Home News Credit reference agency Equifax fined £500,000 by ICO for data security breach

Credit reference agency Equifax fined £500,000 by ICO for data security breach

by Brian Sims
Information Commissioner Elizabeth Denham

Information Commissioner Elizabeth Denham

The Information Commissioner’s Office (ICO) has issued Equifax Ltd with a £500,000 fine for failing to protect the personal information of up to 15 million UK citizens during a cyber attack that took place last year. The incident, which occurred between 13 May and 30 July 2017 in the US, affected 146 million customers globally.

The ICO investigation found that, although the information systems in the US were compromised, Equifax Ltd was responsible for the personal information of its UK customers. The UK arm of the company failed to take appropriate steps to ensure that its American parent Equifax Inc, which was processing the data on its behalf, was duly protecting the information.

The ICO’s investigation, which was carried out in parallel with the Financial Conduct Authority, revealed “multiple failures” at the credit reference agency which led to personal information being retained for longer than necessary and vulnerable to unauthorised access.

The investigation was carried out under the Data Protection Act 1998, rather than the current General Data Protection Regulation (GDPR), as the failings occurred before stricter laws came into force in May of this year. The fine levied is the maximum allowed under the previous legislation.

The company contravened five out of eight data protection principles of the Data Protection Act 1998 including failure to secure personal data, poor retention practices and the lack of a legal basis for international transfers of UK citizens’ data.

Elizabeth Denham, the Information Commissioner, said: “The loss of personal information, and particularly so where there’s the potential for financial fraud, is not only upsetting to customers, but also undermines consumer trust in digital commerce. This is compounded when the company is a global firm whose business relies on personal data. We are determined to look after UK citizens’ information wherever it’s held. Equifax Ltd has received the highest fine possible under the 1998 legislation because of the number of victims, the type of data at risk and because it has no excuse for failing to adhere to its own policies and controls as well as the law.”

“Inadequate and ineffective” measures in place

The ICO found measures that should have been in place to manage the personal information were “inadequate and ineffective”. Investigators unearthed significant problems with data retention, IT system patching and audit procedures. The investigation also found that the US Department of Homeland Security had warned Equifax Inc about a critical vulnerability as far back as March last year. Sufficient steps to address the vulnerability were not taken, meaning that a consumer facing portal wasn’t appropriately patched.

The personal information lost or compromised during the incident ranged from names and dates of birth to addresses, passwords, driving licence information and financial details.

Denham added: “Many of the people affected would not have been aware the company held their data. Learning about the cyber attack would have been unexpected and is likely to have caused particular distress. Multinational data companies like Equifax must understand what personal data they hold and take robust steps to protect it. Their Boards need to ensure that internal controls and systems work effectively to meet legal requirements and customers’ expectations. Equifax Ltd showed a serious disregard for their customers and the personal information entrusted to them, and that led to this substantial fine.”

Mishcon de Reya LLP’s Jon Baines said: “It’s important that, because the failings in question were from 2017, the applicable law was the now-repealed Data Protection Act 1998, and not the GDPR. £500,000 was the maximum penalty available under the old law, whereas the maximum under the GDPR is 20 million Euros or 4% of global annual turnover (whichever is the higher). Equifax will no doubt be smarting from this regulatory action, but also counting themselves fortunate that the GDPR didn’t already apply, with its potentially much higher sanctions. The worldwide effect of the security breach involved 146 million people. Other regulators will be observing the ICO’s action with interest. It took the ICO eight years to serve a maximum penalty under the old law. One wonders how long it will be before we see signs of the increased fines under the GDPR emerging.”

Simon Cuthbert, head of international at 8MAN by Protected Networks, observed: “It’s noteworthy to see that the ICO has given Equifax the maximum penalty for its data breach last year, but had this been under the new GDPR regulation, the fines could have been substantially more. This should come as a warning to businesses to put their houses in order and the necessary security processes in place. It’s not only critical that organisations have visibility over who has access to data and how they are using that access, but more importantly, ensuring access to that data is terminated when it’s no longer required. The implementation of a least privilege policy could ensure access to data remains secure and manageable and minimises the risk of a data breach.”

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