Deminor Wiki - Data Breach and Privacy Violations

Read below for a definition of the term: "Data Breach and Privacy Violations".

What do we mean when we say "Data Breach and Privacy Violations"?

Data breaches and privacy violations involve unauthorised access, use, disclosure, or destruction of personal information. These incidents can have significant repercussions for individuals, businesses, and governments, leading to identity theft, financial loss, reputational damage, and regulatory penalties.

 Definitions

Understanding the legal frameworks, consequences, and preventive measures associated with data breaches and privacy violations is crucial for protecting sensitive information and maintaining trust.

  • Data Breach: A data breach occurs when sensitive, confidential, or any type of personal data information is accessed, disclosed, or stolen by unauthorised individuals. This can result from hacking, phishing attacks, malware, insider threats, or accidental exposure.
  • Privacy Violation: A privacy violation involves the improper handling, use, or disclosure of personal information in a way that infringes on an individual's privacy rights. This can include unauthorised data collection, failure to protect personal data, or misuse of information for unauthorised purposes, and can happen intentionally, through negligence, or by accident without personal fault.

 

Legal Framework and Enforcement

United States

Federal Laws:

  • Health Insurance Portability and Accountability Act (HIPAA): Protects medical records and other personal health information. Requires healthcare providers to implement security measures and notify individuals of breaches.
  • Gramm-Leach-Bliley Act (GLBA): Protects consumers' financial information. Requires financial institutions to safeguard sensitive data and disclose their information-sharing practices.
  • Children's Online Privacy Protection Act (COPPA): Protects the privacy of children under 13 by regulating data collection practices of websites and online services targeting children.
  • Federal Trade Commission Act (FTC Act): The FTC enforces regulations against unfair or deceptive practices, including inadequate data security practices.

State Laws (selection):

  • California Consumer Privacy Act (CCPA): Provides California residents with rights to access, delete, and opt out of the sale of their personal information. Imposes requirements on businesses that meet certain thresholds to protect personal data (e.g., revenue, data volume).
  • New York SHIELD Act: Requires businesses to implement data security measures to protect personal information of New York residents regardless of physical location and strengthens breach notification requirements.

European Union

General Data Protection Regulation (GDPR): The GDPR is a comprehensive regulation that protects the privacy and personal data of all individuals in the EU. It applies to organisations operating within the EU and those outside the EU that offer goods or services to, or monitor the behaviour of, individuals in the EU. When enacted, it represented quite a landmark piece of legislation that went beyond all earlier bodies of data protection law globally.

Key Provisions:

  • Data Protection Principles: Lawfulness, fairness, transparency, purpose limitation, data minimisation, accuracy, storage limitation, integrity, and confidentiality.
  • Data Subject Rights: Right to access, rectification, erasure (right to be forgotten), restriction of processing, data portability, and the right to object use of personal data.
  • Data Breach Notification: Organisations must report data breaches to the relevant supervisory authority within 72 hours after having become aware and notify affected individuals without undue delay if the breach is likely to result in a high risk to their rights and freedoms.
  • Penalties: Fines up to €20 million or 4% of the annual global turnover, whichever is higher, for non-compliance.
  • Private Enforcement: Individuals who suffered a (material or immaterial) damage due to the improper use or violation of protected data have a civil damages claim against the user of their data.

International Guidelines

  • OECD Privacy Guidelines: The Organisation for Economic Co-operation and Development (OECD) provides guidelines on the protection of privacy and transborder flows of personal data, promoting international cooperation and standardisation.
  • APEC Privacy Framework: The Asia-Pacific Economic Cooperation (APEC) provides a framework to balance privacy protection with the free flow of information in the Asia-Pacific region.

 

Consequences of Data Breaches and Privacy Violations

For Individuals

  • Identity Theft: Unauthorised access to personal information can lead to identity theft, resulting in financial loss, damaged credit, and legal complications.
  • Privacy Invasion: Exposure of personal information can lead to privacy invasion, embarrassment, and emotional distress.
  • Loss of Trust: Repeated data breaches and privacy violations can erode trust in organisations and institutions.

For Businesses

  • Financial Loss: Costs associated with data breach response, including investigation, remediation, legal fees, and compensation to affected individuals.
  • Reputational Damage: Public disclosure of data breaches can damage a company's reputation, leading to loss of customers and decreased market value.
  • Regulatory Penalties: Non-compliance with data protection laws can result in substantial fines and legal sanctions.
  • Operational Disruption: Data breaches can disrupt business operations, leading to loss of productivity and increased operational costs.

