Hong Kong: Personal Data (Privacy) (Amendment) Ordinance 2012

Last Updated: 1 August 2012
Article by Sara S.M. Or
Most Read Contributor in Hong Kong, November 2017

Summary

The Personal Data (Privacy) (Amendment) Ordinance 2012 sets out a number of changes to the Personal Data (Privacy) Ordinance. This article provides an overview of some key changes and suggests some practical steps that data users may take in addressing the changes.

Introduction

The Personal Data (Privacy) (Amendment) Bill 2011 (the "Bill") was introduced to the Legislative Council in July 2011 after two rounds of public consultations in 2009 and 2010 on the review of the Personal Data (Privacy) Ordinance (the "PDPO").

In October 2011, a Bills Committee was established by the Legislative Council to review the Bill. Considerable changes were made to the draft provisions proposed in the Bill. The Personal Data (Privacy) (Amendment) Ordinance 2012 (the "Amendment Ordinance") was passed by the Legislative Council in late June and gazetted on 6 July 2012, finalizing the amendments to the PDPO

The Amendment Ordinance sets out a number of changes to the PDPO. This article provides an overview of some key changes and suggests some practical steps that data users may take in addressing the changes.

Implementation timeline

The changes introduced by the Amendment Ordinance will take effect in phases. Most of the changes are expected to take effect from 1 October 2012. The changes relating to direct marketing and the legal assistance scheme will take effect later on a day to be appointed by the Secretary for Constitutional and Mainland Affairs.

Key changes to the PDPO

This article covers the changes to the following areas:

a. use of personal data for direct marketing (new sections 35B to 35H)

b. provision of personal data to another for use in direct marketing (new sections 35I to 35M)

c. disclosure of personal data obtained without consent (new section 64)

d. regulating data processors (revised DPP2 and DPP4)

e. enforcement notices (revised section 50(1) and new section 50A)

f. legal assistance for aggrieved individuals (new section 66B)

Use of personal data for direct marketing

A) REQUIREMENTS UNDER PDPO BEFORE AMENDMENT ORDINANCE

i. The requirements were principally specified in section 34 and DPP1(3) and DPP3 of the PDPO.

ii. In short, a data user is required:

1. to inform an individual at the time of collecting his data whether his data will be used for direct marketing;

2. not to use his data for direct marketing if (1) was not complied with except for marketing the data user's own services and products (on the rationale that such direct marketing would be within the individual's reasonable contemplation); and

3. when using an individual's data for direct marketing for the first time, to inform the individual of his "opt-out" right free of charge and stop using data for direct marketing if he opts out.

B) NEW / REVISED REQUIREMENTS - PRIOR NOTICE AND "CONSENT"

i. Summary of requirements. In short a data user will be required, after the new/revised requirements take effect, to inform an individual of its intention to use his data for direct marketing, provide a communication channel free of charge to allow the individual to give consent (which includes an indication of no objection) to the intended use, and refrain from using his data for direct marketing unless the data user has received the individual's consent or indication of no objection.

ii. "Opt-out" or "opt-in"? During the consultation and legislative process, there was heated debate on whether the existing right to opt-out from direct marketing should be replaced by an opt-in right. Whilst the Amendment Ordinance preserves the existing opt-out approach and defines "consent" for this purpose to include an "indication of no objection", it is uncertain whether silence or no response from an individual amounts to an "indication" of no objection and satisfies the consent requirement. If silence or no response is inadequate for that purpose, the opt-out approach is in effect replaced by an opt-in approach.

iii. Additional steps required of data user. A data user has to take the following additional steps prescribed by the Amendment Ordinance before using an individual's data for direct marketing:

1. inform the individual that it intends to use his data for direct marketing and that it is not allowed to so use the data unless it has received the individual's "consent" (which includes "an indication of no objection" for this purpose) to the intended use;

2. provide the individual with information of:

aa. the kinds of data to be used for direct marketing; and

bb. the classes of marketing subjects (i.e. the kinds of services and products which may be marketed) for which the data will be used; and

3. provide the individual with a channel through which he may communicate, without charge by the data user, his "consent" to use his data in the scope described in (2) above.

iv. Easily understandable and readable wording. In order to satisfy the requirements, a data user must provide the information in (1) and (2) above in a manner that is easily understandable and easily readable.

