Canada: Parliamentary Committee Recommends Substantial Revisions To PIPEDA – Part 2 – Consent

As reported in our recent post, on February 28, 2018, the House of Commons Standing Committee on Access to Information, Privacy and Ethics tabled in the House of Commons a report entitled Towards Privacy by Design: Review of the Personal Information Protection and Electronic Documents Act. The recommendations in the Committee's Report are also heavily influenced by the direction set in the European Union General Data Protection Regulation, ("GDPR") which comes into force this year.

We have prepared a multi-part series of posts focusing in more depth on each section of the Report.

In this post, we summarize and comment on the Committee's findings set out in Part 2 of the Report, which addresses the issues of "meaningful consent" and the enhancement of the consent model, exceptions to the rule of consent, and data portability.

The other posts in this series are:

Consent

The concept of consent underpins the entire framework of PIPEDA. Essentially a contract-type model, this approach envisions an enlightened user who freely trades his or her personal information in exchange for services. The premise is that the best protection for personal information is therefore to create the conditions in which individuals are free to use their personal information as they wish. This ethos is stated in PIPEDA 's Principle 3 as "The knowledge and consent of the individual required for the collection, use and disclosure of personal information, except where inappropriate." Further sub-principles articulate other aspects of consent, such as the necessary processes and timing in obtaining consent, types of consent, and how consent is to be made meaningful.

However, this consent model is under pressure from online technologies. The Report acknowledges this and begins by setting out the Office of the Privacy Commissioner of Canada's ("OPC") concern that innovation in information technologies has added significant complexity to online interactions and resulted in more ways to use information. As result, few individuals take the time to inform themselves of the conditions of use of their personal information. Compounding the problem, noted some witnesses, is that the privacy policies meant to inform individuals are often unreadable or too vague and consent obtained is illusory.

Notwithstanding the problems with the current consent model, most witnesses supported its continued use, albeit in modified form to address the current shortcomings. Many supported enhancements to implicit consent, including "deemed" consent when the risk of harm is low. Other witnesses cautioned against this approach, noting that if is often difficult to evaluate risk and potential harm beforehand.

Other witnesses supported implementing measures that would make consent more meaningful.

Enhancements to Consent

The overall recommendation of the Committee was ultimately that while consent should remain the core element of the privacy regime, it should be enhanced and clarified by additional means. The Report explores four areas in which the consent model could be enhanced and in some cases makes specific recommendations:

1. Privacy policies. Many witnesses felt that current privacy policies could be dramatically improved, largely in terms of readability and usability. While offering some suggestions on what should be included in a privacy policy, the OPC was of the view that "as a regulatory body, [it] does not consider that it has a role to play in drafting templates for privacy policies." No specific recommendation was made on this issue.
2. Opt-in Consent. In a notable shift, the Committee also recommended that opt-in consent be the default for the use of personal information for secondary purposes, with an eye to making it the default for all purposes. This approach to consent would mean organizations would have to have a clear understanding of their primary purpose for collecting personal information, and then determine what purposes are secondary (typically, marketing purposes would be secondary). These secondary purposes would then require express opt-in consent.
3. Algorithmic Transparency. "Algorithmic transparency" is shorthand for "understanding how automated decisions are made". In a world where enormous data sets are readily available to organisations, much of this information is processed and analysed with the end goal of refining or supplementing decisions about individuals (e.g. credit risk). When combined with artificial intelligence, the decision-making can be fully automated. An ongoing concern with the use algorithms such as these that use personal information is that they will perpetuate prejudices or discriminatory practices that exist in society. The Committee was of the view that truly informed consent requires the implementation of measures to improve algorithmic transparency and therefore recommended that the Government of Canada consider implementing such measures.
4. Revocation of Consent. The Committee acknowledged that in most cases, when a person revokes their consent for something they themselves have posted publically, such revocation results in the immediate deletion of that content from the platform. However, the Committee commented that this had little effect on those who had copied and/or distributed the content to others. In other jurisdictions, this has meant a positive obligation on organizations to pass along the revocation of consent. The Committee therefore recommended that the Government of Canada study the issue of revocation of consent and clarify the form of revocation required and its legal and practical implications.

