Yahoo! fined £250,000 after systemic failures put customer data at risk

12 Jun 2018 12:50 PM

Yahoo! UK Services Limited has been fined £250,000 by the Information Commissioner’s Office (ICO) following a cyber-attack in November 2014. The incident was publicly disclosed in September 2016, almost two years after it had taken place.

Because of when the breach happened, the ICO’s investigation was carried out under the Data Protection Act 1998.

It considered the circumstances under which the personal data of approximately 500 million international users of Yahoo!’s services was placed at risk. In particular, the ICO focused on the 515,121 UK accounts, that Yahoo! UK Services Limited – based in London - had responsibility for as a data controller.

The compromised personal data included names, email addresses, telephone numbers, dates of birth, hashed passwords, and encrypted or unencrypted security questions and answers.

ICO Deputy Commissioner of Operations, James Dipple-Johnstone, said in a blog about the ICO investigation:

“People expect that organisations will keep their personal data safe from malicious intruders who seek to exploit it.

“The failings our investigation identified are not what we expect from a company that had ample opportunity to implement appropriate measures, and potentially stop UK citizens’ data being compromised.”

In summary, the investigation found that:

• Yahoo! UK Services Ltd failed to take appropriate technical and organisational measures to protect the data of 515,121 customers against exfiltration by unauthorised persons;
• The company failed to take appropriate measures to ensure that its data processor – Yahoo! Inc – complied with the appropriate data protection standards;
• It also failed to ensure appropriate monitoring was in place to protect the credentials of Yahoo! employees with access to Yahoo! customer data;
• The inadequacies found had been in place for a long period of time without being discovered or addressed.

The ICO considered the breach to be a serious contravention of Principle 7 of the Data Protection Act 1998, which states that appropriate technical and organisational measures must be taken against unauthorised or unlawful processing of personal data.

Under the 1998 Act, the ICO has the power to impose a maximum fine of £500,000.

Mr Dipple-Johnstone said:

“Cyber-attacks will happen, that’s just a fact, and we fully accept that they are a criminal act. But as the intruders become more sophisticated and more determined, organisations need to make it as difficult as possible for them to get in. But they must also remember that it’s no good locking the door if you leave the key under the mat.”

Since the ICO investigation, data protection law has changed. The EU’s General Data Protection Regulation (GDPR) came into effect on 25 May 2018.

Mr Dipple-Johnstone added:

“Under the GDPR and the new Data Protection Act 2018, individuals have stronger rights and more control and choice over their personal data. If organisations, especially well-resourced, experienced ones, do not properly safeguard their customers’ personal data, they may find customers taking their business elsewhere.”

Data protection by design is one of the requirements of the GDPR, meaning privacy must be considered throughout the processing lifecycle, from hardware and software to the procedures, guidelines, standards, and polices that an organisation has or should have.

Companies and public bodies also need to ensure strong IT governance and information security measures are in place, and that these are tested and refreshed to comply with the provisions of the law.

The ICO has published helpful guidance, including our Guide to the GDPR, 12 steps to take now, and toolkits. It has also worked closely with the National Cyber Security Centre (NCSC) to develop joint guidance on the steps organisations can take to protect themselves.

Notes to Editors

1. The Information Commissioner’s Office upholds information rights in the public interest, promoting openness by public bodies and data privacy for individuals.
2. The ICO has specific responsibilities set out in the Data Protection Act 2018, the Freedom of Information Act 2000, Environmental Information Regulations 2004 and Privacy and Electronic Communications Regulations 2003.
3. However, this case is being dealt with under the provisions of the Data Protection Act 1998 because of when the breach happened. The maximum financial penalty under the old legislation is £500,000.
4. The ICO fined TalkTalk £400,000 in October 2016 after security failings that allowed a cyber attacker to access customer data.
5. Civil Monetary Penalties (CMPs) are subject to a right of appeal to the (First-tier Tribunal) General Regulatory Chamber against the imposition of the monetary penalty and/or the amount of the penalty specified in the monetary penalty notice. 
6. Any monetary penalty is paid into the Treasury’s Consolidated Fund and is not kept by ICO.
7. To report a concern to the ICO telephone our helpline 0303 123 1113 or go to ico.org.uk/concerns.