A quote attributed to FBI Director Robert Mueller is, “There are only two types of companies: those that have been hacked and those that will be”. The assessment of the Ashley Madison cyber-attack has lessons for all organizations who may face this risk.

July 15, 2015, a website run by Avid Life Media Inc. (ALM), called Ashley Madison targeted at people seeking a discreet affair, was breached by a group or person calling themselves The Impact Team. The personal information of members was threatened to be exposed unless ALM shut down the Ashley Madison and another ALM website. ALM did not comply with the demand and on July 20, 2015, reported the breach to the Office of the Privacy Commissioner of Canada (OPC) after the perpetrator had published its demand on the internet July 19, 2015. On August 18 and 20, 2015, the perpetrator published information it claimed to have stolen from ALM, including the details of approximately 36 million Ashley Madison user accounts.

The Office of the Australian Information Commissioner (OAIC) and the OPC jointly investigated ALM’s privacy practices at the time of the data breach, circumstances of the data breach and ALM’s information handling practices.

Lessons from the Breach – Common Steps

The incident provides lessons for future victims of cyber-attacks on the likely stages to be encountered in such an incident and illustrates the efforts that can be made to mitigate the damage arising from it.

The first lesson is that a data breach is a crisis management event. From the detection of behaviour in ALM’s database management system to the publication of the threat on the internet and engagement with the OPC all occurred in mere days. Organizations may be overwhelmed by the fast pace with which a breach event expands and objective management of the crisis is required to minimize expanding the damage. Advance preparations, such as the preparation of a breach response plan and training with it, can help to mitigate harm.

A second lesson is to act quickly to stop the furtherance of the breach. ALM acted quickly to stop further access to the attacker. On the same day it became aware of the attack, ALM took immediate steps to restrict the attacker’s access to its systems and ALM engaged a cybersecurity consultant to assist it in responding to and investigate the attack, eliminate any continuing unauthorized intrusions and provide recommendations for strengthening its security. Such steps require access to very capable technical and forensic support. A lesson for future victims is that advance preparation and engagement of such experts may result in faster response when faced with a breach.

After the publication the breach became a media event. ALM issued several press releases on the breach. They also set up a dedicated telephone line and an email inquiry system to allow affected user to communicate with ALM about the breach. ALM subsequently provided direct written notification of the breach by email to users. ALM responded to requests by the OPC and OAIC to provide additional information about the data breach on a voluntary basis. The lesson is that a breach response plan should anticipate the various elements of communication to the affected individuals, to applicable regulators, to the media and others.

ALM conducted a substantial reassessment of its information security program. They hired a Chief Information Security Officer who reports directly to the CEO and has a reporting relationship to the board of directors. External consultants were engaged and ALM’s security framework was assessed, new documentation and procedures developed and training was provided to staff. The lesson is that by taking a critical assessment of an organization’s information security program the effectiveness of these protections can be improved.

Mitigation efforts by ALM included use of notice and take-down mechanisms to remove stolen data from many websites.

The OAIC and OPC Joint Report

The joint report of the OAIC and OPC was published August 22, 2016.

The report recognizes that basic obligation that organizations that collect personal information have a duty to protect it. Principle 4.7 in the Personal Information Protection and Electronic Documents Act (PIPEDA) requires that personal information be protected by safeguards appropriate to the sensitivity of the information, and Principle 4.7.1 requires security safeguards to protect personal information against loss or theft, as well as unauthorized access, disclosure, copying, use or modification.

The level of protection required is dependent on the sensitivity of the information. The report described factors that the assessment must consider including “a meaningful assessment of the required level of safeguards for any given personal information must be context based, commensurate with the sensitivity of the data and informed by the potential risk of harm to individuals from unauthorized access, disclosure, copying, use or modification of the information. This assessment should not focus solely on the risk of financial loss to individuals due to fraud or identity theft, but also on their physical and social well-being at stake, including potential impacts on relationships and reputational risks, embarrassment or humiliation.”

In this case a key risk is of reputational harm as the ALM website collects sensitive information on user’s sexual practices, preferences and fantasies. Both the OPC and OAIC became aware of extortion attempts against individuals whose information was compromised as a result of the data breach. The report notes that some “affected individuals received email messages threatening to disclose their involvement with Ashley Madison to family members or employers if they failed to make a payment in exchange for silence.”

