Carphone Warehouse fined £400,000 after “serious failures” placed customer and employee data at risk

Carphone Warehouse has been issued with one of the largest fines imposed by the Information Commissioner’s Office (ICO) after one of the company’s computer systems was compromised as a result of a cyber attack in 2015. The business’ failure to secure the system allowed unauthorised access to the personal data of over three million customers and a total of 1,000 employees.

The compromised customer data included names, addresses, phone numbers, dates of birth, marital status and, for more than 18,000 customers, historical payment card details. The records of some Carphone Warehouse employees, including their names, phone numbers, postcodes and car registration details were also accessed.

The ICO considered that the personal data involved would significantly affect individuals’ privacy, leaving their data at risk of being misused.

Information Commissioner Elizabeth Denham explained: “A company as large, well-resourced and established as Carphone Warehouse should have been actively assessing its data security systems and ensuring that those systems were robust and not vulnerable to such attacks. Carphone Warehouse should be at the top of its game when it comes to cyber security, and it’s concerning to discover that the systemic failures we found related to rudimentary and commonplace measures.”

Multiple inadequacies identified

Following a detailed investigation, the ICO identified multiple inadequacies in Carphone Warehouse’s approach to data security and determined that the company had failed to take adequate steps to protect personal information.

Using valid login credentials, intruders were able to access the system via an out-of-date WordPress software.

The incident also exposed inadequacies in the organisation’s technical security measures. Important elements of the software in use on the systems affected were out of date and the company failed to carry out routine security testing. There were also inadequate measures in place to identify and purge historic data.

The ICO considered this to be a serious contravention of Principle 7 of the Data Protection Act 1998.

No evidence of ID theft or fraud

The Commissioner acknowledges the steps Carphone Warehouse took to fix some of the problems and protect those affected. The Commissioner also acknowledges that, to date, there has been no evidence that the data breach has resulted in identity theft or fraud.

Denham continued: “The real victims are customers and employees whose information was open to abuse by the malicious actions of the intruder. The law says it’s the company’s responsibility to protect customer and employee personal information. Outsiders should not be accessing such systems in the first place. Having an effective layered security system will help to mitigate any attack. Systems cannot be exploited if intruders cannot access them. There will always be attempts to breach organisations’ systems, while cyber attacks are becoming more frequent as adversaries become more determined. Companies and public bodies need to take serious steps in order to protect systems and, most importantly, customers and employees.”

General Data Protection Regulation

From 25 May this year, the law is set to become even more stringent as the European Union’s General Data Protection Regulation (GDPR) comes into effect. Data protection by design is one of the requirements and must be in every part of information processing, from the hardware and software to the procedures, guidelines, standards and policies that an organisation has (or should have) in place.

Companies and public bodies alike should ensure that strong IT governance and information security measures are in place, tested and refreshed to comply with the provisions of the law.

The ICO has published helpful guidance, including its Guide to the GDPR. The National Cyber Security Centre also offers useful guidance on the steps organisations can take to protect themselves.

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014.

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