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Incident Response Requirements in Indian Law

Posted by Vipul Kharbanda at Dec 28, 2016 01:20 AM |
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Cyber incidents have serious consequences for societies, nations, and those who are victimised by them. The theft, exploitation, exposure or otherwise damage of private, financial, or other sensitive personal or commercial data and cyber attacks that damage computer systems are capable of causing lasting harm.

A recent example of such an attack  that we have seen from India is the recent data breach involving an alleged 3.2 million debit cards in India.[1] In the case of this hack the payment processing networks such as National Payments Corporation of India, Visa and Mastercard, informed the banks regarding the leaks, based on which the banks started the process of blocking and then reissuing the compromised cards. It has also been reported that the banks failed to report this incident to the Computer Emergency Response Team of India (CERT-In) even though they are required by law to do so.[2] Such risks are increasingly faced by consumers, businesses, and governments. A person who is a victim of a cyber incident usually looks to receive assistance from the service provider and government agencies, which are prepared to investigate the incident, mitigate its consequences, and help prevent future incidents. It is essential for an effective response to cyber incidents that authorities have as much knowledge regarding the incident as possible and have that knowledge as soon as possible. It is also critical that this information is communicated to the public. This underlines the importance of  reporting  cyber incidents as a tool in making the internet and digital infrastructure   secure.. Like any other crime, an Internet-based crime should be reported to those law enforcement authorities assigned to tackle it at a local, state, national, or international level, depending on the nature and scope of the criminal act. This is the first in a series of blog posts highlighting the importance of incident reporting in the Indian regulatory context with a view to highlight the Indian regulations dealing with incident reporting and the ultimate objective of having a more robust incident reporting environment in India.

Incident Reporting under CERT Rules

In India, section 70-B of the Information Technology Act, 2000 (the “IT Act”) gives the Central Government the power to appoint an agency of the government to be called the Indian Computer Emergency Response Team. In pursuance of the said provision the Central Government issued the Information Technology (The Indian Computer Emergency Response Team and Manner of Performing Functions and Duties) Rules, 2013 (the “CERT Rules”) which provide the location and manner of functioning of the Indian Computer Emergency Response Team (CERT-In). Rule 12 of the CERT Rules gives every person, company or organisation the option to report cyber security incidents to the CERT-In. It also places an obligation on them to mandatorily report the following kinds of incidents as early as possible:

  • Targeted scanning/probing of critical networks/systems;
  • Compromise of critical systems/information;
  • Unauthorized access of IT systems/data;
  • Defacement of website or intrusion into a website and unauthorized changes such as inserting malicious code, links to external websites, etc.;
  • Malicious code attacks such as spreading of virus/worm/Trojan/botnets/spyware;
  • Attacks on servers such as database, mail, and DNS and network devices such as routers;
  • Identity theft, spoofing and phishing attacks;
  • Denial of Service (DoS) and Distributed Denial of Service (DDoS) attacks;
  • Attacks on critical infrastructure, SCADA systems and wireless networks;
  • Attacks on applications such as e-governance, e-commerce, etc.

The CERT Rules also impose an obligation on service providers, intermediaries, data centres and body corporates to report cyber incidents within a reasonable time so that CERT-In may have scope for timely action. This mandatory obligation of reporting incidents casts a fairly wide net in terms of private sector entities, however it is notable that prima facie the provision does not impose any obligation on government entities to report cyber incidents unless they come under any of the expressions “service providers”, “data centres”, “intermediaries” or “body corporate”. This would mean that if the data kept with the Registrar General & Census Commissioner of India is hacked in a cyber incident, then there is no statutory obligation under the CERT Rules on it to report the incident. It is pertinent to mention here that although there is no obligation on a government department under law to report such an incident, such an obligation may be contained in its internal rules and guidelines, etc. which are not readily available.

