By Mark Young and Tom Jackson

On February 20, 2015, the Information Commissioner’s Office (“ICO”) fined Ltd (“Staysure”), an online travel insurer, £175,000 for failing to protect its customers’ personal data.  In addition to technical vulnerabilities, the ICO took into account Staysure’s lack of security policies and practices when levying the fine.

In short, Staysure had failed to implement processes to ensure that key software updates were applied, leading to vulnerabilities in the company’s IT systems.  As a result, hackers gained access to customers’ personal details, medical data, and payment card information, including over 100,000 sets of credit card details relating to more than 90,000 individual customers.  These stolen details were then used in relation to more than 5,000 fraudulent transactions.

In its monetary penalty notice, the ICO set out a number of aggravating – and mitigating – factors that it considered when imposing the fine:

  • as aggravating factors, it took into account the evidence that personal data was used for fraudulent transactions, and the fact that Staysure should have been aware of its software vulnerability as far back as 2010;
  • as mitigating factors, the ICO highlighted that Staysure was the victim of a criminal attack, was in the process of upgrading its IT systems at the time of the breach, that it voluntarily reported the breach and remained cooperative with the ICO’s investigation, and that it notified affected consumers and took remedial action to remove payment card data from its systems.

It is interesting, as a practical compliance matter, that the ICO criticised Staysure failing to have adequate security policies and systems in place (i.e., for checking, reviewing and applying available software security updates), and took this into account when levying the fine.  This is becoming a standard consideration of the ICO.  For example, Sony was criticised that it should have been aware of its software vulnerability when it was fined £250,000 — the largest penalty levied by the ICO against a private body in connection with a data breach to date (see notice here).  The Staymore case – and the ICO’s increasing focus on private sector companies more generally –  should serve as a warning to companies to put adequate policies and procedures in place to check systems and keep them up to date to help prevent unauthorized disclosure of personal data.