v. Additional requirement applicable to oral consent. The Amendment Ordinance (section 35E(1)(b)) permits a data user to obtain the individual's consent orally. If consent is obtained orally, the data user is required to send a written confirmation to the individual within 14 days from receiving his consent confirming (a) the date of receipt of the consent, (b) the kinds of data to be used for direct marketing, and (c) the classes of marketing subjects for which the data will be used.

vi. Existing obligation to inform individual of opt-out right. In addition to the new/revised requirements, a data user is continued to be required to inform an individual of his opt-out right when using his data for direct marketing for the first time, and to stop using his data for direct marketing if he opts out.

vii. Individual may opt out at any time. The Amendment Ordinance (section 35G) makes it clear that an individual has the right to opt out from direct marketing at any time, irrespective of whether he has previously consented to the use of his data for direct marketing.

viii. Penalties. Contravention of the new/revised requirements relating to direct marketing constitutes an offence punishable by fine of up to HK$500,000 and imprisonment for up to three years.

C) "GRANDFATHERING" ARRANGEMENT

i. "Grandfathering" dispenses with additional steps in (B)(iii). Following much debate on how to facilitate a practical implementation of the new/revised requirements balancing the respective needs of individuals and data users, the Amendment Ordinance provides for a "grandfathering" arrangement in section 35D(1). A data user is not required to take the additional steps described in (B)(iii) above if it successfully invokes the grandfathering arrangement.

ii. Conditions for invoking "grandfathering". In order to invoke the grandfathering arrangement, a data user has to satisfy all of the following conditions before the date on which the new/revised requirements on direct marketing come into effect:

1. the individual has been explicitly informed by the data user in an easily understandable and easily readable manner of the intended use or use of his data for direct marketing in relation to specified classes of marketing subjects (i.e., services and products);

2. the data user had actually used the individual's data for direct marketing in relation to the same classes of services and products;

3. the individual had not required the data user to stop so using any of the data; and

4. the data user had not contravened the applicable requirements under the PDPO at the relevant time in relation to the use of data.

D) PRACTICAL STEPS

i. A data user should take steps, ahead of the commencement date of the new/revised requirements, to satisfy all the conditions for invoking the grandfathering arrangement to the extent permitted of its existing customers (and other individuals) and its services and products.

ii. As regards an individual to whom the grandfathering arrangement does not apply, a data user will have to take the additional steps in (B)(iii) above before using his data for direct marketing.

iii. The requirements in (B)(iii) above may be incorporated in a data user's PICS. A data user should review and update its PICS for that purpose.

iv. If a data user is unable to satisfy either (D)(i) or (D)(ii) above with respect to an individual, it should refrain from using his data for direct marketing.

v. A data user should keep and update the list of individuals who have opted out from direct marketing at any time, and refrain from using their data for direct marketing.

vi. A data user should review and update its internal direct marketing policies and procedures to ensure that they address the new/revised requirements, and provide appropriate training to its staff, agents and representatives.

Provision of personal data to another for use in direct marketing

A) REQUIREMENTS UNDER PDPO BEFORE AMENDMENT ORDINANCE

The PDPO does not expressly address disclosure of personal data by a data user to another person for direct marketing or sale of data. The requirement is wrapped up in the general principles in DPP1(3) and DPP3.

B) NEW REQUIREMENTS - PRIOR WRITTEN NOTICE AND WRITTEN CONSENT

i. Summary of requirements. The concept resembles the requirements in 6 above. In short a data user will be required, after the new requirements take effect, to inform an individual of its intention to provide his data to another person for use by that other person in direct marketing expressly specifying whether the data user is providing data for gain, provide a communication channel free of charge to allow the individual to give consent (which includes an indication of no objection) to the intended provision, and refrain from providing his data unless the data user has received the individual's consent or indication of no objection.

ii. "Sale" or "for gain". During the consultation and legislative process, data users emphasized the need to have a clear definition of "sale" of data or provision of data "for gain" in order not to preclude legitimate commercial activities and arrangements. The Amendment Ordinance defines provision of data "for gain" (section 35A(2)) to mean provision of data "in return for money or other property", irrespective of whether the return is contingent or the person providing data retains control over the use of data.

iii. Additional steps required of data user. A data user has to take the following additional steps prescribed by the Amendment Ordinance before providing his data to another person for use by that other person in direct marketing:

