Canada: The New And Improved PIPEDA

Last Updated: November 6 2018
Article by Stas Bodrov

I met Logan when we were presenters at a Cyber Security Conference in Toronto. Our interests intersected and we decided to enlighten business owners about cybersecurity developments in Canada. I am a lawyer practicing civil litigation with a keen interest in privacy law. Logan is a cybersecurity and threat intelligence consultant focusing on providing cybersecurity solutions to businesses. This article was begging to be written by us.

The New and Improved PIPEDA: What you need to know and what you need to do

By: Stanislav Bodrov (Strigberger brown Armstrong LLP) and Logan Wolfe (Gearhead Software)

Part 1 – The Amendment

It has become a bit of a jingle – "the question is not if your organization will get hacked, it's when" – but Canadian lawmakers are taking this mentality seriously. There is a clear commitment in Canada to ensure that individuals retain power over their personal information; how it is used; and, most importantly, how it is protected by organizations.

Earlier this year, the EU passed the revolutionary General Data Protection Regulation (GDPR). On November 1, 2018, the Canadian Personal Information Protection and Electronic Documents Act (PIPEDA) will be amended to include mandatory breach notification rules, which are similar to the provisions included in the GDPR. On an International scale, Canada is seen as a leader in personal data protection and the changes to the existing legislation further reinforces that image.

The amendment will require organizations to do three things:

  1. Report data breaches to the Privacy Commissioner of Canada;
  2. Notify the affected individuals who were affected by a data breach; and,
  3. Keep records of every breach of security safeguards.

These requirements will apply to every organization that collects, uses, or discloses personal information in the course of commercial activities in Canada.

The drafters of the legislation prescribe targeted requirements. For instance, a "breach of security safeguards" is defined as a loss of, unauthorized access to, or unauthorized disclosure of personal information resulting from a breach of the organizations security safeguards. This type of breach ranges from an employee accessing a consumer's personal information without authorization (i.e. bank teller accessing information of an ex-spouse to see what they were spending money on) to an outside hacker accessing the organization's network through illicit means. All breaches of security safeguards must be recorded by the organization and are subject to review by the Privacy Commissioner of Canada.

However, not every breach will require the organization to notify the consumer and be reported to the Privacy Commissioner. Only those breaches that pose a real risk of "significant harm" will trigger these obligations. The current PIPEDA does not define the term "significant harm". However, the new PIPEDA defines it as including bodily injury, humiliation, damage to reputation or relationships, loss of employment, identity theft, negative effects on the credit report and damages to or loss of property.

In the course of determining whether a breach will cause significant harm, the organization must balance a number of factors including the sensitivity of the personal information; the probability of the information being misused; and, other relevant factors specific to each case.

The Regulation states that the organization must give notification "as soon as feasible" after the breach is discovered. There is no definition of this phrase. However, considering the number of reactionary steps that must be taken by an organization, the notification need not be immediate (otherwise it would say so in the Regulation), but it must certainly be considered a top priority in the organization's data breach response plan.

Failure to maintain records of breaches, report breaches to the Commissioner, and notify the affected user, can lead to penalties prescribed by PIPEDA. An organization guilty of such non-compliance will be subject to a fine of up to $100,000. This is in addition to the exposure associated with lawsuits initiated against the organization by the affected consumers and the legal costs associated with defending such actions.  

Part 2 – PIPEDA v. GDPR: Similarities and Trends

The GDPR went into effect in May of this year and was immediately used as a basis for complaints against Facebook and Google. The GDPR, like PIPEDA, requires organizations to disclose to consumers when a company's security mechanisms have been breached. It also requires the organization to disclose to its consumers how their information is going to be used, all in an effort to revert power over personal information back to the individual providing it.

One of the prevalent similarities between the two pieces of legislation is the territorial application of the laws. Specifically, organizations that conduct business in Canada will be subject to PIPEDA as well as the GDPR, if that organization is accessible in the European market. As such, the organization will be required to pay fines prescribed in the GDPR for non-compliance. The GDPR fines are much more severe than those in PIPEDA – up to €20 million or four percent of the organization's annual global turnover. Similar to PIPEDA, the fines are discretionary and are levied based on the blameworthiness of the organization; the sensitivity of the information breached; and, number of other applicable factors.

