Gov’t of Canada Moves Closer to Implementing Mandatory Data Breach Reporting

Gov’t of Canada Moves Closer to Implementing Mandatory Data Breach Reporting by Publishing the Proposed “Breach of Security Safeguards Regulations”

The Government of Canada published last Sept. 2 the proposed “Breach of Security Safeguards Regulations” in the Canada Gazette. The official publication signals the approaching implementation of the mandatory data breach reporting under Canada’s Digital Privacy Act.
 
The Digital Privacy Act, a law that amended Canada’s private sector privacy law, the Personal Information Protection and Electronic Documents Act (PIPEDA), was passed by the Canadian Parliament on June 18, 2015. While it has been over two years since the passage of the Act, the law is still not in force in the absence of “Regulations” that lays out the specific details of the law. 

Digital Privacy Act

Under the Digital Privacy Act, every Canadian organization is required to do the following in case of a data breach:

1. Notify the Privacy Commissioner of Canada
2. Notify the affected individuals
3. Maintain a record of the data breach

Organizations could face fines of up to $100,000 for failing to notify the affected individuals and the Privacy Commissioner of the data breach under the Digital Privacy Act.

Proposed Breach of Security Safeguards Regulations

​The proposed Breach of Security Safeguards Regulations specifically laid out the specific steps on how to notify the Privacy Commissioner, the affected individuals and the particulars of maintaining a record of the data breach.
 
Under the proposed Breach of Security Safeguards Regulations, an organization affected by the data breach must notify the Privacy Commissioner in writing and provide the following details:

• Description of the circumstances of the breach and cause, if known
• Data breach period
• Description of the personal information that’s breached
• Estimates of the number of individuals affected
• Description of the “steps that the organization has taken to reduce the risk of harm to each affected individual resulting from the breach or to mitigate that harm”
• Description of the “steps that the organization has taken or intends to take to notify each affected individual of the breach”

 
The proposed Breach of Security Safeguards Regulations also requires an organization to inform the affected individuals directly via by email, letter, telephone or in person. Indirect notice via a message posted on the organization’s website for at least 90 days or advertisement that’s likely to reach the affected individuals is an option under the proposed Breach of Security Safeguards Regulations in the following circumstances:

• Giving of direct notification would result in further harm
• Cost of giving of direct notification is “prohibitive for the organization”
• The organization doesn’t have contact information for the affected individuals or the information that it has is out dated

 
Under the proposal, notice to individuals – whether direct or indirect notice –must contain the following information:

• Description of the circumstances of the breach
• Data breach period
• Description of the personal information that’s breached
• Description of the “steps that the organization has taken to reduce the risk of harm to the affected individual resulting from the breach or to mitigate that harm”
• Description of the “steps that the affected individual could take to reduce the risk of harm resulting from the breach or to mitigate that harm”
• Toll-free number or email address that affected individuals can contact to obtain further information about the breach
• Information about the affected individual’s right under the organization’s internal data breach complaint process and under the Digital Privacy Act.

 
The proposed Breach of Security Safeguards Regulations further requires an organization to maintain a record of every data breach for a period of 24 months. Under the proposed Regulations, it isn’t clear when it will come into effect. Both the Digital Privacy Act and Breach of Security Safeguards Regulations will, however, take effect on the same day.
 
Interested persons have until October 2, 2017 to give feedback regarding the proposed Regulations.

Benefits of Mandatory Data Breach Reporting and Mandatory Data Breach Record-Keeping 

​The enforcements of the Digital Privacy Act and Breach of Security Safeguards Regulations or the mandatory data breach reporting and mandatory data breach record-keeping are expected to bring about the following benefits: 
 
1. Prevent Identity Fraud
Mandatory data breach reporting is expected to “contribute positively to the privacy and security of individuals” according to Charles Taillefer, Director for Innovation, Science and Economic Development Canada. He said, “Mandatory breach reporting allows individuals who are affected by a breach to take immediate action to protect themselves against further compromise that may lead to fraud, identity theft, humiliation, loss of employment or other forms of significant harm.”
 
Based on the 2015 Identity Fraud Study conducted by Javelin Strategy and Research, two-thirds of individuals who were impacted by a data breach become victims of identity theft or fraud. The research group defines identity fraud as the “unauthorized use of another person’s personal information to achieve illicit financial gain”. Examples of identity fraud include using a stolen payment card account to opening new accounts, making a fraudulent purchase or to taking control of existing accounts.
 
2. Help Organizations Improve Data Security
According to the Global Internet Report 2016 (PDF) by the Internet Society, mandatory data breach reporting increases transparency about data breaches – what are likely targets, what data is taken, how the breaches are carried out, what cyber security works and what doesn’t.
 
“Sharing information responsibly has a number of benefits – it could help organisations globally improve their data security, help policymakers improve policies and regulators pursue attackers, and help the data security industry produce better solutions,” Internet Society said. “All this can help protect the data ecosystem as a whole.”
 
3. Motivate Organizations to Track and Analyze Data Breaches
According to the Director for Innovation, Science and Economic Development Canada, the requirement to maintain a record for every data breach for the period of two years will “incentivize organizations to track and analyze the impact of all data security incidents”.
 
According to EY’s 19th Global Information Security Survey (PDF), 62% of organizations wouldn’t increase their cyber security spending after experiencing a breach that didn’t appear to do any harm.
 
“Cyber criminals often make ‘test attacks,’ lie dormant after a breach, or use a breach as a diversionary tactic to throw organizations off the trail of what they are really up to,” EY said. “Organizations should assume that harm has been done every time there is an attack, and if they have not found it, they should consider that they have not found it yet.”