November 30, 2020

Volume X, Number 335

Advertisement

British Airways Faces Significantly Reduced £20M Fine for GDPR Breach

At £20 million, the fine imposed on British Airways (BA) for its infringement of the General Data Protection Regulation is the biggest fine of its kind in the history of the U.K.’s Information Commissioner’s Office (ICO). Whilst markedly lower than the fine initially proposed, the process by which the revised figure was reached provides some interesting insights on the factors that regulators will take into account and is a clear sign that despite the current economic climate, the ICO is not afraid to enforce strict GDPR compliance.

On 16 October 2020, the U.K.’s data protection regulator, the ICO, gave notice of the fine to be imposed on British Airways for a customer data breach that occurred between June and September 2018 (Penalty Notice). The ICO found that BA had failed significantly in its role as a data controller to preempt and prepare its security measures against a highly sophisticated cyberattack. Yet the reduction in the fine issued from the initially proposed £183.39 million is confirmation of the significant financial benefit that can be gained from full cooperation with an investigation, and an indication of the ICO’s ongoing adaptability in its enforcement of the General Data Protection Regulation 2016/679 (GDPR) during a time of continued disruption by COVID-19.

Across Europe, data protection authorities (DPAs) such as the ICO have made statements to confirm that they will ensure to continue to act in the public interest throughout the COVID-19 pandemic. During this time, that means they should retain the right balance, focusing on those areas likely to cause the greatest public harm and recognising the genuine constraints on most businesses, which will inevitably impact their ability to fully comply with all aspects of the law. Generally, there is an expectation of more action from DPAs right across Europe, the COVID-19 pandemic notwithstanding, as companies that have thus far been given the benefit of the doubt and assistance with compliance are increasingly subjected to tougher enforcement action.

Background to the ICO’s Penalty Notice

The initial Notice of Intent to fine BA £183.39 million (equating to 1.5% of BA’s worldwide turnover in 2017) was issued following the airline’s failure to prevent a cyber incident that compromised over 500,000 customers’ personal details in 2018. This would have been the largest fine (by a significant margin) imposed by any EU data protection regulator. The attack involved a sophisticated infiltration of BA’s systems, including gaining access to high-level accounts and to the code for the BA website. The attacker was then able to divert user traffic from the BA website so that customer payment card data were copied and redirected to the attacker’s site without interrupting the usual BA booking and payment procedure, remaining undetected until a third party brought it to BA’s attention.

The Penalty Notice issued by the ICO commenced with a much-reduced penalty of £30 million as an appropriate starting point before any mitigating factors were taken into consideration. No clear explanation is provided for such a significant reduction from the initial notice to fine, although it suggests it is likely that the ICO laid less blame on BA once the incident had been fully investigated.

The Breach

ICO investigators found that BA had failed under Articles 5(1)(f) and 32 of the GDPR to ensure appropriate security of the data. Specifically, there was a failure to use appropriate technical and organizational measures to protect against unauthorized or unlawful processing, and accidental loss, destruction or damage of personal data, that BA was responsible for as data controller. There were multiple weaknesses in BA’s system that should have been identified and resolved, and had BA implemented one or more of the appropriate security measures available at the time, the attack could have been prevented, or its impact mitigated. The Commissioner found that BA was processing a significant amount of personal data without appropriate security and it is unclear whether BA would have detected the data breach if the airline had not been alerted by a third party. The Commissioner also considered the severity of the data breach in terms of the high volume of data disclosed — an estimated 429,612 people were affected, with 185,000 customers having their payment card data compromised and 77,000 having their CVV numbers taken, the latter considered sensitive financial information and therefore high risk.

Mitigating Factors

There were a number of mitigating factors, and as a result, the ICO further reduced the fine from £30 million to £20 million. Part of that reduction, £6 million, relates to mitigating factors specific to BA’s response to the data breach. After becoming aware of the data breach, BA took immediate action to mitigate any damage suffered, promptly informed the ICO and affected data subjects of the breach in line with its reporting obligations, and cooperated fully with the Commissioner’s enquiries. Additionally, the ICO accepted BA’s argument that widespread reporting of the attack and the ICO’s investigation had increased the awareness of other data controllers of the risks posed by cyberattacks. The ICO further accepted that the attention also had an adverse impact on BA’s branding and reputation.

