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UK data protection regulator issues £183m fine to British Airways for data breach

“When an organisation fails to protect [personal data] from loss, damage or theft it is more than an inconvenience.” (the Information Commissioner’s Office). The Information… Read more

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“When an organisation fails to protect [personal data] from loss, damage or theft it is more than an inconvenience.” (the Information Commissioner’s Office).

The Information Commissioner’s Office (the “ICO”) has announced its intention this morning to fine British Airways (“BA”) a record-high £183.39m for the UK airline’s data breach which occurred in June 2018.

Data breach

Cyber attackers successfully gathered BA customers’ details through a false site which intercepted the airline’s own website. The ICO’s investigation revealed that names, addresses, log in details, payment card information (including CVV codes) and travel booking details of approximately 500,000 BA customers were compromised during the incident. BA’s CEO and Chairman Alex Cruz described it as a ‘malicious criminal attack.’

At the time of the breach BA offered to i) reimburse for financial losses; ii) provide a credit checking service and iii) pay compensation for inconvenience and expense although it is unclear to what extent these were offered to affected individuals as a matter of course. BA was also praised as handling the communications around the data breach relatively successfully – although the bar had been set at a relatively low level by previous breaches – and there were still many complaints from those affected.

In particular, the ICO has criticised BA’s “poor security arrangements” which led to the data breach – with no mention in the ICO’s press release of a ‘malicious criminal attack’. One of the key data principles under the General Data Protection Regime (“GDPR”) is the security principle which requires organisations to have appropriate security measures in place to protect the personal data that the organisation holds. Importantly, under the new principle of accountability under the GDPR, organisations are required to actually demonstrate that they are implementing these security measures in practice. As cybersecurity evolves, then organisations also need to regularly review the security measures on their digital estate,

Record-high fine

This is the first fine that the ICO has issued under the GDPR, which came into force in May last year. Under the new legal regime, the ICO has the power to issue a fine of up to 4% of the company’s annual turnover for the previous year. The £183.39m fine against BA amounts to 1.5% of the company’s turnover in 2017. Comparatively, the highest fine issued by the ICO until now was the £500,000 fine against Facebook for the Cambridge Analytica scandal; this was the maximum penalty under the old data protection regime.

Next steps

The ICO announced that BA have been cooperative during the investigation and have taken steps to improve its cybersecurity measures since the data breach. BA now has the opportunity to appeal the ICO’s initial findings within the next 28 days by making representations to the regulator about the findings of the investigation and the amount of the proposed fine. BA has responded to the ICO’s notice stating ‘We have found no evidence of fraud/ fraudulent activity on accounts linked to the theft.’ Notably the share price of the BA holding company IAG dropped 1% in response to the ICO’s announcement.

The ICO has been the lead regulator investigating the breach, predominantly affected UK-based BA customers. However, the ICO will be liaising with other EU data protection regulators where other affected BA customers may reside. Other EU data protection regulators will also have the opportunity, alongside BA, to comment on the ICO’s initial findings and proposed fine.

Key takeaways

Although the ICO did not exercise its power to issue BA with the maximum fine under the GDPR of 4% of its annual turnover, today’s news emphasises the fact that the ICO is willing to enforce significant penalties on companies that do not look after individuals’ personal data. The ICO has made clear that such organisations will “face scrutiny from [the ICO] to check they have taken appropriate steps to protect fundamental privacy rights” (Elizabeth Denham). The ICO’s findings will force companies of all sizes to re-think their internal cybersecurity measures and the way in which they handle and protect individuals’ personal data. BA has indicated that it will be making any necessary appeals. If the fine is made final by the ICO then BA does have the right in the UK to appeal to the Information Tribunal (a first tier tribunal) which can either quash or reduce the level of the fine.