On 19 September 2016, the Bavarian Data Protection Authority ("DPA") issued a new guidance paper on handling personal data breaches under the new EU General Data Protection Regulation ("GDPR") in the course of a series of non-binding guidance papers on selected topics in relation to the GDPR, which the DPA publishes periodically. The papers can be found on the DPA's official website.
Starting Point: Current Legal Framework
The DPA states that there are a number of ways how personal data might fall into unauthorized hands. Already under the current legal framework, unauthorized access to personal data – colloquially: "data breaches" – has to be notified; however, only under certain circumstances. Pursuant to Section 42a of the Federal Data Protection Act (Bundesdatenschutzgesetz – BDSG), two requirements need to be fulfilled in order to trigger the obligation to notify:
- The personal data affected must be very sensitive data, such as bank and health data.
- There must be a high risk for the data subject affected, i.e., there must be a threat of severe obstructions.
In the view of the DPA, those requirements lead to the result that to date, only a very low number of breaches are notified. The yearly amount of such notifications is in a two-digit range. However, the DPA takes the view that it is very likely that a considerable number of undetected, and therefore non-notified, breaches exists. If a breach that triggers the obligation to notify has occurred, the affected data subject also needs to be informed.
Legal Framework under the GDPR: Clearly Lower Thresholds
The GDPR regulates handling of personal data breaches in Articles 33 and 34. Under the GDPR, a graduated system of notification obligations exists:
- The general rule is that a personal data breach shall be notified to the competent supervisory authority, "unless the personal data breach is unlikely to result in a risk" of natural persons.
- However, the communication of the
relevant personal data breach to the data subject is only required
if the personal data breach is likely to result in a "high
risk" for the right in freedoms of natural persons.
Further, a communication to the data subject shall not be required if the controller has implemented appropriate technical and organizational protection measures, in particular those that render the personal data unintelligible to any person who is not authorized to access it, such as encryption.
The same shall apply, if the controller has taken subsequent measures which ensure that the high risk to the rights and freedoms, which existed at the time of the data breach, is no longer likely to materialize. The DPA emphasizes that the supervisory authorities have to clarify how this scenario can be handled in daily practise.
Should each Personal Data Breach be Notified to the Supervisory Authority?
The DPA has compared the English and the German version of the GDPR. In the DPA's view, this comparison leads to the conclusion that as a general rule, each data breach shall be notified to the competent supervisory authority, "unless the personal data breach is unlikely to result in a risk to the rights and freedoms of natural persons" (German version: "es sei denn, dass die Verletzung des Schutzes personenbezogener Daten voraussichtlich nicht zu einem Risiko für die Rechte und Freiheiten natürlicher Personen führt").
The DPA presumes that the correct assessment of this requirement might be challenging for enterprises, since in the majority of cases it cannot be ruled out that such risk exists. Accordingly, the DPA expects that the supervisory authorities will coordinate the criteria for a proper risk analysis and the obligation to notify.
Scope and Date of the Notification
The notification needs to be filed with the competent supervisory authority within 72 hours. An extension of this deadline shall be possible only in justified cases. A notification pursuant to Article 33 GDPR shall comprise inter alia the following:
- The nature of the personal data breach
- The categories of personal data records concerned
- The number of data subjects and data records
- An estimate of the consequences for the data subject, as well as the measures to be taken or proposed to be taken by the controller to address the personal data breach, or measures to mitigate its possible adverse effects
Companies are Called-on to Comply with Obligation to Notify
The DPA emphasizes that companies should observe the obligation to notify. This shall be true in particular in the light of the fact that administrative fines might be imposed on the company in case of non-compliance. The administrative fines might amount up to EUR 10 million or 2% of the relevant company's turnover (see our blog on the DPA's guidance paper on sanctions under the GDPR).
The DPA explains that the consequences of personal data breaches are very difficult to calculate and might not only result in a loss of confidence by customers and reputation by business partners, but might also lead to a high risk of financial losses. Accordingly, the DPA takes the view that an active and comprehensive collaboration with the supervisory authority does not only contribute to mitigation of such losses, but also ensures that the affected data subjects will be properly informed.
The DPA eagerly awaits the further developments in this context. In particular, it remains to be seen whether data controllers will comply with the new notification requirements, and how the supervisory authorities will deal with the likely increase of notifications and workload.
Finally, the DPA announces that it is in the course of developing an online service for data controllers that shall enable an efficient notification procedure.