Privacy law has been a fast-evolving field for some years now, and 2019 should be no exception. Building on developments in 2018, here are the top trends we expect to see this year that will affect Canadian businesses:
1. New breach notification requirement takes off
On November 1, 2018, amendments to the federal Personal Information Protection and Electronic Documents Act (PIPEDA), which were originally adopted in 2015, finally came into force. PIPEDA now requires organizations to give notice of any breach of security safeguards involving personal information under the organization's control that could reasonably create "a real risk of significant harm to an individual." As soon as the organization determines the breach has occurred, it must give notice to the Privacy Commissioner and the individual whose personal information was breached. The organization must notify such individual directly, although indirect notification (e.g., newspaper or online advertising) may be permitted if direct notification is impossible, impractical or inadvisable.
The amendments define the concept of "significant harm" very broadly. "Significant harm" includes "bodily harm, 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". While PIPEDA does not define "risk", the statute sets out some of the relevant factors that determine whether a breach of security safeguards creates a real risk of significant harm to the individual, including the sensitivity of the personal information and the probability that the personal information has been, is being or will be misused. Other factors may be prescribed in the future. As a result, organizations should be diligent about the process they undertake to decide whether a breach is reportable. Even if it is determined that no report is required, PIPEDA now requires that organizations keep a record of every breach of security safeguards for a period of at least 24 months after the day on which the organization determines that the breach has occurred. Note that there is no materiality threshold to this recordkeeping requirement – an organization is obliged to keep and maintain records of "every" breach of security safeguards involving personal information under its control.
Furthermore, PIPEDA imposes on organizations an obligation to notify third parties. An organization that notifies an individual of a breach of security safeguards must notify any other organization or government institution (in whole or in part), of the breach if the notifying organization believes the other organization or government institution concerned may be able to reduce or mitigate the risk of harm that could result from the breach. It will be challenging for organizations to determine what other third party organizations are relevant, and whether they are in a position to reduce or mitigate the risk of harm. Confidentiality or competitive information may also make it difficult to comply with this provision.
Given the nature of this new requirement, 2019 should see an increase the number of reports received by the Office of the Privacy Commissioner of Canada (OPC), as well as the number of notifications received by individuals. Under the prior voluntary regime, organizations could previously make a considered decision to keep breaches internal; this new regime does not permit that where the "real risk of significant harm" standard is met. As a result, it will be interesting to see if this increased transparency causes an increase in the number of legal actions (particularly class action lawsuits).
For more information on these new requirements, see our client bulletin, New mandatory data breach notification requirements come into force.
2. GDPR continues to make an impact
On May 25, 2018, the European General Data Protection Regulation (GDPR) came into force, bringing with it sweeping new rules governing the control and processing of personal information by businesses in Europe and across the world. The GDPR applies to a company or entity that processes personal data as part of the activities of one of its branches established in the EU (regardless of where the data is actually processed). It also applies to a company established outside the EU that offers goods/services (paid or not) to persons in the EU, or monitors the behaviour of individuals in the EU (for example, for purposes of behavioural advertising).
The GDPR sets stringent new requirements for organizations, including transparency, security and accountability. It also provides extensive rights to individuals, including the "right to be forgotten." Any business subject to the GDPR needs to ensure its policies and practices reflect these new rules, failing which it may be subject to fines of up to the greater of four percent of its global annual revenues or €20 million.
Although businesses have had several years to prepare for it, the GDPR's sweeping scope means many are still coming to grips with how it affects their operations. In the first full year of the GDPR's existence, the European authorities are likely to increase enforcement action, which will test whether the compliance measures adopted by businesses meet the regulator's requirements.
For more information on how the GDPR may affect your businesses, see Dentons' Guide to the General Data Protection Regulation (GDPR).
3. New consent guidelines take effect
In May 2018, the OPC released new guidelines for obtaining meaningful consent, which it announced would begin applying on January 1, 2019. While the guidelines are not legally binding, they provide informal guidance and important insight into how the OPC interprets PIPEDA's requirement to obtain consent from individuals to the collection, use and disclosure of their personal information. In brief, the OPC expresses the view (shared by many businesses and other organizations), that "advances in technology and the use of lengthy, legalistic privacy policies have too often served to make the control – and personal autonomy – that should be enabled by consent nothing more than illusory. Consent should remain central, but it is necessary to breathe life into the ways in which it is obtained."
Under its new approach, the OPC suggests putting special emphasis on key points, such as what personal information is being collected, with whom it is being shared, the purposes of its collection and the potential harms that can arise from the information's collection, use or disclosure. The OPC also recommends preparing multiple versions of a privacy policy, allowing the reader to get more or less information depending on their desired level of detail. The OPC also urges organizations to be innovative and creative in their approaches, using methods such as interactive tools to explain their privacy policies, and "just in time" notices to bring privacy-related information to the user's attention as they interact with the organization's website or application.
Many organizations will find some of the OPC's suggestions at odds with a sound litigation risk management approach. Other recommendations, while likely to increase understandability, may simply be too costly or technologically sophisticated for some organizations to implement.
To consult this new guideline, see the OPC's Guidelines for obtaining meaningful consent.
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