Tell your customers about your data breaches!

Did they tell their customers that data was stolen? No, not right away. When AA — a large automobile club and insurer in the United Kingdom — was hacked in April, the company was completely mum for months, in part because it didn’t believe the stolen data was sensitive. AA’s customers only learned about it when information about the breach was publicly disclosed in late June.

There are no global laws that require companies to disclose information about data thefts to customers. There are similarly no global laws that require companies to disclose defects in their software or hardware products, including those that might introduce security vulnerabilities.

It’s obviously why companies wouldn’t want to disclose problems with their products (such as bugs or vulnerabilities) or with their back-end operations (such as system breaches or data exfiltration). If customers think you’re insecure, they’ll leave. If investors think you’re insecure, they’ll leave. If competitors think you’re insecure, they’ll pounce on it. And if lawyers or regulators think you’re insecure, they might file lawsuits.

No matter how you slice it, disclosures about problems is not good for business. Far better to share information about new products, exciting features, customer wins, market share increases, additional platforms, and pricing promotions.

It’s Not Always Hidden

That’s not to say that all companies hide bad news. Microsoft, for example, is considered to be very proactive on disclosing flaws in its products and platforms, including those that affect security. When Microsoft learned about the Server Message Block (SMB) flaw that enabled malware like WannaCry and Petya in March, it quickly issued a Security Bulletin that explained the problem — and supplied the necessary patches. If customers had read the bulletin and applied the patches, those ransomware outbreaks wouldn’t have occurred.

When you get outside the domain of large software companies, such disclosures are rare. Automobile manufacturers do share information about vehicle defects with regulators, as per national laws, but resist recalls because of the expense and bad publicity. Beyond that, companies share information about problems with products, services, and operations unwillingly – and with delays.

In the AA case, as SC Magazine wrote,

The leaky database was first discovered by the AA on April 22 and fixed by April 25. In the time that it had been exposed, it had reportedly been accessed by several unauthorised parties. An investigation by the AA deemed the leaky data to be not sensitive, meaning that the organisation did not feel it necessary to tell customers.

Yet the breach contained over 13 gigabytes of data with information about 100,000 customers. Not sensitive? Well, the stolen information included email addresses along with names, IP addresses, and credit card details. That data seems sensitive to me!

Everything Will Change Under GDPR

The European Union’s new General Data Protection Regulation (GDPR) is go into effect May 2018. GDPR will for the first time require companies to tell customers and regulators about data breaches in a timely manner. Explains the U.K. Information Commissioner’s Office,

The GDPR will introduce a duty on all organisations to report certain types of data breach to the relevant supervisory authority, and in some cases to the individuals affected.

What is a personal data breach?

A personal data breach means a breach of security leading to the destruction, loss, alteration, unauthorised disclosure of, or access to, personal data. This means that a breach is more than just losing personal data.

Example

A hospital could be responsible for a personal data breach if a patient’s health record is inappropriately accessed due to a lack of appropriate internal controls.

When do individuals have to be notified?

Where a breach is likely to result in a high risk to the rights and freedoms of individuals, you must notify those concerned directly.

A ‘high risk’ means the threshold for notifying individuals is higher than for notifying the relevant supervisory authority.

What information must a breach notification contain?

• The nature of the personal data breach including, where possible:
• the categories and approximate number of individuals concerned; and
• the categories and approximate number of personal data records concerned;
• The name and contact details of the data protection officer (if your organisation has one) or other contact point where more information can be obtained;
• A description of the likely consequences of the personal data breach; and
• A description of the measures taken, or proposed to be taken, to deal with the personal data breach and, where appropriate, of the measures taken to mitigate any possible adverse effects.

Also, says the regulation,

If the breach is sufficiently serious to warrant notification to the public, the organisation responsible must do so without undue delay. Failing to notify a breach when required to do so can result in a significant fine up to 10 million Euros or 2 per cent of your global turnover.

Bottom line: Next year, companies in the E.U. must do better disclosing data breaches that affect their customers. Let’s hope this practice extends to more of the world.