Can Pseudonymisation Protect Your Business from Data Breaches?

Can Pseudonymisation Protect Your Business from Data Breaches?

It has been said that “A good name is rather to be chosen than great riches” Proverbs 22:1 (https://biblehub.com/proverbs/22-1.htm)

And sometimes, a good nickname might just be the key to protecting your privacy.

Ever wondered why some people go by a nickname instead of their real name?

Maybe it’s to avoid awkward conversations, maybe it’s for privacy, or maybe their real name is something like “Bartholomew T. Featherington the third” and they just prefer ‘Bart.’

Whatever the reason, nicknames serve a purpose: they offer a layer of separation between a person’s identity and how they are perceived. For more – https://www.identity.com/pseudonymity-privacy-identity-digital-world/#:~:text=Pseudonymity%20involves%20using%20an%20alias,and%20engaging%20in%20digital%20activities.

Now, what if I told you that the same logic applies to data privacy? Welcome to the world of pseudonymisation—the legal equivalent of giving your personal data a cool, protective alias.

Pseudonymisation defined

In simple terms, pseudonymisation is a technique used in privacy law to replace identifiable personal data with a fake identifier—a nickname, if you will. Unlike anonymisation, which permanently removes all identifiable elements, pseudonymisation allows data to still be useful for analysis while keeping the original identity hidden.

This means that businesses can continue using data for research, marketing, and security purposes without directly exposing a person’s actual identity. It’s a delicate balancing act—protecting privacy while still making data valuable.

Case Study: The Perils of No Nickname

Let’s take a real-world example of why pseudonymisation matters.

Imagine Alice, an investigative journalist, is researching corporate fraud. She signs up for a whistleblower platform that claims to be ‘secure and anonymous.’ However, instead of pseudonymising user identities, the platform simply hides names but keeps personal metadata intact.

One day, a company facing scrutiny uncovers Alice’s IP address and login habits, revealing her identity. The platform failed to implement pseudonymisation properly, making it dangerously easy to re-identify her.

Now, let’s say the platform had used proper pseudonymisation. Instead of Alice’s real login details, a system-generated identifier—something like “User-8472” — would have replaced them.

Even if a hacker got their hands on the data, it wouldn’t lead directly back to Alice. Her digital ‘nickname’ would have acted as a protective layer, ensuring that she remained safe.

What does the law say?

Under Australia’s Privacy Act 1988 (Cth), businesses are legally required to take ‘reasonable steps’ to protect personal information, including measures like pseudonymisation.

Proposed Privacy Act reforms aim to strengthen data protection obligations, making it clearer that even pseudonymised data may still be considered personal information if it can be linked back to an individual.

This means businesses using pseudonymisation must also secure re-identification keys separately and ensure their data-handling practices align with Australian Privacy Principles to avoid potential breaches and legal penalties.

With privacy laws evolving, businesses need to rethink how they handle data.

Pseudonymisation is becoming a key strategy to comply with legal obligations while minimising risks of data breaches and misuse.

In Australia the law requires businesses are expected to take ‘reasonable steps’ to protect personal information.

This can include techniques like pseudonymisation to mitigate risks of re-identification.

Is a nickname personal information?

Under Australian law, if data can still be re-identified, it may still fall under the definition of personal information, meaning privacy laws still apply.

Unlike anonymisation (which is permanent), pseudonymisation can be reversed under the right conditions.

This distinction is crucial in determining legal responsibilities.

Can Pseudonymisation Reduce Liability for Data Breaches?

If personal data is pseudonymised and then stolen, businesses may have a stronger case that they took reasonable security measures, potentially reducing legal exposure.

As a business how can you stay compliant?

The first step is understanding that privacy protection is not just a compliance issue—it’s a business necessity.

Consumers are more aware than ever of how their data is used, and businesses that fail to adopt strong privacy measures risk both legal and reputational damage.

Here’s what you should consider as an Australian business:

Consider adding a quick checklist at the end:

• Use pseudonymisation to protect sensitive data
• Keep re-identification keys separate from pseudonymised data
• Regularly review and update privacy measures
• Train staff on data protection best practices
• Seek expert legal guidance on compliance

How we can help

At Sharon Givoni Consulting, we practise in all areas of privacy law, helping businesses understand how to comply with Australian privacy legislation at the same time making the most of their data.

Sharon Givoni is the editor of the Privacy Law Bulletin, and our firm is known for its plain English approach—or as we like to say, Legal Ease, Not Legalese®.

I have attached that bulletin here: Sharon Givoni Consulting is the General Editor of the Privacy Law Bulletin, a LexisNexis publication dedicated to exploring key issues in Australian privacy law.

The bulletin provides insightful analysis, case studies, and expert commentary on the latest legal developments, regulatory updates, and emerging trends in privacy and data protection. It is an essential resource for lawyers, in-house counsel, business leaders, and compliance professionals who need to stay ahead in an evolving legal landscape.

Topics covered include:

• Privacy Act reforms and Australian Privacy Principles (APPs)
• Data breaches and cybersecurity obligations
• Pseudonymisation, anonymisation, and data protection strategies
• International data transfers and G DPR comparisons
• Consumer rights, consent, and digital identity

Sharon Givoni Consulting is the General Editor of the Privacy Law Bulletin, a LexisNexis publication dedicated to exploring key issues in Australian privacy law. The bulletin provides expert commentary on the latest legal developments in privacy and data protection. To read more about the bulletin click here: https://www.lexisnexis.com/en-au/content/practice-areas/media-it-and-communications/privacy-law-bulletin?srsltid=AfmBOoo5RLYiSjyD0wi4b3I3GvnBdN8dTmc3w9JcczOrTpdZ83KtgRtn

For more articles on privacy law go here: https://sharongivoni.com.au/services/privacy-law/drafting-privacy-policies/ (Privacy Impact Assessments) and here https://sharongivoni.com.au/the-many-faces-of-australian-privacy-law/ (The many faces of privacy law).

Want to explore this further? Here’s a sample of the latest Privacy Law Bulletin: https://sharongivoni.com.au/wp-content/uploads/2025/03/Feb-PLB-data-breach-involvency-20.10.pdf

Need guidance on how pseudonymisation fits into your business? Contact Sharon Givoni Consulting today—where we believe in Legal Ease, Not Legalese®.

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Please note the above article is general in nature and does not constitute legal advice.

Please email us info@iplegal.com.au if you need legal advice about your brand or another legal matter in this area generally.