statement (13 February 2017), available at < HTTPS://WWW.OAIC.GOV.AU/MEDIA-AND-SPEECHES/STATEMENTS/MANDATORY-DATA-BREACH-NOTIFICATION#MANDATORY-DATA-BREACH-NOTIFICATION > (accessed 3 May 2017)

2 Office of the Australian Information Commissioner Data breach notification — a guide to handling personal information security breaches August 2014, accessed 3 May 2017, www.oaic.gov.au/agencies-and-organisations/guides/data-breach-notification-a-guide-to-handling-personal-information-security-breaches

3 Office of the Australian Information Commissioner Guide to developing a data breach response plan April 2016, accessed 3 May 2017, https://www.oaic.gov.au/agencies-and-organisations/guides/guide-to-developing-a-data-breach-response-plan

Client Disclaimer

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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.

Direct To Live SETLIVE

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
Similar Articles
Relevancy Powered by MondaqAI
Thynne & Macartney
 
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 Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Thynne & Macartney
Related Articles
 
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions