Australian businesses may be forced to publicly admit data breaches

SYDNEY – Australia’s Privacy Commissioner would be given new powers to enforce the mandatory reporting of data breaches under proposed amendments to the Privacy Act.

Under the proposed changes, Australian businesses will be forced to publicly detail data breaches. The Australian Law Reform Commission (ALRC) has submitted recommendations to reform the Privacy Act in an 800 page discussion paper with 301 proposals.

The reforms will likely give the Privacy Commissioner new powers to amend legislation to facilitate emerging technologies including biometrics, data warehousing of customer information and high profile breaches of sensitive data.

Speaking at the SecurityPoint 2008 conference in Sydney last week, Andrew Hayne deputy, acting director for the Office of the Privacy Commissioner, said the new Privacy Act will require public notification of breaches that expose sensitive customer information.

"There will be a requirement for notification of significant breaches in order to make organizations take adequate safeguards [to protect data]," Hayne said. "The requirement should not be an unreasonable burden on business and it should not result in alarmous [sic] notification.

"Notification should only be needed in cases where breaches could cause serious harm [to customers] such as financial damages or risk of discrimination or embarrassment."

Hayne said defining 'serious harm' is the "$64,000 question". He said it will be framed according to the next ARLC discussion paper, expected to be delayed past its March deadline due to the federal elections, and a call for industry submissions to the reforms.

Fines may be issued for data breaches for the first time under the new Privacy Act. "If there are a million individuals [affected by a data breach] it may not be reasonable to reimburse everyone; instead it may be better to impose fines," Hayne said.

However he said it is too soon to confirm such details. But Hayne suspects the Privacy Commissioner will maintain a policy of ruling that offenders must repair the security flaws, reimburse affected entities and issue an apology. The Privacy Commissioner will be able to include developing technologies, such as biometrics and RFID, in the legislation as they emerge by enacting binding codes.

"The ALRC recommends that the commissioner should be able to make binding codes on specific technologies [which] will allow a quick response to risk," Hayne said. According to Haynes, the codes are designed to add specificity to the current Act which has been attacked for its weak nonspecific structure. Parliament will need to pass the codes before the Act can be amended.

The reforms will merge Australia's duelist IPP and NPP privacy laws, which mandate similar policies for federal and state organizations, into a single Act to reduce complexity. Privacy audits will be renamed as 'privacy security assessments' under the reforms. This reflects the Privacy Commissioner's preference for recommending solutions rather than issuing fines for breaches.