Marriott fined £18.4 million following cyber attack
The humongous penalty train keeps rolling – after the £20 million fine for British Airways for GDPR violations, the Information Commissioner’s Office (ICO) has slapped an £18.4 million fine on Marriott International Inc.
In its ruling, the ICO says Marriott made multiple failures in its technical and organisational measures for protecting personal data. The case also highlights how when a business acquires another company it becomes accountable for past as well as present compliance.
An estimated (and staggering) 339 million guest records were affected worldwide, following the 2014 cyber-attack on Starwood Hotels and Resorts Worldwide Inc. It’s estimated 7 million of those affected were UK citizens.
Starwood was acquired by Marriott in 2016, and the attack went undetected until September 2018. The ICO has stressed its ruling relates to infringements after GDPR came into force in May 2018.
As the data breach was notified before Brexit, the ICO was able to act as lead supervisory authority, charged with investigating the breach on behalf of all affected EU citizens.
The penalty was signed-off by other EU data protection authorities, under GDPR’s one-stop shop mechanism for cross-border cases. Moving forward post-Brexit, the UK will no longer be part of the one-stop mechanism.
Why was the fine reduced?
In its original ‘Notice of Intention’ to fine in July 2019, the ICO set the figure at an eye-watering £99 million. The Regulator says this amount was reduced taking several factors into consideration;
- Marriott’s representations to the ICO
- The action the hotel group took to mitigate the breach’s impact
- The economic impact of the COVID-19 pandemic
There are some rumblings the pandemic may be proving a handy ‘excuse’ for the ICO; COVID-19 was also cited in the reasons for reducing the British Airways fine.
This begs the question – did the ICO significantly over-estimate in their initial notices, or are they being kind-spirited due to the current financial and operating climate?
What went wrong for Marriott?
- In 2014 unknown hacker(s) installed code onto a device in the Starwood systems. This gave them the ability to edit the contents of the device remotely.
- This was exploited to install malware, giving the attacker privileged access. The attacker had unrestricted access to connected devices across the Starwood network. The attacker then continued to install further tools, enhancing the malicious access.
- In 2016 Marriott acquired Starwood. The ICO’s ruling reveals Marriott was only able to carry out limited due diligence of Starwood’s data processing systems and databases prior to acquisition (those with acquisition experience will know how challenging robust due diligence can be).
- In September 2018, the attacker made a move which finally tripped an alert. They exported a table which contained card details on which a security trigger had been set. Such alerts were not in place to automatically trigger on other data sets accessed – for example passport details.
- Marriott notified the ICO and affected individuals in November 2018 after becoming ‘aware’ of the nature of the breach.
- The data exfiltrated by the hacker(s) affected data included names, email addresses, phone numbers, passport numbers, arrival and departure information, VIP status and loyalty program information.
72-hour data breach notification rules
You may note there was a significant time delay between the trigger being fired in September on Starwood’s systems and Marriott’s notification to the ICO in November.
As part of its representations Marriott challenged the ICO’s initial finding that the 72-hour breach notification rules had been infringed (GDPR Article 33).
This comes down to when a controller can be judged to be ‘aware’ a personal data breach has occurred.
In its final ruling ICO found Marriott was incorrect to claim that;
“The GDPR requires a data controller to be reasonably certain that a personal data breach has occurred before notifying the Commissioner. Rather, a data controller must be able to reasonably conclude that it is likely a personal data breach has occurred to trigger the notification requirement.”
However, in ‘this particular case’ taking into account Marriott’s representations the Commissioner decided to make a finding that Marriott had NOT breached the notification requirements.
Key ICO findings
At a top-level there are four key findings in the ICO’s ruling. It’s worth remembering the ruling applies to the period post 25 May 2018, despite historic pre-2018 concerns.
- Insufficient monitoring of privileged accounts
There was a failure to put in place ongoing network and user activity monitoring. The ICO says Marriott should’ve been aware of the need to have multiple layers of security.
- Insufficient monitoring of databases
- Failure to implement server hardening – the vulnerability of the server could’ve been reduced, for example, through whitelisting.
- Lack of encryption – for example, passport details were not encrypted.
If you are interested in the full details, you can read the full ICO Marriott ruling.
The ICO references the National Cyber Security Guidance: 10 steps for Cyber Security, which is a useful resource for any business wanting to make sure their cyber sec is robust.
There’s little doubt the attack Marriott suffered was sophisticated, but the ICO says their investigation revealed how the hotel group failed to put in place appropriate security measures to address such attacks and other identifiable risks to their systems.
Impact on individuals
In its ruling the ICO ruling took into account the nature of the personal data breached.
Despite assurances given and mitigating steps taken by Marriott, the Regulator concluded it was likely some of the affected individuals will, depending on their circumstances, have suffered anxiety and distress. The Ruling also specifically calls out the duration of the breach, lasting as it did a period of 4 years.
What can we learn from this data breach?
The number of people affected, the nature of the data maliciously accessed, the potential distress caused and the size and profile of Marriott… all of these will have played a part in the £18.4 million fine. This is a scalable problem – but for every business cyber security needs to be a priority.
When acquiring a company, due diligence is crucial prior and post-acquisition, but this must be an ongoing process, not a one-off activity.
The fine’s just the tip of the financial iceberg. Marriott will have spent a significant amount on rectifying the breach and mitigating the impact for affected individuals, before we even contemplate the cost of complex and protracted legal representation.
Alongside this hefty financial hit, the hotel group also faces a class action lawsuit from customers who are seeking compensation. If successful, this could prove even more costly.
It’s worth noting the fine would’ve been higher if Marriott hadn’t proactively sent email communications to affected customers, created a data breach website and set up a call centre to provide a data breach hotline.
It’s often said, because it’s true, you can’t underestimate how crucial it is to be prepared for a data breach. Making sure you have a robust (and tested) data incident plan, being able to effectively and quickly assess the risk posed, plus having a pre-prepared communications strategy and measures to support those affected.
Commenting on the fine, the UK’s information commissioner Elizabeth Denham said;
“Millions of people’s data was affected by Marriott’s failure; thousands contacted a helpline and others may have had to take action to protect their personal data because the company they trusted it with had not. When a business fails to look after customers’ data, the impact is not just a possible fine, what matters most is the public whose data they had a duty to protect.”
Marriott says they remain committed to the privacy and security of their guests and is continuing to make significant investments in security measures for its systems. Marriott has not admitted liability for the breach, but has indicated it won’t appeal.
Philippa Donn, November 2020
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The information provided and the opinions expressed in this document represent the views of the Data Protection Network. They do not constitute legal advice and cannot be construed as offering comprehensive guidance on the EU General Data Protection Regulation (GDPR) or other statutory measures referred to.