Carphone Warehouse and the DPA risks

According to my less-than-reliable memory, I once purchased a mobile phone from Carphone Warehouse about twelve years ago. I seem to also remember buying a phone from a company with a name like mobiles.co.uk around the same time (we’re they even going then?). Since then, my telephone number, postal address and email address have all changed, but my main banking details have not. So when the news emerged in recent days that Carphone Warehouse and various subsidiaries and partners had been affected by a data security breach involving the data of 2.4m customers I was understandably concerned. I have asked Carphone Warehouse several times how far back they held data which has been compromised, and explained that my contact details will have changed from any they might hold, but I have just been referred to generic information on their website which says that affected customers will be sent an email or text message (which is clearly useless to me).

I think Carphone Warehouse need urgently to clarify how far back they were retaining customer data that was compromised in this incident: I will be extremely unhappy if my c.12 year old data was in fact involved, because as far as I can see there would have been no reason to retain it that long. The fifth principle in Schedule One of the Data Protection Act 1998 (DPA) states that personal data should not be kept for longer than is necessary to fulfil the original purpose for which it was gathered – I doubt that retaining for twelve-odd years would comply with Carphone Warehouse’s obligations under the DPA.

But on a more general, less personal, note, what might this incident mean in DPA terms for Carphone Warehouse and its customers? I note that the generic information referred to above states that the cause was “a sophisticated cyber-attack” and that such attacks are “part of the reality of the modern world”. This is true, but not all organisations suffer such a serious breach of their systems that more than two million people are affected. Carphone Warehouse, as a data controller with obligations to process customer data in accordance with their obligations under the DPA will have to satisfy the Information Commissioner’s Office (which is investigating) and its customers that it complied with the seventh data protection principle, and had appropriate technical and organisational measures in place to safeguard personal data. Failure to have done so would open Carphone Warehouse up to the risk of an ICO monetary penalty to a maximum of£500,000. But the reason I mentioned satisfying customers as to the appropriate measures in place is that the DPA affords individual data subjects the right to bring a compensation claim against a data controller for a contravention of the Act. Traditionally, this right only applied where the data subject had suffered quantifiable damage (in the form of monetary loss), but, since the decision of the Court of Appeal earlier this year in Google Inc v Vidal-Hall & ors. [2015] EWCA Civ 311, such claims can be made on the basis purely of the distress suffered as a result of the contravention. I’ve got to say, I’m feeling a certain level of distress just now at the thought that my data might have been compromised. If it transpires that it was, the distress will only increase. Although such distress payments are unlikely ever to be particularly large, when one then considers the emergence of group litigation of DPA claims, the financial risks to data controllers who suffer huge breaches of customer data is palpable: purely hypothetically, if Carphone Warehouse were found to have failed to comply with their DPA obligations, and half of the customers affected brought a money claim worth £100, they would be facing an exposure of more than £100 million. One wonders if the market’s continuing current confidence in the company allows for that.

Google has been granted permission to appeal Vidal-Hall to the Supreme Court, but pending that the Court of Appeal’s judgment remains good law. And, as I have predicted previously, I think there may be a number of law firms eyeing the case, and potential clients, expectantly.

The views in this post (and indeed all posts on this blog) are my personal ones, and do not represent the views of any organisation I am involved with.

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Filed under 7th principle, Data Protection, data security, Fifth principle, Information Commissioner

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