Data privacy: Sales agent’s ‘malicious behaviour’ costs Vodafone a massive $51.3 million fine

(Bloomberg) -- Vodafone Group Plc was hit by a record €45 million ($51.3 million) data privacy fine in Germany over “malicious behavior” by third-party sales agents.

The actions of partner agencies that broker contracts to customers on behalf of Vodafone led to fraud, including fictitious contracts or term changes at the expense of clients, Louisa Specht-Riemenschneider, Germany’s federal data protection commissioner, said in a statement Tuesday. 

“If data breaches happen, we take action with all the means at our disposal,” Specht-Riemenschneider said. “This is the highest fine my agency has ever imposed.”

Privacy watchdogs across the European Union have increased their scrutiny under the bloc’s comprehensive General Data Protection Regulation and started to levy hefty penalties. Meta Platforms Inc., the parent of Facebook, was slapped by a record €1.2 billion fine in Ireland over data transfer violations, while Amazon.com Inc. faced a €746 million penalty from Luxembourg regulators for improper use of personal data in advertising.

The German Vodafone penalty had two components. A €15 million part was imposed because Vodafone didn’t sufficiently vet and monitor the sales agents for data-protection compliance. A fine of €30 million was imposed for security flaws in the online customer identification which allowed unauthorized persons access to eSIM profiles, according to the statement.

Vodafone fully cooperated, changed its processes and already paid the fine, Specht-Riemenschneider said.

Germany Revenue Growth Recovery

Vodafone Group Plc Chief Executive Officer Margherita Della Valle said the company’s biggest market, Germany, may return to revenue growth in the current fiscal year after heavy competition and a regulatory change cost it millions of customers and pushed down sales.

Vodafone will continue feeling the impact from the legal change — which barred landlords from bundling rent with TV and broadband services — for another quarter, Della Valle said in a call with reporters on Tuesday. The change has cost the company more than half of its TV customers living in housing complexes in Germany, but is projected to stabilize, she added.

Germany, which has taken on greater importance after Vodafone sold off units in Spain and Italy, has been a drag on the company’s revenue for the past four quarters. Vodafone’s also dealing with heavier competition and took a €4.35 billion ($4.9 billion) impairment charge for the year on the value of the business because of its falling profit and growth expectations, the Newbury, England-based company said in a statement.

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