Cyber Breach? How you respond determines liability

Nicolene Schoeman-Louw | SchoemanLaw IncCategory: Commercial and Technology Law

A data breach is no longer, in itself, the event that exposes a business to the greatest legal risk. Under South Africa’s Protection of Personal Information Act 4 of 2013 (hereinafter “POPIA”), liability often turns on what happens after a security compromise is discovered. Delay, indecision or procedural missteps in the aftermath of a breach can transform a contained incident into a multi-layered legal problem. POPIA does not impose a single consequence for a data breach. Instead, it establishes a graduated enforcement regime in which regulatory intervention, criminal exposure, administrative fines and civil claims may follow — often in parallel. Understanding how this escalation occurs is critical for businesses seeking to manage and minimize post-breach risk.  The trigger: discovery of a security compromise  Liability under POPIA is triggered once a responsible party becomes aware of a security compromise involving personal information. At that point, section 22 requires notification to both the Information Regulator and affected data subjects as soon as reasonably possible.  Notification, however, is only the starting point. POPIA’s focus is not simply whether notice is given, but how the responsible party responds once the risk is identified. Failure to comply with these post-breach duties may constitute an “interference with the protection of personal information”, enabling the Information Regulator to investigate and exercise its enforcement powers.  The Regulator’s primary corrective tool is the enforcement notice issued under section 95, which may compel specific remedial action such as improving security safeguards or addressing governance shortcomings. The real legal consequence arises where such a notice is ignored or inadequately addressed, as this is often the point at which exposure escalates beyond regulatory correction into formal liability.  Criminal Liability and Administrative Fines  A security breach does not only expose a company to reputational and commercial risk, it may also trigger statutory sanctions under POPIA, including both criminal prosecution and administrative fines.   POPIA creates a number of criminal offences which may arise where a responsible party fails to comply with its statutory duties. Importantly, criminal liability is not limited to deliberate misconduct. Certain failures, such as ignoring enforcement notices or unlawfully obstructing the Information Regulator, may themselves constitute offences.  Where a company is found guilty of an offence under POPIA, the court may impose: a fine; imprisonment; or both a fine and imprisonment, depending on the nature and severity of the contravention.  A “responsible party” under POPIA can be a natural or a juristic person, and although imprisonment obviously applies only to natural persons, companies are not necessarily insulated from liability. Corporate entities may still face substantial financial penalties, and individuals acting on their behalf may face personal exposure in certain circumstances where their conduct contributed to the breach. The practical effect is that a security breach can escalate beyond regulatory scrutiny into criminal enforcement territory, particularly where non-compliance is systemic, reckless, or coupled with obstruction of regulatory processes.  In addition to criminal prosecution, the Information Regulator is empowered to impose administrative fines of up to R10 million for certain contraventions of POPIA. Administrative fines are not criminal in nature, but they are nonetheless punitive and may be imposed without the need for a criminal trial. This makes them a particularly potent enforcement tool. A company may therefore find itself liable for a significant monetary penalty even where no prosecution or criminal conviction follows.  From a risk perspective, administrative fines are often the most immediate and commercially impactful consequence of a security breach, particularly for mid-sized and large organisations handling high volumes of personal information.  Civil Liability  Beyond regulatory sanctions, a security breach may expose a company to direct civil claims for damages from affected data subjects. This is where the concept of “liability” becomes most pronounced.  Section 99 of POPIA establishes a statutory cause of action allowing a data subject, or the Information Regulator acting on their behalf, to institute civil proceedings against a responsible party for breach of POPIA.  A critical and often overlooked feature of POPIA is that civil liability may arise even in the absence of intent or negligence. In other words, a company can still be held legally liable for damages despite having exercised reasonable care. The mere fact of non-compliance resulting in harm may be sufficient to ground a damages claim for any or all data subjects who have suffered damages as a result of the breach.  This significantly lowers the threshold for claimants. A company cannot simply rely on the argument that it “acted with reasonable care and skill” or “was not negligent.” The focus shifts to whether there was a breach and whether damage flowed from it.   Practical Implication  The civil liability framework means that the financial exposure flowing from a security breach is not confined to regulatory penalties enforced by the Information Regulator. A single incident may give rise to multiple concurrent claims or potentially class actions, particularly where large datasets are involved. The cumulative effect of civil claims may even exceed the applicable administrative fine.  For companies, the message is clear: POPIA liability is not merely theoretical. It is enforceable, financially material, and capable of attaching even where the breach was not intentional. The emphasis is therefore not only on preventing breaches, but on being able to demonstrate proactive, reasonable, and well-documented compliance measures.  Conclusion  Under POPIA, the consequences of a data breach can depend more on how a company responds than on the breach itself. Liability can arise from delayed notification, inadequate governance, or failure to act once a compromise is discovered. For companies, this means that breach-response procedures, careful oversight by directors, and clear documentation of remedial steps are essential to managing legal risk. Civil claims can arise even without intent or negligence, and regulatory penalties, both administrative and criminal, may follow if obligations are ignored. In practice, the companies best able to limit exposure will be those that respond promptly, act transparently, and take the required steps to protect affected data subjects. In other words, post-incident conduct is as important as prevention itself. Contact an expert at SchoemanLaw for advice, support or to document protocols in case of a breach.  https://schoemanlaw.co.za/our-services/technology-law-smart-contracts-and-cyber-law/      Nicolene Schoeman-Louw | SchoemanLaw Inc    Commercial Law, Technology Law and Contract Legal Specialist