Data Breach Notification: Debate in the EU

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In the wake of a number of security incidents in the United Kingdom and elsewhere, the debate has reopened as to whether there should be a US-style security breach notification law, requiring those suffering a data breach to notify individuals, as well as national data protection authorities. The ICO (“ICO”) recently published guidance on security breach management, including, amongst other things, “voluntary” notification. The European Commission also proposed that telecommunications operators and internet service providers should be required to notify affected persons about breaches. Below we outline the movement towards security breach notification in Europe and the lessons to be learned from the experiences in the United States and Japan, which both have security breach laws in place.

The UK data protection landscape has changed dramatically over the past 12 months as a result of several highly publicized security breaches in both the private and public sectors. For example, in February 2007, the Financial Services Authority (“FSA”), the financial services regulator, fined Nationwide Building Society, a major provider of mortgages and personal banking services, £980,000 (approximately €1,285,534 or US$1,939,879) for security failures resulting from a 2006 theft of an employee laptop computer containing sensitive customer data. The FSA found that Nationwide’s security systems and its response to the breach, involving data relating to some of Nationwide’s 11 million account holders, were inadequate. In November 2007, the government revealed that computer discs containing personal data on 25 million child benefit recipients were lost in the mail when tax officials sent the information to government auditors for review. Most

recently, in January 2008, the ICO issued an Enforcement Notice against Marks & Spencer for its failure to encrypt customer data contained on a company laptop and to notify its customers following the theft of that laptop.

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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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