H&M German Unit Fined $41.4 Million for Snooping on Staff

(Bloomberg) -- A Hennes & Mauritz AB unit was fined 35.3 million euros ($41.4 million) by a German data protection watchdog after managers trampled on the private lives of staff, storing details ranging from workers' religious beliefs to their medical history.

“Unfortunately, we had an incident in a subsidiary in Germany that was reported to the data protection authority at the end of last year,” Chief Executive Officer Helena Helmersson said via phone. “After reviewing this incident, it's clear that our guidelines have not been followed.” The Swedish retailer has had a dialog with the authority and is now reviewing the decision, she said.

The privacy violations started in 2014. They included wide-ranging surveys of staff and the storing of their private situations, such as concrete examples from people's holidays or symptoms and medical findings for certain illnesses. Some managers also sought further private details in informal chats, including family issues or religious beliefs, which were then stored as well.

“This is a case that showed a gross disregard” of data protection rules at the company's Nuremberg venue in Germany, Johannes Caspar, head of the data protection watchdog in Hamburg, said in a statement Thursday. The high fine is “justified and should help to scare off companies from violating people's privacy.”

H&M “admits shortcomings at the service center and has taken forceful measures to correct this,” it said, according to its 3Q report Thursday.

Caspar welcomed the company's “very positive” response to the episode including compensating those affected.

EU data protection regulators' powers have increased significantly since the bloc's so-called General Data Protection Regulation, or GDPR, took effect in May 2018. It allows watchdogs for the first time to levy fines of as much as 4% of a company's annual global sales. The biggest fine to date was a 50 million-euro penalty for Google issued by France's watchdog CNIL.

The H&M penalty is the biggest so far in Germany under the new rules. Germany is the company's biggest market.

The retailer announced it plans to permanently shut 250 stores on a net basis in 2021 after eliminating 50 this year.

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