1. inform the individual in writing that it intends to provide his data to another person for use by that other person in direct marketing and that it is not allowed to so provide the data unless it has received the individual's written consent (which includes "an indication of no objection" for this purpose) to the intended provision;

2. provide the individual with the following written information:

aa. that the data is to be provided for gain, if that is the case;

bb. the kinds of data to be provided;

cc. the classes of persons to which the data is to be provided; and

dd. the classes of marketing subjects (i.e. the kinds of services and products which may be marketed) for which the data will be used; and

3. provide the individual with a channel through which he may communicate, without charge by the data user, his consent in writing to use his data in the scope described in (2) above.

iv. Easily understandable and readable wording. In order to satisfy the requirements, a data user must provide the information in (1) and (2) above in a manner that is easily understandable and easily readable.

v. Written notice and written consent. For the purpose of disclosing data to another person for use by that other person for direct marketing, a data user is required to give written notice to and obtain written consent from the individual.

vi. Individual may revoke consent at any time. An individual has the right under section 35L to require a data user to stop providing his data to any other person for use in direct marketing at any time, irrespective of whether he has previously given his consent. In that case, the data user is required to stop providing his data and to notify any person to whom it has provided data to stop using the data in direct marketing.

vii. Penalties. Contravention by a data user of the new requirements constitutes an offence punishable (if the data user provides data for gain) by fine of up to HK$1,000,000 and imprisonment for up to five years and (if the data user provides data otherwise than for gain) by fine of up to HK$500,000 and imprisonment for up to three years. Failure of the other person (receiving data from a data user and notice to stop using data in direct marketing) to stop so using the data constitutes an offence punishable by fine of up to HK$500,000 and imprisonment for up to three years.

viii. No "grandfathering" arrangement. No "grandfathering" arrangement is available with respect to this requirement.

C) PRACTICAL STEPS

i. A data user should consider whether it will provide personal data of its customers and other individuals to another person for use of that other person in direct marketing. If the answer is "YES", the data user must satisfy the new requirements. Particular attention should be given to comply with the additional requirements where the data user provides data for gain.

ii. If a data user is unable to satisfy the requirements with respect to an individual, it should refrain from providing his data to another person for use of that other person in direct marketing.

iii. A data user should keep and update the list of individuals who do not consent or have revoked their consent at any time, and refrain from providing his data to another person for use of that other person in direct marketing.

iv. A data user should review and update its internal policies and procedures to ensure that they address the new requirements, and provide appropriate training to its staff, agents and representatives.

Disclosure of personal data obtained without consent

A) REQUIREMENTS UNDER PDPO BEFORE AMENDMENT ORDINANCE

The PDPO does not expressly address disclosure by a person who obtained personal data of an individual from a data user. The requirement is wrapped up in the general principles in DPP3.

B) NEW OFFENCE - DISCLOSURE WITHOUT DATA USER'S CONSENT

i. Disclosure for gain or to cause loss or psychological harm. New section 64 creates two new offences:

1. a person commits an offence if he discloses any personal data of an individual which was obtained from a data user without the data user's consent with an intent to (1) obtain gain in money or other property, whether for his own benefit or not, or (2) cause loss in money or other property to the individual; and

2. a person commits an offence if he discloses any personal data of an individual which was obtained from a data user without the data user's consent, and the disclosure causes psychological harm to the individual.

ii. Penalties. Commission of an offence under (a) or (b) above is punishable by fine of up to HK$1,000,000 and imprisonment for up to five years.

Regulating data processors

A) REQUIREMENTS UNDER PDPO BEFORE AMENDMENT ORDINANCE

The PDPO does not expressly define "data processor" and a data user's obligations over its agents and data processors are wrapped up in the general principles in section 65.

B) NEW REQUIREMENTS - ENHANCED DPP2 AND DPP4

i. Definition of "data processor". The term "data processor" is defined in DPP2 and DPP4 to mean a person who processes personal data on behalf of a data user and does not process the data for its own purposes.

ii. Enhanced requirements on retention and security of data. In addition to the general obligation on a data user to be responsible for the acts of its agents, DPP2 and DPP4 are revised to impose express requirements on a data user to ensure compliance of the requirements in those DPPs by its data processors by adopting contractual or other means to prevent:

1. any personal data transferred by the data user to a data processor from being kept longer than is necessary for processing of data (in the case of DPP2); and

2. unauthorized or accidental access, processing, erasure, loss or use of any personal data transferred by the data user to a data processor for processing.

iii. Penalties. Failure to comply the new requirements constitutes a breach of DPP which is not an offence on its own. If the Privacy Commissioner issues an enforcement notice to a data user who is in breach of a DPP, the data user commits an offence if it fails to comply with the enforcement notice.

