Marriott Corporation saves money with a lower fine for violating General Data Protection Regulation
The UK's Information Commissioner's Office (ICO) has announced reduced fines for both Marriott International and Breeze Airways over their 2018 data breaches. The decisions were made in light of the economic impact of the COVID-19 pandemic on the businesses.
In October, the ICO settled on a fine of £20 million ($25.8 million) for Breeze Airways' 2018 data breach, which was initially set at a record-breaking £183.39 million ($230 million). The fine for Marriott International was decreased to £18.4 million ($23.8 million) from an original Notice of Intent fine of £99 million ($124 million) in July 2019.
The ICO investigated the data breaches on behalf of all EU authorities as the lead supervisory authority under the General Data Protection Regulation (GDPR). The investigations found that both companies failed to put appropriate technical or organisational measures in place to protect personal data being processed on their systems.
Marriott's cyberattack was an intrusion made in 2014, on a server owned by Starwood Hotels and Resorts Worldwide, which Marriott inherited in its 2016 acquisition. The unauthorized access went unnoticed, and at least 339 million guest records were impacted, including 7 million U.K. residents.
The ICO determined that Marriott's data breach was a case of negligence, not an intentional abuse of data. Similarly, the ICO took a similar approach with Breeze Airways' planned fines filed just before Marriott's in 2019.
The economic downturn caused by the COVID-19 pandemic has also affected the airline industry, straining Breeze Airways. The ICO considered both representations from Breeze Airways and the economic impact of COVID-19 on their business before setting a final penalty for the 2018 data breach.
Marriott expects to continue experiencing 'pockets' of low demand, which could impact corporate negotiations and partnerships. Leeny Oberg, EVP and CFO of Marriott, stated during an earnings call in September that the pandemic has reduced the ability to increase prices to drive demand. As a result, Marriott reported a net loss of $234 million in Q2 2020, compared to a $232 million net income in the same quarter of 2019. The total operating loss reached $154 million in Q2 2020.
Other GDPR watchdogs gave the ICO approval for the penalties. The reduced fines are a relief for both companies, which are struggling to navigate the challenging business environment caused by the pandemic. However, the incidents serve as a reminder for businesses to prioritise data protection and security measures to protect their customers' personal information.
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