When should breaches be disclosed

With a spate of high profile security breaches making the headlines, businesses are yet again facing the question of whether or not they are required, legally or morally, to disclose the breach. The answer varies from country to country, but are there any commonalities?

In the UK, for a business providing services that include the option for the public to exchange messages online, there is an obligation to ensure that service is fully safeguarded. If those safeguards fail and user data is tampered with, lost or revealed elsewhere, there is a requirement to report the breach to the ICO. The ICO, Information Commissioner’s Office, was established to “uphold information rights in the public interest”.

As well as reporting the breach to the ICO, UK businesses are also required to log the breach, and there may be a requirement to inform users of the incident.

Once a business becomes aware of any breach, it is required to inform the ICO of the issue and the material facts of the breach within a day. If the full details aren’t available in that time frame, they will need to be passed on as soon as they are available.

UK businesses are bound by the Data Protection Act 1998, and this is the framework for the ICO regulations. The Data Protection Act and the ICO are relevant to any UK business that sends out marketing and advertising materials electronically, including emails, texts or telephone. These rules are also applicable if a business uses cookies to monitor user information.

Businesses failing to comply with the rules set out by the ICO can be fined £1,000.

When it comes to deciding whether a business’ users and subscribers should be informed, a decision needs to be made based on whether their personal data has been affected or their privacy attacked by the breach. Should this be the case, then users need to be informed. Users and subscribers will need to be told:

• The business name
• The date of the incident
• How the breach occurred
• What personal data was lost or altered

A company does not need to inform its users about the security breach if it can be shown that the data was protected with some form of encryption.

Any company failing to inform users can be required, legally, to do so by the ICO, should the ICO consider that the breach will adversely affect them.

In the United States, the situation differs somewhat. Here, the securities law does not require a company to report a breach, or attempted breach, to its subscribers. There is no element of the written law that requires any such disclosure, but this doesn’t mean US companies are completely without recourse from breaches. Companies can be required to disclose information about breaches if they contradict any statements made about the IT elements of a company.

Across Europe, there are similar laws governing security breaches as in the UK. Many also impose a fine of a similar level too.

The reporting and managing of security breaches is a complicated area and one that, managed poorly, can lose public trust and, ultimately, customers. Companies affected by these issues would probably be wise to seek the advice and assistance of industry experts.

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