In the case of this breach the report suggests a sophisticated targeted attack initially compromising an employee’s valid account credentials and escalating to access to corporate network and compromising additional user accounts and systems. The objective of the effort appears to have been to map the system topography and escalate the attacker’s access privileges ultimately to access user data from the Ashley Madison website.

The report noted that due to the sensitivity of the information hosted the expected level of security safeguards should have been high. The investigation considered the safeguards that ALM had in place at the time of the data breach to assess whether ALM had met the requirements of PIPEDA Principle 4.7. Reviewed were physical, technological and organizational safeguards. The reported noted that at the time of the breach ALM did not have documented information security policies or practices for managing network permissions. Similarly at the time of the incident policies and practices did not broadly cover both preventive and detection aspects.

The Findings of the Report

It is important to remember that ALM was attacked. Under PIPEDA the mere fact of an attack does not mean ALM breached its legal obligations to provide adequate security. As noted in the report “The fact that security has been compromised does not necessarily mean there has been a contravention of either PIPEDA or the Australian Privacy Act. Rather, it is necessary to consider whether the safeguards in place at the time of the data breach were sufficient having regard to, for PIPEDA, the ‘sensitivity of the information’, and for the APPs, what steps were ‘reasonable in the circumstances’.”

The findings assessed the expectation of substantial safeguards in light of the sensitivity of the information collected. The findings were: “the Commissioners are of the view that ALM did not have appropriate safeguards in place considering the sensitivity of the personal information under PIPEDA, nor did it take reasonable steps in the circumstances to protect the personal information it held under the Australian Privacy Act.

Though ALM had some security safeguards in place, those safeguards appeared to have been adopted without due consideration of the risks faced, and absent an adequate and coherent information security governance framework that would ensure appropriate practices, systems and procedures are consistently understood and effectively implemented. As a result, ALM had no clear way to assure itself that its information security risks were properly managed. This lack of an adequate framework failed to prevent the multiple security weaknesses described above and, as such, is an unacceptable shortcoming for an organization that holds sensitive personal information or a significant amount of personal information, as in the case of ALM.”

Key deficiencies in the security framework identified in the report were:

  • Documented information security policies and practices,
  • An explicit risk management process including “periodic and pro-active assessments of privacy threats, and evaluations of security practices”, and
  • Adequate training for all staff so that privacy and security obligations were understood and carried out.

The OPC and OAIC made a number of specific recommendations for ALM including conducting a comprehensive review of the information system security protections in place, augment the security framework, document that framework and policies and ensure adequate training of staff. It was also recommended that ALM provide a report from an independent third party on such measures. Both privacy offices utilized powers to monitor implementation of the recommendations of the report, using a compliance agreement under S. 17.1(1) of PIPEDA in the case of the OPC and an enforceable undertaking in the case of the OAIC.

Specific Findings – Retention of Account Information

The report went into much more specific detail on certain aspects of the operation of the Ashley Madison website. In particular the OPC and OAIC assessed the requirement under privacy law to destroy or de-identify personal information when no longer required. In this case it was identified that profile information for certain user accounts was retained indefinitely.

The report cited two issues at play, namely (a) if ALM retained information on users longer than necessary to fulfil the purpose for which it was collected and (b) whether charging a fee of the complete deletion of the user’s information was in contravention of PIPEDA’s Principle 4.3.8 regarding the withdrawal of consent.

Ashley Madison did offer a basic user delete option by which search access to the account information was made unavailable but ALM still retained the account information in case a user decided to change their mind.

For users paying for the full deletion option the account information was made inaccessible to a search on the website but the account information was retained for a further 12 months in case ALM had to dispute a user’s charge back on the user’s credit card. The report notes that the retention of information in such full delete cases was addressed in a confirmation notice to users. The ALM terms and conditions also expressly confirmed its approach on chargebacks.

The OPC and OAIC found that indefinite retention of user information in case a user wishes to reactive their account was not reasonable. They found similar considerations applicable for inactive accounts.

On the retention of account information in the case of the full delete option the OAIC and OPC had different considerations. Under PIPEDA it was clear that the account information was retained to process payments and also, under the terms and conditions, to prevent fraudulent charge backs. The OPC found that the retention of photos beyond the period specified by ALM was a breach of PIPEDA Principle 4.5. However the policy of retaining user information following a full deletion for a limited period of time to address user fraud was permitted under PIPEDA.