C) PRACTICAL STEPS

i. A data user should review all the contracts signed by it with data processors to ensure that they contain the necessary contractual terms for the purposes of DPP2 and DPP4.

ii. It is also advisable for a data user to review and, where appropriate, strengthen its policies and procedures for appointing data processors and overseeing their performance on an ongoing basis, in light of the heightened effort under the Amendment Ordinance to require data users to be responsible for their data processors.

Enforcement notice

A) INCREASED POWER TO IMPOSE ENFORCEMENT NOTICE AND INCREASED PENALTIES

The Amendment Ordinance introduces the following changes in relation to enforcement notices, increasing the Privacy Commissioner's power over data users in breach of requirements under the PDPO:

i. May issue enforcement notice whether contravention is likely to continue or repeat. Under the PDPO before the Amendment Ordinance, the Privacy Commissioner is empowered to issue an enforcement notice where, following an investigation, it is of the opinion that a data user (1) is contravening a requirement under the PDPO or (2) has contravened a requirement under the PDPO and is likely to continue or repeat the contravention. The Amendment Ordinance removes the requirement that the contravention is likely to continue or repeat.

ii. Heavier penalties for repeat offenders. Under the PDPO before the Amendment Ordinance, a data user who contravenes an enforcement notice commits an offence and is liable to a fine of up to HK$50,000 (and a daily fine of HK$1,000 for a continuing offence) and imprisonment for up to two years. The Amendment Ordinance introduces a heavier penalty for repeat offenders (i.e. a data user who contravenes multiple enforcement notices). The penalty for the first conviction remains at the same level as aforesaid. The penalty for a subsequent conviction is increased to a fine of up to HK$100,000 (and a daily fine of HK$2,000 for a continuing offence) and imprisonment for up to two years.

iii. New offence for contravening enforcement notice after initial compliance. The Amendment Ordinance introduces a new offence which, in practice, gives continuing effect on an enforcement notice. It is now an offence if a data user, having complied with an enforcement notice, intentionally does the same act or makes the same omission in contravention of the requirement as specified in that enforcement notice. This offence is punishable by a fine of up to HK$50,000 (and a daily fine of HK$1,000 for a continuing offence) and imprisonment for up to two years.

B) PRACTICAL STEPS

In view of the increased powers of the Privacy Commissioner to impose enforcement notices and the increased penalties for breach of enforcement notices, a data user should review and, where appropriate, strengthen its policies and procedures for complying with enforcement notices and generally for complying with the applicable requirements under the PDPO. Particular attention should be given to designing and implementing suitable measures to prevent recurrence of offending acts or practices.

Legal assistance for aggrieved individuals

A) PRIVACY COMMISSIONER MAY GRANT ASSISTANCE ON APPLICATION

The Amendment Ordinance empowers the Privacy Commissioner to provide various forms of legal assistance to a person who has a right to claim compensation under the PDPO from a data user for damages suffered by him as a result of the data user's contravention of the PDPO. That person may apply to the Privacy Commissioner for legal assistance and the Privacy Commissioner may grant legal assistance if he thinks fit having regard to the relevant circumstances in particular, without limitation:

i. if the case raises a question or principle; or

ii. if it is unreasonable, having regard to the complexity of the case or the applicant's position in relation to the respondent or other parties involved in the case, to expect the applicant to deal with the case unaided.

B) FORM OF ASSISTANCE THAT MAY BE GRANTED

The Privacy Commissioner may assist by:

i. giving advice;

ii. arranging for advice or assistance to be given by a solicitor or counsel;

iii. arranging for representation by a solicitor or counsel and provision of assistance in the steps preliminary or incidental to any proceedings, or in reaching a compromise to avoid or end any proceedings; and

iv. giving any other form of assistance as he considers appropriate.

Originally published on 26 July 2012

Keywords: PDPO. Personal Data, Amendment Ordinance

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