In today's digital age, cybersecurity is a growing concern for businesses of all sizes. With the increasing reliance on technology and the internet, companies must be proactive in protecting themselves and their customers from cyber threats. A Centrify study found that 65% of data breach victims lost trust in an organization as a result of a security breach. Furthermore, IDC found that 80% of consumers will defect from a business if their information is compromised in a security breach.
When the big bad wolf comes to your door "huffing and puffing", is your house made of straw, sticks or bricks?
The legal landscape of cybersecurity in Canada is complex, and companies must understand their obligations under the law to ensure they are taking adequate measures to protect against cyber attacks.
Relevant Laws and Regulations
In Canada, the protection of personal information is governed by federal and provincial privacy legislation, including the Personal Information Protection and Electronic Documents Act (PIPEDA), as amended. This law sets out the rules for the collection, use, and disclosure of personal information by organizations, and requires them to take reasonable steps to protect that information from unauthorized access, use, or disclosure.
Certain provinces have also created statutory torts, pursuant to which individuals can bring a claim for breach of their privacy (without proof of damages).
Canada’s Criminal Code sets out the following offences:
using a device willfully to intercept a private communication without the express or implied consent of the originators or intended recipient (s. 184) ; and
intercepting fraudulently and without colour of right any function of a computer system (s. 342.1).
In addition to PIPEDA, the Office of the Privacy Commissioner of Canada (OPC) has issued guidelines for organizations on protecting personal information. The OPC also has the authority to investigate complaints and enforce privacy laws in Canada.
Companies are also subject to various cybersecurity-related laws and regulations, including the Payment Card Industry Data Security Standard (PCI DSS) for businesses that process credit card transactions, and the Digital Privacy Act, which requires organizations to report privacy breaches to the OPC and to affected individuals.
Key Obligations for Businesses
Businesses in Canada must take reasonable steps to protect their clients' personal information, including implementing appropriate technical, physical, and organizational measures to secure their systems and data. They must also be transparent about their data collection and usage practices and provide individuals with access to their personal information upon request.
In the event of a data breach, companies must also take prompt action to contain the breach and prevent further harm, and they must report the breach to the OPC and affected individuals as required by law, whether the security breach affects one person or thousands.
The liability for financial losses resulting from, for example, a hacked business email address which results in customers sending money to a fraudster would depend on the specific circumstances of the case, the application of relevant laws, including contract law, consumer protection legislation, and privacy laws.
If the business failed to take reasonable steps to protect the customer's personal and financial information and failed to notify the customer in a timely manner of the breach, the business could potentially be held liable for the customer's losses. However, if the customer's financial information was obtained due to their own negligence, such as using a weak password or falling for a phishing scam, the customer would likely bear the burden of their losses.
Best Practices for Cybersecurity
To help protect against cyber threats, businesses in Canada should implement the following best practices:
Implement strong passwords and multi-factor authentication to secure access to sensitive systems and data.
Regularly backup important data to minimize the impact of a potential breach.
Develop and implement a robust cybersecurity plan, including regular security assessments and updates to systems and software.
Train employees on good security practices, such as avoiding phishing scams and using strong passwords.
Encrypt sensitive data, both in transit and at rest.
Engage a professional cybersecurity firm to assess your organization's security posture and provide recommendations for improvement.
Organizations should regularly conduct an audit of their existing cybersecurity status and evaluate their systems and networks.
Conclusion
The legal landscape of cybersecurity in Canada is complex and an area that requires a multi-disciplinary approach. Businesses must be aware of their obligations under the law to ensure they are taking adequate measures to protect themselves and their customers from cyber threats. By not implementing best practices and staying vigilant, companies that fail to actively address cyber risk may be exposed to serious reputational, financial and legal repercussions if and when a data breach occurs.
If want to speak to a lawyer, please email us at reception@arralawfirm.com or download the Arra Law Firm app in the App Store or Google Play.