The Commissioners also assessed a fee for the full deletion option. They noted that “the fee constitutes a condition for users to exercise their right, under PIPEDA Principle 4.3.8, to withdraw consent for ALM to have their personal information.” PIPEDA is silent on whether a fee can be charged in such circumstances. In this case the Commissioners noted that the fee had not been disclosed during the sign up process and so found that “ALM’s practice of charging a fee for withdrawal of consent without prior notice and agreement is a contravention of PIPEDA Principle 4.3.8.” The Commissioners did note that had contractual arrangements been in place so that users agreed to such a fee then the reasonableness of such a practice could still be subject to an assessment.

Specific Findings – Accuracy of Email Addresses

The Commissioners noted that privacy law requires an organization to take steps to maintain the quality and accuracy of the personal information they collect and use. In this case some of the email addresses published by the attackers online were of persons who had never used the Ashley Madison service. ALM noted that it did not use email verification procedures in order to enhance a user’s sense of anonymity.

The email address was a mandatory requirement of the sign up process and provided for a welcome message as well as unsubscribe and deletion options for the user. The report noted that many of the emails addresses would permit a user to be identified and were therefore personal information.

The Commissioners found that the accuracy provisions apply to “all individuals whose personal information is collected, used or disclosed by an organization, whether or not the individual provided the information to the organization directly.” Factors important in this case where that there was a potential of users of the Ashley Madison service to provide false information, there was a sensitivity about making and association with the Ashley Madison service and ALM had actual knowledge that a sub-set of its users did submit false email addresses.

The report found that that Ashley Madison approach of using a welcome email to empower non-users whose email addresses were falsely used to object was insufficient to address the accuracy concerns relating to the email addresses of non-users being inaccurately associated with the Ashley Madison service. The report concluded that ALM had to take better steps to ensure the accuracy of the email addresses that it collects.

Specific Findings – Openness and Informed Consent

The key principle upon which the privacy law is based is the concept of informed consent. The Commissioners examined the information made available to a user during the sign in process to assess if the consent was informed.

The report noted that the Ashley Madison website had included a series of trust marks suggesting that the website was secure. However investigation revealed that a “trusted security award” trust mark was a fabrication. The review of the terms and conditions were found to be difficult to understand, deceptive or no disclosure on aspects of Ashley Madison’s security safeguards and account closure options and retention practices.

The report found that “the lack of clarity regarding retention practices, and the presence of a deceptive trust-mark, could have materially impacted on a prospective user’s informed consent to join the Ashley Madison site and allow the collection, use and disclosure of their personal information” and hence was found to be a contravention of PIPEDA section 6.1 as well as Principles 4.3 and 4.8.

Conclusion

At the same time as the publication of the OPC report on Ashley Madison the OPC also published a summary of takeaway learnings for all organizations. Those points are relevant for all organizations that collect, use or disclose sensitive personal information.

  • The harms arising from a data breach are not merely financial but can have significant long term reputational impacts as well.
  • A coherent and adequate data governance framework is an essential foundation to seek to anticipate, prevent and mitigate cyber-attacks. Such framework would be guided by the sensitivity of the information to be protected.
  • Documentation of security and privacy practices provides clarity and is therefore an element in the security protections.
  • Use of multi-factor authentication is important to protect remote administrative access.More specifically as to certain practices of Ashley Madison the OPC noted that retention policies should be based on a demonstrable rationale and time frame and that false or misleading statements in a privacy policy or in terms and conditions may impact the validity of consent.

It is clear that an important element in the risk management and risk mitigation framework for the Ashley Madison website was its privacy disclosure and the terms and conditions used in the user sign up process. All website operators should review the scope, accuracy and effectiveness of their online contracting practices as a further means to collect informed consent and manage expectations of users.

Martin Kratz leads the intellectual property practice for Bennett Jones. His practice is focused around intellectual property and technology law, which includes substantive patent, copyright and trademark matters as well as matters of intellectual property transactions, IP commercialization, IP strategy and opinions, anti-spam, data protection, privacy, ecommerce, strategic alliances, mergers, acquisitions and technology transfers among technology companies. His practice is focused on the energy, electronic commerce, software, telecommunications, pharmaceutical, biotechnology, entertainment and related industries.