It is pertinent to note that although the CERT Rules provide for a mandatory obligation to report the cyber incidents listed therein, the Rules themselves do not provide for any penalty for non compliance. However this does not mean that there are no consequences for non compliance, it just means that we have to look to the parent legislation i.e. the IT Act for the appropriate penalties for non compliance. Section 70B(6) gives the CERT-In the power to call for information and give directions for the purpose of carrying out its functions. Section 70B(7) provides that any service provider, intermediary, data center, body corporate or person who fails to provide the information called for or comply with the direction under sub-section (6), shall be liable to imprisonment for a period up to  1 (one) year or fine of up to 1 (one) lakh or both.

It is possible to argue here that sub-section (6) only talks about calls for information by CERT-In and the obligation under Rule 12 of the CERT Rules is an obligation placed by the central government and not CERT-In. It can also be argued that sub-section (6) is only meant for specific requests made by CERT-In for information and sub-section (7) only penalises those who do not respond to these specific requests. However, even if these arguments were to be accepted and we were to conclude that a violation of the obligation imposed under Rule 12 would not attract the penalty stipulated under sub-section (7) of section 70B, that does not mean that Rule 12 would be left toothless. Section 44(b) of the IT Act provides that where any person is required under any of the Rules or Regulations under the IT Act to furnish any information within a particular time and such person fails to do so, s/he may be liable to pay a penalty of upto Rs. 5,000/- for every day such failure continues. Further section 45 provides for a further penalty of Rs.25,000/- for any contravention of any of the rules or regulations under the Act for which no other penalty has been provided.

Incident Reporting under Intermediary Guidelines

Section 2(1)(w) of the IT Act defined the term “intermediary” in the following manner;

“intermediary” with respect to any particular electronic record, means any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, network service providers, internet service providers, web hosting service providers, search engines, online payment sites, online-auction sites, online market places and cyber cafes.

Rule 3(9) of the Information Technology (Intermediaries Guidelines) Rules, 2011 (the “Intermediary Guidelines”) also imposes an obligation on any intermediary to report any cyber incident and share information related to cyber security incidents with the CERT-In. Since neither the Intermediary Guidelines not the IT Act specifically provide for any penalty for non conformity with Rule 3(9) therefore any enforcement action against an intermediary failing to report a cyber security incident would have to be taken under section 45 of the IT Act containing a penalty of Rs. 25,000/-.

Incident Reporting under the Unified License

Clause 39.10(i) of the Unified License Agreement obliges the telecom company to create facilities for the monitoring of all intrusions, attacks and frauds on its technical facilities and provide reports on the same to the Department of Telecom (DoT). Further clause 39.11(ii) provides that for any breach or inadequate compliance with the terms of the license, the telecom company shall be liable to pay a penalty amount of Rs. 50 crores (Rs. 50,00,00,000) per breach.

Conclusion

It is clear from the above discussion that there is a legal obligation service providers to report  cyber incidents to the CERT-In. Presently, the penalty prescribed under Indian law may not be enough to incentivise companies to adopt comprehensive and consistent incident response programmes. , except in cases of telecom companies under the Unified License Agreement. A fine of Rs. 25,000/- appears to be inconsequential  when compared to the possible dangers and damages that may be caused due to a security breach of data containing, for example,  credit card details.. Further, it is also imperative that apart from the obligation to report the cyber incident to the appropriate authorities (CERT-In) there should also be a legal obligation to report it to the data subjects whose data is stolen or is put at risk due to the said breach. A provision requiring notice to the data subjects could go a long way in ensuring that service providers, intermediaries, data centres and body corporates implement the best data security practices since a breach would then be known by general consumers leading to a flurry of bad publicity which could negatively impact the business of the data controller, and for a business entity an economic stimulus may be an effective way  to ensure compliance.

As we continue to research incident response, the questions and areas we are exploring include the ecosystem of incidence response including what is reported, how, and when, appropriate incentives to companies and governments to report incidents, various forms of penalties, the role of cross border sharing of information and jurisdiction and best practices for incident reporting and citizen awareness.

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[1] http://www.huffingtonpost.in/2016/10/21/atm-card-hack-what-banks-are-saying-about-india-s-biggest-data/

[2] http://tech.economictimes.indiatimes.com/news/internet/cert-in-had-warned-banks-on-oct-7-about-expected-targeted-attacks-from-pakistan/54991025