Some sources note that reported breaches to the Information Commissioner's Office in the UK, quadrupled within a month of the GDPR's implementation1, other sources report a doubling in reporting2. Regardless, one thing is clear, organizations suffered breaches significantly more than they were reporting prior to the implementation of the GDPR. In September, Fieldfisher, a law firm in the UK, reported a ten-fold increase in security breach cases since the implementation of the GDPR.3

If history is any indicator, it is likely that a similar trend will follow in Canada with the passing of the PIPEDA amendments. Companies will be exposed to not just the fines prescribed in the legislation, but also the insipient legal actions that will be based on negligence and violation of privacy.

In essence, the Regulations are forcing organizations to owe a duty of care to their consumers. Implementing effective cyber security strategies to avoid significant financial devastation will be vital to a business' success, while failure to do so will result in significant legal and financial exposure.

Part 3 – Cyber Security Strategies

Security safeguard requirements vary based on the sensitivity of data. However, as a rule of thumb, a strategy's end goal is protecting personal information against loss or theft, as well as unauthorized access, disclosure, copying, use or modification, regardless of the format in which it is held.

The nature of the safeguards will depend on a variety of factors including the sensitivity of the information that has been collected; the amount, distribution, format of the information; and, the method of storage. Implementing these safeguards will affect an organization's reputation. In the event of a data breach and the resulting mandatory incident disclosure to affected customers and third parties, an organization will be forced to demonstrate that adequate security measures were implemented and the organization leadership met the requisite standard to protect its affiliates.

Realistically, risk cannot be reduced to zero without reducing the usefulness of the asset - the goal is to find an acceptable balance between protection and usability. That said, more sensitive information should be safeguarded by a higher level of protection, which will typically decrease the usability of that information. Various types and levels of security controls are vital to a business' cyber security success, these include:

  • Physical measures (CCTV, locks, access cards, restricted access to premises);
  • Organizational measures (security clearances, risk awareness, privacy policy, acceptable use policy); and,
  • Technical measures (network security configuration, role-based access control, firewalls, encryption).

Finally, having a detailed data breach response and business continuity plans will make all the difference in the event of a security incident. These plans cover all preparatory and reactionary steps in case of a breach in great detail. The plans ought to include tiered impact analysis; automated backups; load balancing and IT-focused forensics procedures focusing on determining affected areas and containing damage; escalation and notification practices; mitigation steps; lessons learned; high-level financial and technical reporting; recovery procedures; designated first responders; loss control; and, reputation management.

Closing Thoughts

Data breach response plans are no longer optional – they are mandatory. Organizations will be responsible to ensure that their customer's data is protected with a strategy that meets the standard of care prescribed by the cyber security industry. Additionally, organizations will be required to report breaches to the Privacy Commissioner; inform users of a breach; and, maintain detailed records of all security safeguards breaches. Failure to comply with these requirements may result in significant fines levied pursuant to the amended PIPEDA and/or the European GDPR.

Organizations must ensure to not only have a sufficient preventative mechanism but also a requisite reactionary plan. This includes having a cybersecurity agency on-call to follow a response plan and a competent lawyer to minimize an organization's exposure in legal actions. Cyber liability insurance policies play a vital role in covering the costs of both services based on your own choosing.

For a copy of the actual Regulation, please see: Breach of Security Safeguards Amendments

Footnotes

1. Under GDPR, Data Breach Reports in UK have Quadrupled, BankInfo Security, July 25, 2018

2. GDPR Prompts UK Data Protection Complaints to Double, Out-Law, August 27, 2018

3. Ten-Fold Increase in Security Breach Cases since GDPR, Computing, September 7, 2018

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
McCarthy Tétrault LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
McCarthy Tétrault LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions