Can Private Firms Be Prosecuted For Data Theft?

Data theft is a serious offense involving unauthorized access, use, or disclosure of personal or sensitive data. Private firms handling large volumes of user data are subject to legal scrutiny, and Indian laws provide mechanisms to prosecute such firms if they engage in or facilitate data theft.

Can Private Firms Be Prosecuted For Data Theft?

Legal Framework:

• The Information Technology Act, 2000 (IT Act) specifically addresses cyber offenses including data theft under sections such as Section 43 (penalties for unauthorized access) and Section 66 (hacking).
• The proposed Personal Data Protection Bill (PDPB) further strengthens liability by imposing strict obligations on data fiduciaries (including private firms) for protecting user data.

Definition of Data Theft:

• Unauthorized access, copying, or transfer of personal or sensitive data without consent qualifies as data theft.
• Firms failing to implement reasonable security practices may also be held liable for negligence leading to data breaches.

Prosecution and Penalties:

• Private firms can face criminal prosecution, heavy fines, and compensatory damages for victims.
• Executives and responsible personnel within the firm can also face personal liability.

Victims’ Rights and Remedies:

• Victims can file complaints with cybercrime cells, approach consumer courts, or seek remedies under data protection laws.
• Regulatory authorities (like the upcoming Data Protection Authority of India) will have powers to investigate and penalize offenders.

Due Diligence Requirements:

Firms must adopt reasonable security safeguards, conduct regular audits, and ensure transparency in data handling to avoid liability.

Case Law and Enforcement:

Indian courts have increasingly recognized data theft as a serious crime and upheld penalties against offenders, reinforcing private firms’ accountability.

Example

Scenario:

A private e-commerce company suffers a data breach due to inadequate security, leading to theft of customer credit card information.

Outcome:

The company is prosecuted under the IT Act for negligence, fined heavily, and ordered to compensate affected customers. Executives responsible for security lapses face legal action.