The Canadian Privacy Law Blog: Developments in privacy law and writings of a Canadian privacy lawyer, containing information related to the Personal Information Protection and Electronic Documents Act (aka PIPEDA) and other Canadian and international laws.
The author of this blog, David T.S. Fraser, is a Canadian privacy lawyer who practices with the firm of McInnes Cooper. He is the author of the Physicians' Privacy Manual. He has a national and international practice advising corporations and individuals on matters related to Canadian privacy laws.
For full contact information and a brief bio, please see David's profile.
The views expressed herein are solely the author's and should not be attributed to his employer or clients. Any postings on legal issues are provided as a public service, and do not constitute solicitation or provision of legal advice. The author makes no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained herein or linked to. Nothing herein should be used as a substitute for the advice of competent counsel.
This web site is presented for informational purposes only. These materials do not constitute legal advice and do not create a solicitor-client relationship between you and David T.S. Fraser. If you are seeking specific advice related to Canadian privacy law or PIPEDA, contact the author, David T.S. Fraser.
Wednesday, September 26, 2007
The federal Privacy Commissioner and the Information and Privacy Commissioner of Canada have released their reports on the TJX/Winners breach (Report of Findings (September 25, 2007) Privacy Commissioner of Canada and Investigation Report P2007-IR-006). The moral of the story: don't collect information you don't need, don't keep it any longer than you need and properly secure the information you have.
Here's the media release:
News Release: Inadequate security safeguards led to TJX breach, Commissioners say (September 25, 2007) - Privacy Commissioner of Canada
Inadequate security safeguards led to TJX breach, Commissioners say
September 25, 2007 –The risk of a breach of sensitive personal information held by TJX Companies Inc., the US parent company of Winners and HomeSense stores in Canada, was foreseeable, but the company failed to put in place adequate security safeguards, an investigation by the Privacy Commissioners of Canada and Alberta has found.
“The company collected too much personal information, kept it too long and relied on weak encryption technology to protect it – putting the privacy of millions of its customers at risk,” says Privacy Commissioner of Canada Jennifer Stoddart.
“Criminal groups actively target credit card numbers and other personal information,” says Commissioner Stoddart. “A database of millions of credit card numbers is a potential goldmine for fraudsters and it needs to be protected with solid security measures.
“The TJX breach is a dramatic example of how keeping large amounts of sensitive information – particularly information that is not required for business purposes – for a long time can be a serious liability.”
The joint investigation by the two Commissioners was launched after TJX disclosed in January that its computer system had been breached. This breach involved millions of credit and debit card numbers as well as other personal information, such as driver’s license numbers collected when customers returned merchandise without receipts.
“This case is a wake-up call for all retailers. They must collect only the personal information necessary for a transaction,” says Frank Work, the Information and Privacy Commissioner of Alberta.
“One positive outcome of this extremely unfortunate breach is that TJX worked cooperatively with us to develop a new process for dealing with unreceipted returns which strikes an appropriate balance between privacy rights and a retailer’s need to take steps to prevent fraud.”
TJX believes the intruder may have initially gained to customer information via the wireless local area networks at two of its US stores. Customer information was stolen from mid-2005 through December 2006, a TJX investigation found. Some stolen information involved transactions dating back to 2002.
Stolen information included credit card account data as well as data collected when customers returned merchandise without a receipt (drivers’ license numbers, names and addresses).
The investigation concluded TJX did not comply with the federal private sector privacy law, the Personal Information Protection and Electronic Documents Act (PIPEDA), and Alberta’s Personal Information Protection Act (PIPA). The investigation found:
- TJX did not properly manage the risk of an intrusion against the amount of customer data that it collected.
- The company failed to act quickly in converting from a weak encryption standard to a stronger standard. The conversion process took two years to complete, during which time the breach occurred.
- TJX did not meet its duty to monitor its computer systems vigorously. An adequate monitoring system should have alerted the company of an intrusion prior to December 2006.
- The company did not adhere to the requirements of the Payment Card Industry Data Security Standard, which was developed to address the growing problem of credit card data theft.
The investigation also found the company did not have a reasonable purpose to collect driver’s license and other identification numbers when unreceipted merchandise was returned. TJX stated it asked for this information as part of a fraud prevention process to identify people frequently returning merchandise. It retained the driver’s license numbers – an extremely valuable piece of information for identity thieves – indefinitely.
In response to these concerns, TJX proposed a new process to address fraudulent returns. Store staff will continue to ask for identification, however, information such as a driver’s license number will instantly be converted into a unique identifying number when it is keyed into the point-of-sale system. This will allow the company to track unreceipted merchandise returns without keeping original driver’s license numbers in its system.
The Commissioners called on TJX to take a number of steps to improve its security measures and privacy practices and are pleased the company has agreed to follow these recommendations.
Commissioner Stoddart says the Winners/HomeSense breach illustrates the need to get security right in the first place to avoid the potentially huge costs of mopping up after a security breach. “Organizations need to ensure they have multiple layers of security and that they keep up with advances in security technologies. The cost of failing to do this can be enormous – not only to a company, but to its customers,” she says, adding that a data breach can also have a major impact on credit card companies, banks, law enforcement agencies and regulatory bodies.
A summary of the findings in the case is available on the Commissioners’ websites.
The Privacy Commissioner of Canada is mandated by Parliament to act as an ombudsman, advocate and guardian of privacy and the protection of personal information rights of Canadians.
The Information and Privacy Commissioner of Alberta has a mandate to promote a society where personal privacy is respected and public bodies are open and accountable.
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