Legal Issues Relating to the Notification of Australian Data Breaches

Advances in information and communications technologies during the last two decades have allowed organisations to capture and utilise data on a vast scale, thus heightening the importance of adequate measures for protecting unauthorised disclosure of personal information. In this respect, data breach notification has emerged as an issue of increasing importance throughout the world. It has been the subject of law reform in the United States and in other international jurisdictions. Following the Australian Law Reform Commission’s review of privacy, data breach notification will soon be addressed in Australia. This article provides a review of US and Australian legal initiatives regarding the notification of data breaches. The authors highlight areas of concern based on the extant US literature that require specific consideration in Australia regarding the development of an Australian legal framework for the notification of data breaches.

Encryption safe harbours and data breach notification laws

Data breach notification laws require organisations to notify affected persons or regulatory authorities when an unauthorised acquisition of personal data occurs. Most laws provide a safe harbour to this obligation if acquired data has been encrypted. There are three types of safe harbour: an exemption; a rebuttable presumption and factor-based analysis. We demonstrate, using three condition-based scenarios, that the broad formulation of most encryption safe harbours is based on the flawed assumption that encryption is the silver bullet for personal information protection. We then contend that reliance upon an encryption safe harbour should be dependent upon a rigorous and competent risk-based review that is required on a case-by-case basis. Finally, we recommend the use of both an encryption safe harbour and a notification trigger as our preferred choice for a data breach notification regulatory framework.

Stakeholder perspectives regarding the mandatory notification of Australian data breaches

The advent of data breach notification laws in the United States (US) has unearthed a significant problem involving the mismanagement of personal information by a range of public and private sector organisations. At present, there is currently no statutory obligation under Australian law requiring public or private sector organisations to report a data breach of personal information to law enforcement agencies or affected persons. However, following a comprehensive review of Australian privacy law, the Australian Law Reform Commission (ALRC) has recommended the introduction of a mandatory data breach notification scheme. The issue of data breach notification has ignited fierce debate amongst stakeholders, especially larger private sector entities. The purpose of this article is to document the perspectives of key industry and government representatives to identify their standpoints regarding an appropriate regulatory approach to data breach notification in Australia.

The mandatory notification of data breaches : issues arising for Australian and EU legal developments

Public and private sector organisations are now able to capture and utilise data on a vast scale, thus heightening the importance of adequate measures for protecting unauthorised disclosure of personal information. In this respect, data breach notification has emerged as an issue of increasing importance throughout the world. It has been the subject of law reform in the United States and in other jurisdictions. This article reviews US, Australian and EU legal developments regarding the mandatory notification of data breaches. The authors highlight areas of concern based on the extant US experience that require further consideration in Australia and in the EU.

Notification of data breaches under the continuous disclosure regime

Consumer personal information is now a valuable commodity for most corporations. Concomitant with increased value is the expansion of new legal obligations to protect personal information. Mandatory data breach notification laws are an important new development in this regard. Such laws require a corporation that has suffered a data breach, which involves personal information, such as a computer hacking incident, to notify those persons who may have been affected by the breach. Regulators may also need to be notified. Australia currently does not have a mandatory data breach notification law but this may be about to change. The Australian Law Reform Commission has suggested that a data breach notification scheme be implemented through the Privacy Act 1988 (Cth). However, the notification of data breaches may already be required under the continuous disclosure regime stipulated by the Corporations Act 2001 (Cth) and the Australian Stock Exchange (ASX) Listing Rules. Accordingly, this article examines whether the notification of data breaches is a statutory requirement of the existing continuous disclosure regime and whether the ASX should therefore be notified of such incidents.

Contextualizing the tensions and weaknesses of information privacy and data breach notification laws

Data breach notification laws have detailed numerous failures relating to the protection of personal information that have blighted both corporate and governmental institutions. There are obvious parallels between data breach notification and information privacy law as they both involve the protection of personal information. However, a closer examination of both laws reveals conceptual differences that give rise to vertical tensions between each law and shared horizontal weaknesses within both laws. Tensions emanate from conflicting approaches to the implementation of information privacy law that results in different regimes and the implementation of different types of protections. Shared weaknesses arise from an overt focus on specified types of personal information which results in ‘one size fits all’ legal remedies. The author contends that a greater contextual approach which promotes the importance of social context is required and highlights the effect that contextualization could have on both laws.

