Marriott Facing Possible $123.7M Fine for Data Breach

LONDON—The U.K. Information Commissioner’s Office (ICO) plans to fine Marriott International $123.7 million for infringements of the General Data Protection Regulation (GDPR) in November 2018.

“The GDPR makes it clear that organizations must be accountable for the personal data they hold,” said Information Commissioner Elizabeth Denham. “This can include carrying out proper due diligence when making a corporate acquisition, and putting in place proper accountability measures to assess not only what personal data has been acquired, but also how it is protected. Personal data has a real value so organizations have a legal duty to ensure its security, just like they would do with any other asset. If that doesn’t happen, we will not hesitate to take strong action when necessary to protect the rights of the public.”

Marriott has co-operated with the ICO investigation and has made improvements to its security arrangements since these events came to light, according to the ICO. The company will now have an opportunity to make representations to the ICO as to the proposed findings and sanction.

Arne Sorenson, Marriott International’s president/CEO, issued a statement on the possible fine. “We are disappointed with this notice of intent from the ICO, which we will contest.  Marriott has been cooperating with the ICO throughout its investigation into the incident, which involved a criminal attack against the Starwood guest reservation database. We deeply regret this incident happened. We take the privacy and security of guest information very seriously and continue to work hard to meet the standard of excellence that our guests expect from Marriott.”

The ICO has been investigating this case as lead supervisory authority on behalf of other E.U. Member State data protection authorities. It has also liaised with other regulators. Under the GDPR one-stop-shop provisions the data protection authorities in the EU whose residents have been affected will also have the chance to comment on the ICO’s findings.

Divya Gupta, a partner at the international law firm Dorsey & Whitney, said this fine should be a wake-up call for companies. “These steep fines to Marriott are a warning to companies that fail to protect this private information from loss, damage or theft. The fines are intended to encourage compliance because when entrusted with personal data, it’s a company’s job to diligently look after it, and for many years have gotten away with not doing so. More important than the headline-making penalties themselves, however, is the exposure of 339 million guest records globally, including 30 million Europeans.”

Companies doing business in the U.S. should also be on alert. “With further fines like this one on the horizon, companies doing business in the E.U. should also look to their American operations,” she said. “With several states imposing privacy laws in the U.S., with California leading the pack with the California Consumer Privacy Act, this means possible future penalties for non-compliance now. While 30 million Europeans were impacted, even if 10% of that number were California residents—three million—Marriott would be looking at $300 million in domestic statutory penalties at a minimum for failure to enact reasonable security practices and procedures. For companies looking for the lesson here—this GDPR penalty is a paltry sum, compared to what is looming.”