Stop begging, startup-land, and start YELLING at Catch of the Day

Consumer trust boost from data breach laws would do more for online biz than any subsidy or share scheme

Internet Security Threat Report 2014

Thank you, Catch of the Day: in taking three years – three years – to own up to a data breach (and by the way doing it late on a Friday afternoon), Australians have had a first-rate demonstration of why we need data breach disclosure laws.

It would be welcome news that the egregious Asshat-of-the-Day episode has finally concentrated the mind of Australia's start-up mouthpieces, thought leaders and lobbyists onto something really practical they could do to boost trust in the country's online businesses.

Only … actually it hasn't.

The talking heads that are happy to shout, endlessly, that Australia tech businesses can't survive without special treatment in the form of direct subsidy, indirect subsidy (tax breaks and share option schemes), favourable labour laws (including special visas), and "would sir require a towel?" treatment – these voices are utterly silent in the face of the Crock-of-the-Day hack.

The outfit took three years – not hours, days, weeks or months, but years, three of them – to announce that attackers had copied files that included usernames, hashed passwords and credit card data.

Catch Group's excuse for waiting? It thought the hashed passwords were safe and decided to go public because:

“As technology advances, there is a risk that those hashed [encrypted] passwords become compromised and Catch of the Day decided in light of these developments to proactively inform customers”.

It seems not to have occurred to anyone inside Australia's clubby, insular startup sector that a massive breach of trust by a company claiming (at the time of the breach) a quarter-billion annual revenue might, just might, do as much harm to online commerce here as a government failing to offer enough sweeteners fast enough?

That the breach might make Australians prefer to deal with online ventures that will let them know if their data is compromised?

It's no good whatever for the Australian government to “consider” breach notification laws: it's been doing so for years, and hasn't acted. And it won't act unless business demands action.

Instead of action, in a display of abject stupidity, the coalition government has recently argued in the Senate (presumably parroting business lobbies) that such laws would hamper the growth of the digital economy in Australia.

No, it wouldn't: breach laws would be foundational to the trust that underlies every business transaction. More trust in the sector would do more to drive online business than any amount of government intervention.

It would also mean that Australians would not today be wondering how many other breaches are being covered up. Ever had a bank issue a replacement card without request or explanation? If you weren't a CoTD customer, you'd right now be running through all the other services you'd ever used to try and work out which one got hacked.

Such intangibles are, however, too deep for startup-land. They are pussycats, happy to be fed, caterwauling if anyone tries to regulate their behaviour.

The financial sector's reaction is also mystifying outrageous.

Not only did Australia's banks connive to keep the breach secret, so did credit card issuers, internationals who know full well that such behaviour is not tolerated in their home territories.

Let's wrap up with Catch of the Day's own reaction. It explains its decision to release the information (at five-thirty on a Friday afternoon) at last came about because “As technology advances, there is a risk that those hashed passwords become compromised and Catch of the Day decided in light of these developments to proactively inform customers”.

The Register is inclined to treat this with some scepticism: what suddenly happened that the hashes were no longer considered secure? The big announcements about hashes – for example that SHA-1 is on the end-of-life list and RC4 is not recommended – came more than a year ago. If the passwords used a weak hash, its weakness was known long before July 2014.

It's a grubby and disgraceful episode that credits nobody. ®

Internet Security Threat Report 2014

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