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Legal expert: TalkTalk customers may be able to get out of their contracts

Wednesday, October 28th 2015 by Ellen Branagh

TalkTalk customers may be able to get out of their contracts – as long as they can prove that the company seriously breached the terms of its contract, a legal expert has said.

John Deane, from Slater and Gordon, who specialises in commercial law, said TalkTalk has failed to honour its contractual promises to customers by allowing their data to be shared without their consent.

The broadband, TV and phone provider confirmed last week that its website had been hacked, compromising the personal data of its four million customers.

A 15-year-old boy from Northern Ireland has been arrested and bailed in connection with the attack.

Yesterday TalkTalk – which has been attacked three times this year – said investigations so far suggest the information accessed is not enough on its own to take money from customers’ bank accounts.

The embattled company said that it will only waive contract termination fees on a “case by case basis” if money is actually stolen as a direct result of the attack.

But Mr Deane said it may be possible for customers to terminate their contracts if they can prove a “material” breach of the terms of their contract.

“Talk Talk’s privacy policy, which forms part of its contract with its customers, states that TalkTalk will: ‘only share data with third parties with the consent of the customer, and do its utmost to employ organisational and technical security measures to protect against security breach’,” he said.

“Yet customers’ data has been shared with third parties without the consent of those customers.

“As a result Talk Talk has failed to honour its contractual promises to its customers.”

Customers will be able to claim compensation for any losses suffered as a direct consequence of the breach, Mr Deane said, but added: “However, has TalkTalk’s failure to comply with the terms of its contract amounted to a breach which is so serious that it justifies a customer terminating the contract?

'Thousands of claims'

“The answer to this depends on whether the breach is ‘material’.”

That would depend on the nature of the breach and its consequences, he said.

Mr Dean said TalkTalk also has an obligation under the Data Protection Act to keep customers’ personal data secure.

“The data protection legislation requires TalkTalk to take ‘appropriate’ technical and organisational measures against authorised/unlawful processing of a person’s data.

“It requires appropriate measures to prevent personal data being deliberately compromised. Did TalkTalk fail to fulfil its statutory obligations in this regard?

“If it is found that Talk Talk breached its statutory obligations then the argument for the breach amounting to a material breach becomes more persuasive.”

Last week Jon Baines, chairman of the National Association of Data Protection Officers, said there was the potential for legal claims by customers under the Data Protection Act (DPA).

He told Cable.co.uk: "The DPA requires organisation to have appropriate safeguards in place to protect customer data, having regard to the state of technological developments, and resources available.

"As far back as 2008 the Information Commissioner’s Office (ICO) took enforcement action against TalkTalk because of its poor DPA compliance, and required steps to be taken to protect customer data – the question now for the ICO will be, did TalkTalk take those steps, and if so, why has this incident now happened?"

Mr Baines said as well as a potential ICO penalty of up to £500,000 for contravening the DPA, TalkTalk could also be hit by potential legal claims from individuals.

“On an individual basis such claims will not normally be particularly expensive, but if thousands of claims were to be successful the liability could be huge, especially if group litigation was pursued.”

An inquiry into the attack on TalkTalk will be carried out by Jesse Norman, chair of the culture, media and sport select committee, digital minister Ed Vaizey has announced.

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