The recent disclosure of Israeli credit card details by a group of hackers is an
opportune time to examine whether Israel should introduce data breach
Such laws would require organizations to notify
customers if their personal information is stolen or lost. This is important for
two reasons. First, customers would be alerted about any theft or loss of
their personal information and would then be able to take steps to protect
Second, notification laws would motivate companies to improve
security measures to protect personal information they have collected from their
customers because a failure to do so could result in a public relations
nightmare and notification costs. As the old saying goes, “an ounce of
prevention is worth a pound of cure.”
Similar laws already exist in other
countries. California got the ball rolling in the United States 10 years ago
when it enacted legislation requiring notice of security breaches. Most US
states have followed that lead and now require organizations to notify the
customers involved if they have been the subject of a data breach. Some
states impose civil and even criminal penalties for a failure to properly
The European Union is moving in a similar direction. The
E-Privacy Directive already requires EU member states to introduce mandatory
data breach notification obligations in connection with the telecommunications
sector. Certain countries, such as Germany, have gone further and impose a more
general obligation to issue notifications in cases of data breaches.
Interestingly, the European Commission is currently proposing to fine
organizations up to five percent of their annual turnover if they breach privacy
regulations, which would be a meaningful incentive for companies to become even
more serious about data protection.
Some organizations may argue that the
cost for implementing security measures is too high. However, one survey shows
that in 92% of data breach cases, simple intermediate controls could have
detected and prevented the breach. There are now security experts who are saying
that a standard and relatively inexpensive step like encryption could have
foiled the Saudi perpetrators.
The cost for protecting customer data is
not likely to be prohibitive and, in any event, should be less than the damaging
effects of a data breach for an organization which may result in negative
publicity and a loss of customer confidence.
Albert Einstein said that
“in the middle of difficult lies opportunity.” While the Saudi hacker scheme is
an unpleasant affair, it does present an opportunity for a public debate, and
hopefully some legislative follow-up, about the need for data breach
notification laws in Israel. The ideas bandied about in recent days, including
the creation of an anticyber terror task force or a Bank of Israel
investigation, would be helpful.
Like a modern-day Moses, we need a
leader to stand-up and say: “Let my people know!”
The writers are lawyers in the
Technology and Privacy Group at Meitar Liquornik Geva & Leshem Brandwein.