Privacy breaches bring devastating consequences to businesses, including financial loss, legal liability and reputational damage. With Australia recording millions of data breaches annually, it’s crucial for businesses to understand their responsibilities under the Privacy Act 1988 (Cth) and take proactive steps to protect sensitive customer and employee information.
What can cause privacy breaches?
- Malicious cyber attacks
External threats such as hacking, phishing, ransomware, or brute-force attacks can compromise sensitive data. For example, the Optus data breach in 2022 exposed the personal information of nearly 9.8 million customers due to an unsecured API endpoint. - Human error
Mistakes like sending emails to the wrong recipients or failing to secure databases can lead to unauthorized disclosure of private information. - Inadequate security systems
Outdated software or insufficient cybersecurity measures can leave systems vulnerable to breaches. For example, The Latitude Financial breach in 2023 occurred due to stolen employee credentials, exposing data from over 14 million customers. - Failure to comply with retention policies
Storing outdated records beyond mandatory retention periods increases the risk of breaches. For example, Latitude Financial stored customer data dating back to 2005, raising concerns about compliance with privacy regulations.
When to take action
Businesses should act immediately if any of the following factors are present:
- Compromised customer data
If personal or confidential information such as names, addresses, or identification numbers are exposed. - Legal non-compliance
If your business fails to meet obligations under the Privacy Act 1988, such as notifying affected individuals under the Notifiable Data Breaches scheme, implementing adequate security measures to protect personal information, or responding to access or correction requests from individuals regarding their data. - Financial Loss
If a breach results in costs for mitigating damage or responding to legal claims. - Reputational damage
If a breach impacts customer trust or public perception of your business.
What action to take
If your business has experienced a privacy breach, there are several steps (some compulsory, some optional) that will mitigate harm and address liabilities:
- Notify affected individuals
Under the Notifiable Data Breaches scheme, businesses must promptly inform individuals whose personal information has been compromised and provide recommendations on how they can protect themselves. - Report the breach
Notify the Office of the Australian Information Commissioner (OAIC) about the breach and comply with their investigation requirements. Failure to report may result in fines or penalties under the Privacy Act 1988 (Cth). - Seek injunctions
If sensitive data has been unlawfully accessed or shared, you may seek court orders (injunctions) to prevent further dissemination or misuse of the information. - Pursue compensation claims
If a third party is responsible for the breach (e.g., a vendor or contractor), you may pursue legal action for damages caused by their negligence or misconduct. - Defend against legal claims
If affected individuals file lawsuits against your business for privacy breaches, consult legal experts to defend your position and minimize liability exposure. - Exercise reputational damage control
Take proactive measures to mitigate harm to your business’s reputation following a data breach. This includes transparent communication with all stakeholders, implementing public relations strategies, and demonstrating accountability by addressing the breach effectively. Consider offering support to affected individuals, such as free credit monitoring services, to rebuild trust and showcase your commitment to privacy protection.
How to protect your business
To safeguard your business from future privacy breaches, implement these measures:
- Strengthen cybersecurity
Use secure-by-design principles, update software regularly, and implement strong passwords and two-factor authentication. - Conduct regular audits
Review data handling practices and ensure compliance with mandatory retention periods. - Train employees
Educate staff on privacy policies and cybersecurity best practices to minimize human error. - Prepare for breaches
Develop a comprehensive privacy breach response plan that includes notifying affected individuals and reporting breaches to the OAIC. - Seek legal advice
Consult a lawyer for guidance on privacy compliance and managing liabilities after a breach.
Privacy breaches are becoming increasingly common. Strengthening cybersecurity, adhering to privacy laws, and preparing for incidents protect sensitive data and ensure compliance with Australian regulations. Further, taking proactive steps during an incident can safeguard reputation and business financial viability.