Exceptions to Consent

While consent underpins PIPEDA, the legislation also recognizes situations in which consent should not be required.

1. Publically Available Information. Currently, certain forms of "publically available information" identified in the Regulations to PIPEDA are sensibly excluded from consent, but not having been updated, they quaintly refer to information found in a public "telephone directory" and other similar mechanisms. While recognizing the need to update the Regulation to take account of the online world, the Committee expressed some reservations that there may be a misconception that merely because something is accessible online, there is no privacy interest in it. The Committee recommended that the Government of Canada modernize the Regulation in order to take into account situations in which individuals post personal information on a public website and in order to make the Regulation technologically neutral.
2. Legitimate Business Interests. Currently, PIPEDA prohibits organisations from requiring individuals consent to the collection, use or disclosure of personal information beyond that required to fulfil the explicitly specified and legitimate purposes, and such collection, use and disclosure must be that which a reasonable person would consider appropriate in the circumstances. A number of witnesses called for PIPEDA to be amended to recognize a new exemption from consent that is based on "legitimate business interests", premised on the concept in the European model. This exemption from consent would permit organizations to process personal information without express consent for obvious purposes reasonably expected by a customer. A number of witnesses pointed out that this would help streamline privacy notices by shortening them and providing information about the processing activities that consumers really care about. The OPC has resisted the introduction of the exemption from consent for legitimate business issues, and the Report reflects the OPC's concerns that the category is too broad and is at high risk of abuse by organisations. The Committee recommended that the Government of Canada consider amending PIPEDA in order to clarify the terms under which personal information can be used to satisfy legitimate business interests.
3. Depersonalization. Many organizations incorrectly believe that de-identifying personal information removes it from the ambit of the Act. However, in many cases, when not sufficiently de-identified or when combined with other data, the data may in fact be about an" identifiable individual". This is especially true in an era of enormous data sets and significant computing power. In its submissions to the Committee, while the OPC recognized that de-identification was a way to reduce risk, it expressed doubt that data could ever be truly de-identified without any residual risk of re-identification. This is a significant issue requiring resolution as increasing numbers of data-driven technologies and companies emerge. To that end, the Committee recommended that the Government of Canada examine the best ways of protecting depersonalized data.
4. Financial Crime. PIPEDA currently permits disclosure without consent to another organization for the purposes of investigating "fraud". However, witnesses in the financial services industry identified the need to be able to make similar disclosures for other non-fraud criminal activities such as theft of data, money laundering, terrorist financing and so on. The Committee therefore recommended broadening PIPEDA to replace "fraud" with "financial crime".

Data Portability

Data portability refers to the right of an individual to request information about them held by an organization and to receive it in a useable and portable form, typically machine-readable. One of the purposes of the right of data portability is to promote competition among organizations – if customers can take their account data, or transaction data, or other data with them when they go, they may be more inclined to leave, which may encourage companies to try harder to compete for their business. It is also premised on the understanding that personal information ought to "belong" to the individual.

Data portability underlies Open Banking in the UK and PSD2 in the EU. Open Banking is in its early days in Canada. Finance Canada released its second consultation paper concerning the review of the federal financial sector framework, in connection with the 2019 Bank Act review. The consultation paper stated that the Department of Finance Canada would be examining the merits of open banking, including consideration of how other jurisdictions are implementing open banking and the potential benefits and risks for Canadians. The Competition Bureau also raised data issues in its recent Fintech paper, and the open banking received mention in the recent federal budget.

For open banking to be realized in Canada, PIPEDA's recognition of data portability will likely be a necessary precondition. The Committee recommended that PIPEDA be amended to recognize this right.

Key Take-Aways

While consent continues to be a bedrock principle in privacy, meaningful consent is becoming increasingly difficult to obtain. Organizations will need to pay close attention to the developments in the Canadian consent model as moves toward opt-in consent, if adopted, will have a significant impact on business processes and will impact the go-forward ability to use certain personal information,.

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