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Banking and fraud detection; what is the solution?

by | Mar 27, 2020

As the year comes to a close, we must reflect on the most historic events in the world of privacy and data science, so that we can learn from the challenges, and improve moving forward.

In the past year, General Data Protection Regulation (GDPR) has had the most significant impact on data-driven businesses. The privacy law has transformed data analytics capacities and inspired a series of sweeping legislation worldwide: CCPA in the United States, LGPD in Brazil, and PDPB in India. Not only has this regulation moved the needle on privacy management and prioritization, but it has knocked major companies to the ground with harsh fines. 

Since its implementation in 2018, €405,871,210 in fines have been actioned against violators, signalling that the DPA supervisory authority has no mercy in its fervent search for the unethical and illegal actions of businesses. This is only the beginning, as the deeper we get into the data privacy law, the more strict regulatory authorities will become. With the next wave of laws hitting the world on January 1, 2020, businesses can expect to feel pressure from all locations, not just the European Union.

 

The two most breached GDPR requirements are Article 5 and Article 32.

These articles place importance on maintaining data for only as long as is necessary and seek to ensure that businesses implement advanced measures to secure data. They also signal the business value of anonymization and pseudonymization. After all, once data has been anonymized (de-identified), it is no longer considered personal, and GDPR no longer applies.

Article 5 affirms that data shall be “kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the personal data are processed.”

Article 32 references the importance of “the pseudonymization and encryption of personal data.”

The frequency of a failure to comply with these articles signals the need for risk-aware anonymization to ensure compliance. Businesses urgently need to implement a data anonymization solution that optimizes privacy risk reduction and data value preservation. This will allow businesses to measure the risk of their datasets, apply advanced anonymization techniques, and minimize the analytical value lost throughout the process.

If this is implemented, data collection on EU citizens will remain possible in the GDPR era, and businesses can continue to obtain business insights without risking their reputation and revenue. However, these actions can now be done in a way that respects privacy.

Sadly, not everyone has gotten the message, as nearly 130 fines have been actioned so far.

The top five regulatory fines

GDPR carries a weighty fine:  4% of a business’s annual global turnover, or €20M, whichever is greater. A fine of this size could significantly derail a business, and if paired alongside brand and reputational damage, it is evident that GDPR penalties should encourage businesses to rethink the way they handle data

1. €204.6M: British Airways

Article 32: Insufficient technical and organizational measures to ensure information security

User traffic was directed to a fraudulent site because of improper security measures, compromising 500,000 customers’ personal data. 

 2. €110.3M: Marriott International

Article 32: Insufficient technical and organizational measures to ensure information security

The guest records of 339 million guests were exposed in a data breach due to insufficient due diligence and a lack of adequate security measures.

3. €50M: Google

Article 13, 14, 6, 5: Insufficient legal basis for data processing

Google was found to have breached articles 13, 14, 6, and 5 because it created user accounts during the configuration stage of Android phones without obtaining meaningful consent. They then processed this information without a legal basis while lacking transparency and providing insufficient information.

4. €18M: Austrian Post

Article 5, 6: Insufficient legal basis for data processing

Austrian Post created more than three million profiles on Austrians and resold their personal information to third-parties, like political parties. The data included home addresses, personal preferences, habits, and party-affinity.

5. €14.5M: Deutsche Wohnen SE

Article 5, 25: Non-compliance with general data processing principles

Deutsche Wohnen stored tenant data in an archive system that was not equipped to delete information that was no longer necessary. This made it possible to have unauthorized access to years-old sensitive information, like tax records and health insurance, for purposes beyond those described at the original point of collection.

Privacy laws like GDPR seek to restrict data controllers from gaining access to personally identifiable information without consent and prevent data from being handled in manners that a subject is unaware of. If these fines teach us anything, it is that investing in technical and organizational measures is a must today. Many of these fines could have been avoided had businesses implemented Privacy by Design. Privacy must be considered throughout the business cycle, from conception to consumer use. 

Businesses cannot risk violations for the sake of it. With a risk-aware privacy software, they can continue to analyze data while protecting privacy -with the guarantee of a privacy risk score.

Resolution idea for next year: Avoid ending up on this list in 2020 by adopting risk-aware anonymization.