Canada: Fed's Digital Charter And Proposed Modernization Of PIPEDA

Last Updated: June 17 2019
Article by Molly Reynolds and Ronak Shah

As part of the Government of Canada's initial Digital Charter initiative, the government released its "Strengthening Privacy for the Digital Age" discussion paper (Discussion Paper) on May 21, which outlines proposals to modernize the Personal Information Protection and Electronic Documents Act (PIPEDA).

What you need to know

  • The Digital Charter outlines 10 principles that will inform the Canadian government's approach to the digital and data driven economy.  
  • The Discussion Paper focuses on four key areas for PIPEDA reform:
    • enhancing individuals' control;
    • enabling responsible innovation;
    • enhancing the Office of the Privacy Commissioner's (OPC) enforcement and oversight; and
    • clarifying PIPEDA's obligations.
  • Considering the government's proposed amendments to PIPEDA, the OPC has indefinitely suspended its current Consultation on Transborder Data Flows resulting from the OPC's Equifax decision. Once the OPC has reviewed the government's Discussion Paper, the OPC plans to undertake a new round of consultation that may ask for stakeholders' input on both the current state of the law and potential amendments.
  • It is not expected that any proposed amendments will be in force before the federal election this fall.

Canada's Digital Charter

The Digital Charter outlines what Canadians can expect from the federal government in relation to the digital landscape. The 10 principles set out in the Digital Charter will provide the framework for the government's approach to the digital and data-driven economy and its management. It was informed by government's 2018 National Digital and Data Consultations. The 10 Principles set out in the Digital Charter are aimed at restoring and building "public trust in the data and digital environment."

  1. Universal Access: All Canadians will have equal opportunity to participate in the digital world, and the necessary tools to do so, including access, connectivity, literacy, and skills.
  2. Safety and Security: Canadians will be able to rely on the integrity, authenticity and security of the services they use and should feel safe online.
  3. Control and Consent: Canadians will have control over what data they are sharing, who is using their personal data and for what purposes and know that their privacy is protected.
  4. Transparency, Portability and Interoperability: Canadians will have clear and manageable access to their personal data and should be free to share or transfer it without undue burden.
  5. Open and Modern Digital Government: Canadians will be able to access modern digital services from the Government of Canada, which are secure and simple to use.
  6. A Level Playing Field: The Government of Canada will ensure fair competition in the online marketplace to facilitate the growth of Canadian businesses and affirm Canada's leadership on digital and data innovation, while protecting Canadian consumers from market abuses.
  7. Data and Digital for Good: The Government of Canada will ensure the ethical use of data to create value, promote openness, and improve the lives of people—at home and around the world.
  8. Strong Democracy: The Government of Canada will defend freedom of expression and protect against online threats and disinformation designed to undermine the integrity of elections and democratic institutions.
  9. Free from Hate and Violent Extremism: Canadians can expect that digital platforms will not foster or disseminate hate, violent extremism or criminal content.
  10. Strong Enforcement and Real Accountability: There will be clear, meaningful penalties for violations of the laws and regulations that support these principles.

While the proposed initial focus of the government's Digital Charter based actions is on modernizing PIPEDA, the Digital Charter will probably have broader industry-specific effect through anticipated changes in the Competition Act, Canada's anti-spam legislation (CASL), Telecommunications Act, Broadcasting Act and Radiocommunication Act.

For instance, as part of the Digital Charter action plan, the government also proposes to modernize CASL and to review enhanced e-protection measures, where appropriate, to make sure CASL is clear and effective. The government, through the Department of Justice and the Treasury Board Secretariat, is also studying potential reforms to the Privacy Act.

Government's proposals to reform PIPEDA

The proposed PIPEDA reforms seek to create a modern regulatory privacy framework that is responsive and agile, that has an enhanced, reasoned enforcement mode, that is interoperable with other jurisdictions, and that balances the need to support data-driven innovation by reducing onerous or redundant restrictions for business with the need to respect individuals and their privacy by providing them with meaningful control and requiring enhanced transparency and accountability. The government's plan to modernize PIPEDA is focused on the following four areas.