For Governments

  • National Security Risks: Breaches involving government or critical infrastructure data can pose significant national security risks.
  • Public Trust Erosion: Repeated breaches in government agencies can undermine public confidence in the government's ability to protect sensitive information.
  • Economic Impact: Large-scale data breaches can have broader economic implications, affecting investor confidence and economic stability.

 

Preventive Measures

Data Security Practices

  • Encryption: Protect sensitive data by encrypting it both in transit and at rest.
  • Access Controls: Implement strict access controls to limit who can access sensitive information.
  • Regular Audits: Conduct regular security audits and assessments to identify and address vulnerabilities.
  • Employee Training: Train employees on data protection best practices and the importance of safeguarding personal information.
  • Incident Response Plan: Develop and regularly update an incident response plan to quickly address data breaches and mitigate damage.

Compliance and Governance

  • Data Protection Officers (DPOs): Appoint DPOs to oversee data protection strategies and ensure compliance with relevant laws.
  • Privacy by Design: Integrate privacy considerations into the design and development of products and services.
  • Third-Party Risk Management: Assess and monitor the data protection practices of third-party vendors and partners.
  • Transparent Policies: Develop and communicate clear privacy policies and practices to consumers.

Technological Solutions

  • Intrusion Detection Systems (IDS): Deploy IDS to monitor network traffic for suspicious activities and potential breaches.
  • Data Loss Prevention (DLP): Use DLP technologies to prevent unauthorised data transfers and leaks.
  • Regular Updates and Patching: Ensure software and systems are regularly updated and patched to protect against known vulnerabilities.

 

Key Cases

United States

  • Equifax Data Breach (2017): The breach exposed the personal information of 147 million people. Equifax faced numerous lawsuits and regulatory penalties, highlighting the importance of robust data protection measures.
  • Target Data Breach (2013): Hackers accessed the payment card data of 40 million customers. Target incurred significant financial losses and reputational damage, underscoring the need for secure payment systems.

European Union

  • Uber GDPR Fine (2024): The Dutch Data Protection Authority (DPA) fined Uber €290 million for unlawfully transferring the personal data of European taxi drivers to the United States. The fine followed complaints from over 170 French drivers and was issued by the DPA in the Netherlands, where Uber’s European headquarters is located. The DPA found that Uber stored sensitive data on U.S. servers without sufficient safeguards, especially after the EU’s invalidation of the Privacy Shield framework.
  • Meta Platforms Ireland GDPR Fine (2023): The Irish Data Protection Commission (DPC) fined Meta Platforms Ireland €1.2 billion for violating GDPR rules on transatlantic data transfers. The decision found that Meta continued to transfer personal data of EU users to the United States without adequate safeguards, despite the invalidation of the Privacy Shield framework by the Court of Justice of the EU. This remains the largest GDPR fine ever imposed to date.

United Kingdom (As a member of the European Union)

  • British Airways GDPR Fine (2020): The UK Information Commissioner's Office (ICO) fined British Airways £20 million for a data breach that compromised the personal data of 400,000 customers.
  • Marriott International GDPR Fine (2020): The ICO fined Marriott International £18.4 million for a data breach affecting 339 million guest records globally.

Conclusion 

Data breaches and privacy violations pose significant risks to individuals, businesses, and governments. Understanding the legal frameworks, consequences, and preventive measures associated with these incidents is crucial for protecting sensitive information and maintaining trust. By implementing robust data security practices, ensuring compliance with relevant laws, and fostering a culture of privacy, organisations can mitigate the risks associated with data breaches and privacy violations and protect the interests of their stakeholders. Victims of financial damages or other kind of significant harm caused by an improper use of protected personal data may have a damages claim against the date user and should consider seeking legal advice on whether taking action might lead to a recovery. In case of mass data breaches, third party funders may offer the ability to join a fully financed class/mass action without any financial risk on the individual plaintiffs.

Reviewed by:  Dr. Malte Stübinger, General Counsel Germany 

Disclaimer: The sole purpose of this article is for general information, and its contents should not be considered as legal advice, as legal frameworks / systems vary from country to country. The article is based on publicly available information and while care is taken in compiling this, no warranty, express or implied is given, nor does Deminor assume any liability for the use thereof.