Canada: Does Your Business Need A Spring Privacy Tune-Up? Breach Reporting And Europe's GDPR Are About To Hatch

Last Updated: April 10 2018
Article by Rob Aske

The arrival of spring should bring thoughts of renewal... to your privacy practices.

Breach reporting under PIPEDA

Canada's federal privacy law known by the acronym PIPEDA (Personal Information Protection and Electronic Documents Act) will now add privacy breach reporting as of November 1, 2018.

These breach reporting requirements were passed in 2015, but were not put into force as we waited for certain regulations to be proposed. But these regulations have now been published and with General Data Privacy Regulation coming in Europe in late May (see below), it was expected that Canada's federal government would put the breach reporting provisions into force soon, and the November 1 implementation has just been announced.

The gist of the breach reporting obligations is as follows:

A business will be required to report to the Privacy Commissioner a breach involving personal information ("PI") under its control, if it is reasonable to believe that the breach creates a real risk of significant harm to the individual.

Significant harm is defined to include humiliation, damage to reputation or relationships, loss of employment, business or professional opportunities, financial loss, identity theft, negative effects on credit record, and damage to or loss of property.

Factors relevant to the real risk of significant harm include sensitivity of the PI, and the probability that it may be misused.

The report to the Commissioner would need to describe the breach, when it occurred, the PI that is subject, the estimated number of individuals affected, and the steps that the organization is taking in response.

The business would also need to notify individuals whose PI is involved, if that breach creates a real risk of significant harm to the individual.

The notice to the individual would need to describe the breach, when it occurred, the PI affected, the steps the organization is taking, plus information about the business' complaints process and the individual's rights under PIPEDA.

The business could be obliged to notify other organizations or government if the business believes that these other bodies may be able to reduce the risk of harm.

Another big change with this new legislation is that businesses shall be obliged to keep and maintain records of EVERY breach of security safeguards involving PI; i.e. whether or not it meets any particular harm test. In addition, businesses must, on request, provide the Commissioner with access to copies of these records.

In other words (cynically speaking), businesses will be obliged to maintain records which will help the Commissioner and any claimant build a case against the business.

The regulations require records of breach to be maintained for 24 months after the date that the business determined that the breach occurred. In addition, these records, must enable the Commissioner to verify compliance with the business' reporting obligations to the Commissioner and to individuals, if there has been a breach which creates a real risk of significant harm.

Any breach of these obligations may result in the business being charged with an offence, which could result in a fine not exceeding $100,000.

The obligation to report privacy breaches is not new to many jurisdictions, but will be new to much of Canada, and compels every business to tune up their privacy practices. And if your business deals with European customers, there's more....

Europe's General Data Privacy Regulation ("GDPR") in force on May 25, 2018

This new law applies to both "controllers" and "processors" of PI. Controllers are those front line organizations (visible to the customer) that determine the purposes and means of processing PI, while a processor may process PI on behalf of the controller.

The GDPR can apply to a business which may not be established in the European Union ("EU"), if that business is offering goods and services to EU residents.

The GDPR takes individual consent to a higher level, requiring a freely given, specific, informed and unambiguous indication of the individual's wishes, by which they offer a "clear affirmative action" to confirm their agreement to processing of their PI. Any PI collection must be specific, explicit and for legitimate purposes, and PI cannot be further processed in a manner that is not compatible with those purposes. Most interpret the GDPR's consent provisions as requiring a positive opt-in, which is separate from other terms and conditions. The language must be plain. The right to withdraw must be as easy as giving consent, and must be available at any time. A child below 16 years must provide the consent of their parent or guardian.

Individuals have the right to obtain from controllers information about the processing of their PI including purposes of processing, categories of PI involved, recipients of PI, the period of retention, the identity of third parties providing any of the PI, and more.

EU residents will now have the so-called "right to be forgotten", which requires the controller to erase PI without undue delay, provided that the PI is no longer necessary, and certain other conditions are met. Individuals will also have right to data portability, requiring controllers to transmit data to other controllers.

Processors may have potential direct liability, even though they may only be acting for the controller, and may not have any relationship with the individuals whose personal data is involved.

The GDPR also has obligations to notify individuals of data breach, similar terms to those outlined for PIPEDA above.

The GDPR gives individuals the right to an effective judicial remedy if their privacy rights have been infringed, including the right to receive compensation from the controllers and processors. The privacy authorities also have the right to levy fines for breach, which in some cases can go as high as €20 million, or 4% of total worldwide annual revenue for the preceding financial year, whichever is higher.

So if your organization has potential exposure in dealing with PI of Europeans, a close look at the obligations under GDPR is likely warranted.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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