  1. Enhancing individuals' control

The government proposes to provide individuals more meaningful control, increased transparency and to promote consumer choice by:

  • requiring organizations to provide individuals with the specific, standardized, plain-language information on the intended use of the information, the third parties with which information will be shared, and prohibiting the bundling of consent into a contract (thereby giving consumers more choice);
  • incorporating certain alternative grounds or exceptions to consent to facilitate use of personal information by business under specific circumstances, including a "standard business practices" basis, which is like GDPR's legitimate interests basis for processing personal information;
  • introducing the right to data mobility;
  • requiring enhanced transparency of business practices by incorporating the concept of demonstrable accountability, including in the context of transborder data flow;
  • introducing algorithmic transparency requirements for automated decision-making;
  • adding a definition of de-identified information (and potentially pseudonymized data), along with an exception to consent for its use and disclosure for certain prescribed purposes and penalties for re-identification; and
  • addressing some aspects of online reputation, including by introducing the right to request deletion of personal information and mandating defined retention periods. However, the government reforms will. surprisingly, not include the right to be forgotten (also known as de-indexing) because the matter is before the Federal Court of Canada.
  1. Enabling Innovation

To balance the need to support data-innovation and maintain free flow of data with the need to ensure businesses are transparent, accountable and appropriately use data, the government proposes:

  • using data trusts as a way to enable responsible innovation and data use; and
  • the creation of codes of practice, accreditation/certification schemes and standards, which would be validated through recognition by the OPC.
  1. Enhancing Enforcement

The reforms also aim to enhance the OPC's enforcement and oversight abilities by providing the OPC with order making powers in the form of cessation and record preserving orders. The Discussion Paper also outlines proposals to extend the existing fine regime to other areas of PIPEDA, and substantially increasing the range of potential fines.

  1. Clarifying PIPEDA

The proposed reforms could potentially expand PIPEDA's scope. The proposed reforms also aim to clarify the application of PIPEDA (and thereby enhance accountability), including by extending PIPEDA's applications to certain non-commercial data collection activities. In an effort to address new business models, which do not fit in the traditional "controller-processor" framework, the government also plans to update and clarify PIPEDA's applicability, including in the context of transborder data flows.

The Discussion Paper also contemplates redrafting PIPEDA to make it easier for: (a) individuals to understand their rights; and (b) organizations to better understand their obligations. For example, the government proposes incorporating PIPEDA's 10 CSA Model Code principles into the body of the Act itself.

PIPEDA reform: Next steps

While a formal consultation period has not yet been announced by Innovation, Science and Economic Development Canada (ISED), the Discussion Paper encourages stakeholders to engage with ISED to help inform the proposed legislative reform of PIPEDA.

OPC suspends transborder data flows consultation

Considering the Government's proposed amendments to PIPEDA and the fact that the Discussion Paper touches upon the issue of transborder data flows and the need for PIPEDA to remains interoperable with other jurisdictions, the OPC announced at its 2019 Annual Form in Toronto that it has indefinitely suspended its current Consultation on Transborder Data Flows. Once the OPC has reviewed the government's Discussion Paper, the OPC plans to undertake a new round of consultation that may ask for stakeholders' input on both the current state of the law and potential amendments.

In the meantime, despite the OPC's Equifax decision, the Privacy Commissioner has stated publicly that it does not expect organizations to alter their practices, as informed by the OPC's long standing position of treating transborder data flows as a disclosure rather than a use, as outlined in the OPC's 2009 Guidelines for Processing Personal Data Across Borders (2009 Guidelines). However, the Privacy Commissioner also noted in his address at the OPC's 2019 Annual Form that he could not comment on what the OPC's interpretation of PIPEDA would be in the event of another complaint involving transborder data flows. Considering this uncertainty, we recommend that organizations proactively review their ability to demonstrate their compliance under the 2009 Guidelines. 

Conclusion

While the plan to modernize PIPEDA is necessary and frankly overdue, including to ensure Canada maintains its adequacy standing with the EU, which is up for review as early as 2020, given the upcoming federal elections this fall, we do not anticipate we will see any movement on this front until sometime in 2020.

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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