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Lessons learnt from the Red Cross Blood Service Data Breach Investigation

[fa icon="calendar"] Sep 21, 2017 3:56:37 PM / by Alison Choy Flannigan and Nicholas Heinecke

On 7 August 2017, the Office of the Australian Information Commissioner (OAIC) released the following investigation reports into the major data breach that occurred on 5 September 2016 through the Australian Red Cross Blood Service’s (Blood Service) website:

  • data breach (Australian Red Cross Blood Service) Investigation Report; and
  • data breach (Precedent Communications Pty Limited) Investigation Report.

This incident highlights the need for Commonwealth Government and private sector healthcare providers to:

  1. implement processes and policies to ensure that personal information which is collected by that entity is periodically destroyed or de-identified in accordance with Australian Privacy Principle (APP) 11.2 of the Privacy Act 1998 (Cth) (Privacy Act); and
  2. when engaging third party contractors, including specific contractual obligations about the handling of personal information and mechanisms to ensure the obligations are being fulfilled.

In addition, healthcare providers should also be reviewing and updating their contracts to ensure that contractors notify the healthcare provider of relevant data breaches. Mandatory notification of serious data breaches will commence in February 2018. Please refer to our previous article, avaiable at:


On or about 5 September 2016 a database containing files relating to approximately 550,000 prospective blood donors was moved to a public-facing web server. The file was inadvertently placed on the web server by an employee of a third party contractor providing services for the management of the Blood Service’s website, Precedent Communications Pty Ltd (Precedent). The data file was discovered and accessed by an unknown individual on 25 October 2016. On the same day, the individual notified the Blood Service via a number of intermediaries. The Blood Service immediately took steps to contain the breach.

The Blood Service responded on 26 October 2016 and in the following days, took a number of steps to immediately contain the breach, including temporarily closing the website. It engaged a consultant to undertake an independent risk assessment and notified individuals whose personal information was involved and provided assistance to those individuals. The Blood Service accepted full responsibility for the incident.

The Blood Service

The OAIC concluded that:

The data breach occurred without the authorisation or direct involvement of the Blood Service, and was outside the scope of Precedent’s contractual obligations to the Blood Service. There was no ‘disclosure’ by the Blood Service of the data file within the meaning of (APP) 6.” 26

The Blood Service had in place policies and procedures to protect personal information as required by APP11.1, including documented information security policies and regular staff training.

However, there were two matters within the Blood Service’s control that were a contributing factor to the data breach and which constituted breaches of the Privacy Act, namely:

  • the absence of contractual measures or other reasonable steps on the part of the Blood Service to ensure adequate safety measures for personal information held for it by the relevant third party contractor, in breach of APP 11.1; and
  • the retention of data on the website for a longer period than was required, in breach of APP 11.2.

Although the Blood Service had not met all of the requirements under the Privacy Act in relation to the data breach, the Blood Service acted appropriately and in a timely manner to rectify the data breach, and its response to the data breach provides a model of good practice.

All copies of the database backup had been destroyed and the Blood Service has enhanced its information handling processes.

It does not appear that the Blood Service assessed the adequacy of Precedent’s security measures and practices when the decision to award Precedent the contract for the development and application support, ongoing management, consulting and testing, maintenance and upgrade of the Donate Blood website in 2015.

The contractual arrangements between the Blood Service and Precedent focussed on service level agreements and were absent control to mitigate the corresponding privacy risks of a third party provider. The Blood Service’s requirements of Precedent in relation to information security were not clearly articulated or proportional to the scale and sensitivity of the information held by the Blood Service and Precedent. A reasonable step in the circumstances may have been to include specific contractual requirements for how Precedent would handle and store the personal information of blood donor on the Donate Blood website, and a reporting mechanism for the Blood Service to ensure these contractual requirements were being met.

The Blood Service failed to implement the appropriate contractual requirements or control measure in order to protect personal information that is handled by a third party provider.

A contract addressing data management or IT related services may contain a clause requiring the parties to comply with Privacy Laws and at the conclusion of the arrangement to return or destroy all confidential information. The data breach that affected the Blood Service highlights the need to periodically assess and manage collected personal information, to ensure that your contracts with contractors comply with privacy laws and requires the contractor to notify you of any data breaches.

The OAIC found that the “Blood Service failed to implement the appropriate contractual requirements or control measures in order to protect personal information that is handled by a third party provider” giving rise to a breach of APP 11.1.

APP 11.1 states:

11.1 If an APP entity holds personal information, the entity must take such steps as are reasonable in the circumstances to protect the information:

(a) from misuse, interference and loss; and

(b) from unauthorised access, modification or disclosure.

APP 11.2 requires an entity to take such steps as are reasonable in the circumstances to destroy or de-identify personal information after it is no longer needed for any purpose for which the information was used or disclosed by the entity and the entity is not required by or under an Australian Law or a court/tribunal lawyer to retain the information.

Matters which you should consider include:

  • conducting appropriate due diligence on the services to be provided;
  • considering the scope of the personal information handling services to be provided;
  • considering what security controls and personal information handling measures the third party provider is expected to use; and
  • including terms in the contract to deal with specific obligations about the handling of personal information and mechanisms to ensure the obligations are being fulfilled, such as regular reporting requirements.

A contract with a third party service provider who holds sensitive personal information should provide for “specific obligations about the handling of personal information and mechanisms to ensure” compliance. It is insufficient to include in such a contract (without more) a general obligation to comply with your policies. We would add that the specific obligations in the contract need to be both enforceable and give rise to consequences if not complied with. It is insufficient for a clause to only state that the parties will generally comply with Privacy Laws. For example, a third party contractor may not know what actions you must take to comply with the APPs, such as when and how frequently you will destroy personal information.

Precedent Communications Pty Limited

The root cause of the data breach was an unforeseen one-off human error on the part of a Precedent employee, such that the data breach was a “disclosure” within the meaning of APP6.

Precedent breached the Privacy Act in respect of APP6 and APP11, by:

  • disclosing the personal information of individuals who had made an appointment on the Donate Blood website, in breach of APP 6; and
  • failing to take reasonable steps to adequately mitigate against the risk of a data breach, and to protect the personal information it held from unauthorised disclosure, in contravention of APP 11.1.27

The case highlights how a number of security deficiencies can create a situation in which human error can trigger a data breach. Organisations should have sufficient protection in place to ensure that even if there is a failure at one point, other levels of protection will prevent the breach from occurring.

The Commission acknowledged that in response to the date breach, Precedent had invested significant effort to improve its information handling practices, strengthened its information security and ensure its compliance.

26 OAIC, data breach (Australian Red Cross Blood Service) Investigation Report 7 August 2017, page 2 available at

27 OAIC, data breach (Precedent Communications Pty Ltd) Investigation Report 7 August 2017, page 2 available at

Topics: Health, Aged Care & Life Sciences

Alison Choy Flannigan and Nicholas Heinecke

Written by Alison Choy Flannigan and Nicholas Heinecke

Alison Choy Flannigan | Partner & Nicholas Heinecke | Special Counsel