Dixons Carphone PLC (LON:DC.) has narrowly avoided a giant fine under the recently introduced European General Data Protection Regulation (GDPR) following a massive data breach.
The FTSE 250-consumer electronics retailer revealed this morning that it had been the victim of a massive data breach over the last year in which attempts were made to compromise 5.9mln customer bank cards, along with 1.2mln personal data records.
While Dixons has said there is currently no evidence of any fraud arising from the breach, it may still be subject to a fine for what seemed by many to be a breach that took far too long to discover.
However, one saving grace for the company will be the timing of the breach, which occurred before 25 May, the day the GDPR came into force.
Under previous data protection rules, to which the company will be subject due to the timing of the breach, the maximum imposable fine is £500,000, whereas under the new EU regulations firms can face fines of up to £17.6mln (€20mln) for a major data breach.
The market has reacted predictably to the news, with Dixon’s shares falling 4.1% to 189.6p in late-morning trading on Wednesday.
Commenting on the announcement, Mike van Dulken, head of research at Accendo Markets, struck a somewhat fatalist note on events: “In this data-fuelled world where we’re happy to entrust it to companies (and the ether) it has become a valuable commodity, as much for targeted advertising as for fraudsters. In which case we should be able to assume it is held securely. Very securely. After all, isn’t that what we opted for in that May deluge of emails from every company we ever dealt with, and what we sign along the dotted line for each time we enter into a new contract.”
He added: “In this new era of big data, are we simply resigned to the fact that breaches are more commonplace and may happen, and just hope for the best.”
The data breach will add more gloom to what has already been a miserable few months for the company, which saw its share price plunge 20.5% toward the end of May after it warned profits for the current year would fall 21% alongside a plan to close 92 Carphone Warehouse stores as a cost saving measure.
Russ Mould, investment director at AJ Bell, said that following a reset of expectations as a result of the profit warning, a further deterioration in trading outlook as a result of the data breach is unlikely to attract much sympathy from the market.