Dishonest data protection notices could earn jail time

People who gather personal data without issuing a valid data protection notice in the course of their business could, at least in theory, face up to 10 years in jail under the UK's new Fraud Act which came into force on Monday.

The Act was passed by the House of Commons in November but only came into force this week. Though legal experts say a 10 year jail sentence seems extremely unlikely for an improperly-worded data protection notice or the absence of one, the law does make such a term possible.

"An unlooked-for consequence is that a data controller which fails to give a proper data protection notice and obtains personal data which he is going to use in business, e.g. to sell on as part of a mailing list, is now risking a prison sentence," said Rosemary Jay, data protection specialist at Pinsent Masons, the law firm behind OUT-LAW.COM.

Section Three of the Act creates the new offence of failing to disclose information. "A person is in breach of this section if he dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and intends, by failing to disclose the information to make a gain for himself or another, or to cause loss to another or to expose another to a risk of loss," the Act says.

Jay believes that the full force of the sanction will probably never be used for data protection failings. "It is unlikely that someone would get sent to prison for a data protection notice and certainly not for 10 years," she said.

A Home Office circular giving guidance on the Act includes an example of a situation where the provision is more likely to be applied: "If a doctor failed to disclose to a hospital that certain patients referred by him for treatment are private patients, thereby avoiding a charge for the services provided."

The Act also outlaws the possession of "phishing" kits. Phishing is the act of sending a fake email to many people pretending to be from a well known company, usually a bank. It sends readers to a fake site which can then gather the person's banking details and defraud them.

Previously it was not an offence to possess the software and tools necessary to launch phishing attacks, but the new law does make that an offence.

It is the first single, general fraud law in English law. Previously a number of different laws created offences related to fraud, but the new Act brings all those offences and some new ones into the same Act.

Another new offence which it creates is the writing of software "knowing that it is designed or adapted for use in...connection with fraud". Those found guilty of that offence could also face a jail sentence of up to 10 years.

Fraud levels are on the rise, according to KPMG's Forensic Fraud Barometer. It reported that 2005 fraud levels were the highest in a decade, at £900m in the UK. It found that the figure for 2006 was likely to be even higher.

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

Related link

Fraud Act 2006(17 page/112KB PDF)