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Data-losing companies may be forced to spill to public

European Commission mulls beef-up of law

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The European Commission will consider passing new laws forcing organisations that lose personal data to go public with that loss. The Commission has until now been opposed to the creation of wide-ranging data breach notification requirements.

The Commission and European Council insisted that a data breach notification in a recent Telecoms Package of reforms only applies to telecoms companies. The European Parliament had attempted to widen its scope. That Package is currently under negotiation on the single issue of file sharer disconnections after the Parliament conceded ground on the data breach issue.

The Commission has now said that it will investigate the passing of new EU-wide legislation forcing all kinds of organisation to notify any data breaches to the relevant authorities and the people affected.

"The Telecoms Reform has put the issue of mandatory notification of personal data breaches firmly on the European policy agenda," said Information Society Commissioner Viviane Reding at a meeting last week organised by the European Data Protection Supervisor (EDPS). "The reformed telecoms package, now awaiting final agreement, will establish rules concerning the prevention, management and reporting of data breaches in the electronic communications sector."

"The Commission will go a step further to extend the debate to generally applicable breach notification requirements and work on possible legislative solutions. This will be done in close consultation with the European Data Protection Supervisor and other stakeholders."

The UK's privacy regulator the Information Commissioner's Office (ICO) has never fully backed data notification breaches. They have become law in many US states in recent years.

Supporters of such schemes say that the fear of public recriminations for data loss will improve companies' performances, while opponents fear that if every breach is revealed the public will become desensitised to the issue of data loss.

Reding said that the Commission will consider further legislation on the issue. "Our role is to understand what the public policy challenges are; identify the proper mechanisms to tackle them; and set the framework conditions – where necessary through sector-specific legislation," she said.

Reding said that social networking was one area where individuals were more exposed than ever to data loss. The emergence of such services makes it more likely that an extension of data breach notifications beyond telecoms providers will be needed, she said.

"Technology and business are evolving very rapidly. New services and business models bring new types of risks to privacy and security. For example: social networking. It has, on the one hand, a strong potential for new forms of communication; but on the other hand it brings privacy concerns for internet users who put personal information online.

"We have seen this in Germany recently where sensitive data was illegally collected from one of the biggest German social networks, Schueler VZ," she said.

"This clearly demonstrates that obligations to ensure protection against data breaches cannot be limited to electronic communications networks alone – but may need to be addressed in new EU rules which cover online services as well," said Reding.

When it dropped its insistence on extending data breach notifications outside the telecoms sector the European Parliament adopted a text to act as a basis for its negotiations with the Commission and Council on the issue.

"This general interest for users to be notified is clearly not limited to the electronic communications sector and therefore explicit, mandatory notification requirements applicable to all sectors should be introduced at the Community level as a matter of priority," it said.

The Article 29 Working Party has also backed the idea. It is the committee formed by all of Europe's national data protection watchdogs.

"An extension of personal data breach notifications to Information Society Services is necessary given the ever increasing role these services play in the daily lives of European citizens, and the increasing amounts of personal data processed by these services," it said earlier this year.

"Online transactions including access to e-banking services, private sector medical records and online shopping are few examples of services that may be subject to personal data breaches causing significant risks to a large number of European citizens," it said.

"Limiting the scope of these obligations to publicly available electronic communications services would only affect a very limited number of stakeholders and thus would significantly reduce the impact of personal data breach notifications as a means to protect individuals against risks such as identity theft, financial loss, loss of business or employment opportunities and physical harm."

Reding also announced that the Commission would undertake a review of information security policy as a whole.

"In 2010, the Commission intends to launch – as part of the ambitious European Digital Agenda advocated by President Barroso in his recent policy guidelines – a major initiative to modernise and strengthen network and information security policy in the EU," she said.

"At the same time, I believe we should look at the emerging challenges for privacy and trust in the broad information society, with a particular emphasis on some of the outstanding issues which were raised during the discussions on the revision of the ePrivacy Directive, such as targeted advertising, convergence, the use of IP addresses and on-line identifiers."

See: Reding's speech (3-page/34kb pdf)

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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