Equifax Breach Affects 143M: If GDPR Were in Effect, What Would Be the Impact?

by Foley & Lardner LLP
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The security breach announced by Equifax Inc. on September 7, 2017, grabbed headlines around the world as Equifax revealed that personal data of roughly 143 million consumers in the United States and certain UK and Canadian residents had been compromised. By exploiting a website application vulnerability, hackers gained access to certain information such as names, Social Security numbers, birth dates, addresses, and in some instances, driver’s license numbers and credit card numbers. While this latest breach will force consumers to remain vigilant about monitoring unauthorized use of personal information and cause companies to revisit security practices and protocols, had this event occurred under the General Data Protection Regulation (GDPR) (set to take effect May 25, 2018), the implications would be significant. This security event should serve as a sobering wake up call to multinational organizations and any other organization collecting, processing, storing, or transmitting personal data of EU citizens of the protocols they must have in place to respond to security breaches under GDPR requirements.

Data Breach Notification Obligations

Notification obligations for security breaches that affect U.S. residents are governed by a patchwork set of state laws. The timing of the notification varies from state to state with some requiring that notification be made in the “most expeditious time possible,” while others set forth a specific timeframe such as within 30, 45, or 60 days. The United States does not currently have a federal law setting forth notification requirements, although one was proposed by the government in 2015 setting a 30-day deadline, but the law never received any support.

While the majority of the affected individuals appear to be U.S. residents, Equifax stated that some Canadian and UK residents were also affected. Given Equifax’s statement, the notification obligations under GDPR would apply, even post-Brexit, as evidenced by a recent statement of intent maintaining that the United Kingdom will adopt the GDPR once it leaves the EU. Under the GDPR, in the event of a personal data breach, data controllers must notify the supervisory authority “without undue delay and, where feasible, not later than 72 hours after having become aware of it.” If notification is not made within 72 hours, the controller must provide a “reasoned justification” for the delay. A notification to the authority must at least: 1) describe the nature of the personal data breach, including the number and categories of data subject and personal data records affected, 2) provide the data protection officer’s contact information, 3) describe the likely consequences of the personal data breach, and 4) describe how the controller proposes to address the breach, including any mitigation efforts. If it is not possible to provide the information at the same time, the information may be provided in phases “without undue further delay.”

According to Equifax’s notification to individuals, it learned of the event on July 29, 2017. If GDPR were in effect, notification would have been required much earlier than September 7, 2017. Non-compliance with the notification requirements could lead to an administrative fine of up to 10 million Euros or up to two percent of the total worldwide annual turnover.

Preparing for Breach Obligations Under GDPR

With a security breach of this magnitude, it is easy to imagine the difficulties organizations will face in mobilizing an incident response plan in time to meet the 72-hour notice under GDPR. However, there are still nearly eight months until GDPR goes into effect on May 25, 2018. Now is a good time for organizations to implement, test, retest, and validate the policies and procedures they have in place for incident response and ensure that employees are aware of their roles and responsibilities in the event of a breach. Organizations should consider all of the following in crafting a GDPR incident response readiness plan:

 

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.

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