Dixons Carphone faces £500,000 data breach penalty

The Information Commissioner’s Office (ICO) UK has imposed a £500,000 fine on Dixons Carphone (a.k.a. DSG Retail), the parent company behind electronics retailers Currys PC World and Dixons Travel over a data breach between July 2017 and April 2018 that affected millions of customers.

"An ICO investigation found that an attacker installed malware on 5,390 tills at DSG’s Currys PC World and Dixons Travel stores between July 2017 and April 2018, collecting personal data during the nine-month period before the attack was detected," read the ICO statement.

The data accessed include 5.6 million payment card details and the personal information of close to 14 million people, including full names, postcodes, email addresses and failed credit checks.

"The ICO found that DSG had failed to comply with the seventh data protection principle – the obligation to keep personal data secure," said Martin Sloan, partner at Brodies Solicitors.

"The ICO found that DSG had not taken appropriate steps to protect personal data from malicious attacks," he told SC Media UK

The probe blamed poor security arrangements: faulty software patching, lack of strong firewalls, network segregation and routine security testing, and failure to adequately protect personal data.

"DSG confirmed that at the time of the incident, its POS systems were not segregated from the wider DSG corporate network. Sufficient internal segregation could have contained the compromise to a particular section of the network," said the monetary penalty notice issued by the ICO.

"DSG’s approach to software patching of its domain controllers and the systems used to administrate them was inadequate. Evidence provided by DSG in support of its representations to the Commissioner confirmed that as at May 2017, DSG’s POS terminals were not compliant with its own patching policy and were not fully compliant until November 2017," it added

This is the second ICO penalty faced by the group. In January 2018, Carphone Warehouse, which is part of the same company group, had to pay £400,000 for similar security vulnerabilities.

"In its decision notice, the ICO says that the previous incident involving DSG's Carphone Warehouse subsidiary is an aggravating factor. In other words, the fact that the ICO had previously taken enforcement action against a DSG company for a similar incident was a reason for imposing a fine at the higher end of the scale. In this case, the fine was the maximum possible fine under the Data Protection Act 1998," said Sloan.

"Our investigation found systemic failures in the way DSG Retail Limited safeguarded personal data. It is very concerning that these failures related to basic, commonplace security measures, showing a complete disregard for the customers whose personal information was stolen," ICO’s director of investigations Steve Eckersley said in the statement.

"The contraventions, in this case, were so serious that we imposed the maximum penalty under the previous legislation, but the fine would inevitably have been much higher under the GDPR."

"The incident took place between July 2017 and April 2018, though the underlying failures date back longer. It, therefore, pre-dates GDPR," said Sloan.

"The ICO makes clear that had GDPR applied then a higher penalty would have been imposed. We are currently awaiting the outcome of the ICO's notice of intention to fine IAG and Marriott following major cyber attacks, which will give us an indication of the ICO's approach to fines under GDPR."  

The General Data Protection Regulation mandates a fine of up to £17 million or 4 per cent of the company’s turnover. 

"We are very sorry for any inconvenience this historic incident caused to our customers. When we found the unauthorised access to data, we promptly launched an investigation, added extra security measures and contained the incident," Dixons Carphone CEO Alex Baldock said in a statement.

"We are disappointed in some of the ICO's key findings which we have previously challenged and continue to dispute. We're studying their conclusions in detail and considering our grounds for appeal."

A fine at the top end of the scale was inevitable, given the circumstances and the previous incident involving Carphone Warehouse, Sloan noted. 

"In this case, the ICO notes a catalogue of errors, including non-compliance with PCI-DSS, a failure to follow Microsoft guidance on patching vulnerabilities, system configuration and the use of firewalls, and a reliance on outdated software. Some of these issues were brought to DSG's attention following an assessment by an information security consultancy in May 2017, but were not acted upon," he explained. 

source scmagazineuk

Industry: Cyber Security