The ICO applied a further reduction of £4 million in light of the adverse financial impact of COVID-19 on BA’s business and the wider aviation industry. This gives some indication of how the ICO will approach its duties over the coming months and suggests companies could expect fines to be reduced by roughly 10% to 15%, although the particular circumstances of the airline industry are not by any means universally felt, and it will remain to be seen whether this will be a common feature of GDPR fines issued during this period.

Quantification Methodology

BA also submitted detailed representations in response to the method used by the ICO to reach the initial fine figure of £183.39 million. BA alleged that the Commissioner unlawfully applied an unpublished, turnover-centric quantification policy to calculate the initial fine. The Commissioner agreed that the draft internal procedure used should not have been relied on in the present case, and so it was not used in deciding the final penalty amount. This provides some relief to data controllers that a significant percentage of their global turnover will not automatically be at risk in the most serious breaches (which could lead to astronomical fines in large global groups). However, the Commissioner is obliged to ensure penalties are “effective, proportionate, and dissuasive”. Therefore a data controller’s turnover remains a relevant and important, but not necessarily a determining, factor.

Wider Implications

Despite a huge reduction from the initial fine amount, £20 million remains the biggest fine ever issued by the ICO for a breach of GDPR and is a clear statement of the seriousness it places on data processing responsibilities. The ICO did not accept BA’s suggestion that the airline industry should be subjected to a lower security standard compared with other industries, and whilst the ICO recognized that the breach was caused by a sophisticated cyberattack, this does not alter BA’s obligations as a data controller to have in place adequate security measures. A company the size of BA, that processes large amounts of high-risk data, is expected to be aware that it is a likely target of such an attack and must have up-to-date systems in place to protect data. This is a reminder to all businesses, given the increasing number of cyberattacks mounted during the COVID-19 pandemic, that data security remains paramount. While it may not be possible to prevent a cyberattack, having appropriate well-rehearsed internal response procedures, particularly in respect of breach notification and remediation measures, will certainly help soften the blow.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume X, Number 297
Advertisement

TRENDING LEGAL ANALYSIS

Advertisement
Advertisement

About this Author

Huw Beverley-Smith Transactions Lawyer Faegre Drinker
Partner

Huw Beverley-Smith advises customers and suppliers on a wide range of international transactions and regulatory issues, including technology, telecommunications and business process outsourcing, complex services agreements, intellectual property ownership and licensing. He counsels clients on privacy and cybersecurity issues and helps navigate regulatory hurdles and operational and commercial risks. Huw is the author of several books and articles on intellectual property and privacy, including "Rights in Data and Information" in the Oxford Handbook of Intellectual...

+44 (0) 20 7450 4551
Charlotte H.N. Perowne International Transactions & Regulatory Issues Faegre Drinker Biddle & Reath London, UK
Associate

Charlotte Perowne advises clients on a wide range of international transactions and regulatory issues, including technology transactions, outsourcing, intellectual property ownership and licensing, data privacy, and cybersecurity. Charlotte helps clients navigate U.K. and EU data protection and other regulatory risks and advises international clients across a range of industries on commercial projects and international transactions.

Past Experience

Prior to her time with Faegre Drinker, Charlotte was a trainee solicitor with CMS Cameron Mckenna Nabarro Olswang, gaining...

44 (0) 20 7450 4532
Trainee Solicitor

Fred Kelleher advises clients on emerging legal and regulatory trends relating to labor and employment, with an eye toward supporting businesses in efforts to expand their workforce and deepen their presence across markets.

Previous Experience

Fred launched his career as a corporate paralegal at Goldman Sachs, assisting clients on regulatory and transactional matters. Fred then moved into a similar role on the investment funds team of an international law firm, where he advised general managers on fund formation and fund raisings. His last role prior to joining Faegre...

44 (0) 20-7450-4564
Advertisement
Advertisement