Australian data breach notification : avoiding the State/Federal overlap

Mandatory data breach notification has become a matter of increasing concern for law reformers. In Australia, this issue was recently addressed as part of a comprehensive review of privacy law conducted by the Australian Law Reform Commission (ALRC) which recommended a uniform national regime for protecting personal information applicable to both the public and private sectors. As in all federal systems, the distribution of powers between central and state governments poses problems for national consistency. In the authors’ view, a uniform approach to mandatory data breach notification has greater merit than a ‘jurisdiction specific’ approach epitomized by US state-based laws. The US response has given rise to unnecessary overlaps and inefficiencies as demonstrated by a review of different notification triggers and encryption safe harbors. Reviewing the US response, the authors conclude that a uniform approach to data breach notification is inherently more efficient.

The conceptual and operational compatibility of data breach notification and information privacy laws

Mandatory data breach notification laws are a novel and potentially important legal instrument regarding organisational protection of personal information. These laws require organisations that have suffered a data breach involving personal information to notify those persons that may be affected, and potentially government authorities, about the breach. The Australian Law Reform Commission (ALRC) has proposed the creation of a mandatory data breach notification scheme, implemented via amendments to the Privacy Act 1988 (Cth). However, the conceptual differences between data breach notification law and information privacy law are such that it is questionable whether a data breach notification scheme can be solely implemented via an information privacy law. Accordingly, this thesis by publications investigated, through six journal articles, the extent to which data breach notification law was conceptually and operationally compatible with information privacy law. The assessment of compatibility began with the identification of key issues related to data breach notification law. The first article, Stakeholder Perspectives Regarding the Mandatory Notification of Australian Data Breaches started this stage of the research which concluded in the second article, The Mandatory Notification of Data Breaches: Issues Arising for Australian and EU Legal Developments (‘Mandatory Notification‘). A key issue that emerged was whether data breach notification was itself an information privacy issue. This notion guided the remaining research and focused attention towards the next stage of research, an examination of the conceptual and operational foundations of both laws. The second article, Mandatory Notification and the third article, Encryption Safe Harbours and Data Breach Notification Laws did so from the perspective of data breach notification law. The fourth article, The Conceptual Basis of Personal Information in Australian Privacy Law and the fifth article, Privacy Invasive Geo-Mashups: Privacy 2.0 and the Limits of First Generation Information Privacy Laws did so for information privacy law. The final article, Contextualizing the Tensions and Weaknesses of Information Privacy and Data Breach Notification Laws synthesised previous research findings within the framework of contextualisation, principally developed by Nissenbaum. The examination of conceptual and operational foundations revealed tensions between both laws and shared weaknesses within both laws. First, the distinction between sectoral and comprehensive information privacy legal regimes was important as it shaped the development of US data breach notification laws and their subsequent implementable scope in other jurisdictions. Second, the sectoral versus comprehensive distinction produced different emphases in relation to data breach notification thus leading to different forms of remedy. The prime example is the distinction between market-based initiatives found in US data breach notification laws compared to rights-based protections found in the EU and Australia. Third, both laws are predicated on the regulation of personal information exchange processes even though both laws regulate this process from different perspectives, namely, a context independent or context dependent approach. Fourth, both laws have limited notions of harm that is further constrained by restrictive accountability frameworks. The findings of the research suggest that data breach notification is more compatible with information privacy law in some respects than others. Apparent compatibilities clearly exist as both laws have an interest in the protection of personal information. However, this thesis revealed that ostensible similarities are founded on some significant differences. Data breach notification law is either a comprehensive facet to a sectoral approach or a sectoral adjunct to a comprehensive regime. However, whilst there are fundamental differences between both laws they are not so great to make them incompatible with each other. The similarities between both laws are sufficient to forge compatibilities but it is likely that the distinctions between them will produce anomalies particularly if both laws are applied from a perspective that negates contextualisation.

Data breach notification law in the EU and Australia : where to now?

Mandatory data breach notification laws have been a significant legislative reform in response to unauthorized disclosures of personal information by public and private sector organizations. These laws originated in the state-based legislatures of the United States during the last decade and have subsequently garnered worldwide legislative interest. We contend that there are conceptual and practical concerns regarding mandatory data breach notification laws which limit the scope of their applicability, particularly in relation to existing information privacy law regimes. We outline these concerns here, in the light of recent European Union and Australian legal developments in this area.

The Growing Pains of Data Breach Notification Law

Mandatory data breach notification laws are a novel statutory solution in relation to organizational protections of personal information. They require organizations which have suffered a breach of security involving personal information to notif'y those persons whose information may have been affected. These laws originated in the state based legislatures of the United States during the last decade and have subsequently garnered worldwide legislative interest. Despite their perceived utility, mandatory data breach notification laws have several conceptual and practical concems that limit the scope of their applicability, particularly in relation to existing information privacy law regimes. We outline these concerns, and in doing so, we contend that while mandatory data breach notification laws have many useful facets, their utility as an 'add-on' to enhance the failings of current information privacy law frameworks should not necessarily be taken for granted.