Data Breach Notification In the EU: A Comparison of US and Soon-To-Be EU Law

by Bryan Cave
Contact

In the United States Congress has repeatedly attempted, but failed, to agree on federal data breach notification legislation. As a result, there is no single federal statute that imposes a breach notification obligation on most companies. Instead, 47 states, plus the District of Columbia, Puerto Rico, Guam, and the Virgin Islands, have enacted their own statutes addressing an organization’s notification obligations in the wake of a data breach. The only states without such laws are Alabama, New Mexico, and South Dakota, although their citizens may be covered in some situations by the data breach laws of other states.

Historically the European Union has also not had a general, non-sectoral, data breach notification statute. Uniform data breach notification rules were only established for the telecommunication sector. While some member states enacted broader breach notification legislation, by and large there was far less uniformity in the EU between, and among, member states, then existed in the United States.

The EU’s new General Data Protection Regulation (“GDPR”) includes, for the first time, a broad breach notification requirement. The requirement purports to apply not only to companies based in the EU, but to United States companies that process information and (1) intend to offer products or services to people in the EU, or (2) monitor people in the EU.1 Under the GDPR, a “personal data breach” is defined broadly as “a breach of security leading to the accidental or unlawful destruction, loss, alteration, unauthorized disclosure of, or access to, personal data transmitted, stored or otherwise processed.2 It will formally go into force in the spring of 2018.

The GDPR’s breach notification requirements are modeled loosely after those found in the United States. For example, US breach notification laws generally require that data licensees notify data owners of a data breach, and data owners, in turn, notify consumers and/or government regulators of a security breach. The GDPR imposes a requirement on data processors to notify data controllers of a data security breach.3 Data controllers, in turn, must notify consumers and/or government regulators.4 That said, there are several significant differences including: 

  1. Type of Information Governed. Data breach notification laws in the United States apply only to enumerated types of data that are considered particularly sensitive such as Social Security Numbers, financial account numbers, or driver’s license numbers. The GDPR’s breach notification provision applies to all types of “personal data” – a term that is defined as “any information relating to identified or identifiable natural person (data subject).”5
  2. Materiality Threshold For Government Notification. Some breach notification laws in the United States only require notification if the breach is “material” (g., it compromises confidentiality, security, or privacy of an individual). The GDPR’s breach notification provision requires notifying a government agency (i.e., relevant Data Protection Authority) unless the breach is not likely to result in a risk of the “rights” of individuals.6
  3. Time Limit To Notify Government. The shortest time period in which a company must act in the United States to notify a government agency following a data breach is 10 days. The GDPR’s breach notification provision will require notification to occur within 72 hours of discovering a breach. Company’s which notify after that time will be required to provide a “reasoned justification” for the delay.7 Once the company has notified the government authority of a personal data breach, the company may have to coordinate with governmental authorities concerning the necessity of notifying individual data subjects.8
  4. Materiality Threshold For Consumer Notification. Some breach notification laws in the United States only require notification if the breach is “material” (g., it compromises confidentiality, security, or privacy of an individual). The GDPR’s breach notification provision requires notification to the impacted individual only if there is a “high risk” to the “rights” of the data subject.9 Such notifications must contain (1) a description of the nature of the personal data breach, (2) the categories and approximate number of data subjects, (3) the contact information of the company’s data protection officer, (4) the likely consequences of the personal data breach, and (3) the measures taken by the company to address and mitigate the personal data breach.10 Where a high risk does not exist, such as when the breached personal data was encrypted, notification is not required.
  5. Damages. United States breach notification statutes differ in terms of whether they specifically confer a private right of action. The GDPR’s breach notification provision grants an individual a right to seek compensation for any damages that they suffer from a violation of the requirements under the GDPR, e.g. if the company fails to comply with the GDPR notification requirements.11
  6. Penalties. United States breach notification statutes differ in terms of whether they specifically confer a fine or penalty for failure to comply. If a company fails to comply with the breach notification obligations in the GDPR, the data protection authority in a member state may seek an administrative fine of up to the greater of € 10 million or 2% of the company’s annual revenue.12

The following summarizes some of the key provisions of the GDPR notification provisions: 

2018

The year that the notification provisions go into effect.

2%

The percentage of a company’s revenue that may be fined if they fail to comply with the notification provision.

72

Number of hours that a company has to notify a government agency after identifying a breach.

100%

Percentage of member states that will permit individuals to recover damages against a company for failing to comply with the notification obligation.

What to consider when preparing for the GDPR:

  1. Is your organization subject to the GDPR?
  2. What data does your organization keep that could trigger the GDPR notification obligation?
  3. Which government agency would you need to report a breach to within the EU?
  4. Have you modified your incident response plan to account for the EU government and consumer notification requirement?
  5. Have you reviewed your incident response policies with vendors for compliance with the new GDPR breach notification requirements?

1. GDPR Recitals ¶¶ 20, 21; GDPR Art. 3(1), (2).

2. GDPR Art. 4(9).

3. GDPR Art. 31(1), (2).

4. Id.

5. GDPR Art. 4(1).

6. GDPR Art. 31(1).

7. GDPR Art. 31(1).

8. GDPR Art. 32(4).

9. GDPR Art. 32(1).

10. GDPR Art. 32(1), (2), 31(3)(b), (d), (e).

11. GDPR Art. 77(1).

12. GDPR Art. 79(3a).

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bryan Cave | Attorney Advertising

Written by:

Bryan Cave
Contact
more
less

Bryan Cave on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.