Companies suffering big cyber-hacks had better hope the incidents don’t happen in Britain – that’s the message flowing from massive fines proposed by British data protection authorities, first against British Airways and now against Marriott International.
Britain’s Information Commissioner’s Office (ICO), the body in charge of data security in the UK, has confirmed that it intends to fine Marriott International GBP 99.2 million (AUD 178.2 million) for infringements of the General Data Protection Regulation (GDPR).
Like British Airways, Marriott plans to appeal.
“We are disappointed with this notice of intent from the ICO, which we will contest,” Marriott’s chief executive, Arne Sorenson, said in a filing with the US Securities and Exchange Commission.
“Marriott has been cooperating with the ICO throughout its investigation into the incident, which involved a criminal attack against the Starwood guest reservation database.”
The huge fine proposed for Marriott comes shortly after a record fine of more than GBP 183 million (AUD 329 million), levied against British Airways for a data breach in which hackers stole the personal data of half a million of the airline’s customers. See: British Airways will appeal $329 million fine for data breach
The ICO said the proposed fine “relates to a cyber incident which was notified to the ICO by Marriott in November 2018”.
“A variety of personal data contained in approximately 339 million guest records globally were exposed by the incident, of which around 30 million related to residents of 31 countries in the European Economic Area (EEA),” the ICO stated.
“Seven million related to UK residents.”
Information Commissioner Elizabeth Denham said the GDPR made it clear that organisations must be accountable for the personal data they hold.
“This can include carrying out proper due diligence when making a corporate acquisition, and putting in place proper accountability measures to assess not only what personal data has been acquired, but also how it is protected,” she said.
“Personal data has a real value, so organisations have a legal duty to ensure its security, just like they would do with any other asset. If that doesn’t happen, we will not hesitate to take strong action when necessary to protect the rights of the public.”
It is believed the vulnerability began when the systems of the Starwood hotels group were compromised in 2014, according to the ICO. Marriott subsequently acquired Starwood in 2016, but the exposure of customer information was not discovered until 2018.
The ICO’s investigation found that Marriott failed to undertake sufficient due diligence when it bought Starwood and should also have done more to secure its systems.
Marriott has co-operated with the ICO investigation and has made improvements to its security arrangements since these events came to light the ICO concedes. The company will now have an opportunity to make representations to the ICO as to the proposed findings and sanction.
The ICO says it has been investigating this case as lead supervisory authority on behalf of other EU Member State data protection authorities. It has also liaised with other regulators. Under the GDPR “one stop shop” provisions, the data protection authorities in the EU whose residents have been affected will also have the chance to comment on the ICO’s findings.
The ICO says it will “consider carefully” the representations made by the company and the other concerned data protection authorities before it takes its final decision.
Travel companies – and others – are right to be concerned. Under the new GDPR regime, the ICO can fine a company up to 4% of its annual turnover. That’s turnover, not profit. According to analysis by Techcrunch.com, Marriott made about USD 3.6 billion in revenue during 2018, so the ICO’s fine represents about 3% of its global revenue.
Written by Peter Needham
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