UK: Global Data & Privacy Update - May 2017

Welcome to the May Global Data & Privacy Update. This update is dedicated to covering the latest legislative developments affecting the way data is managed and protected, as well as reporting on the most recent news governing data breaches and industry developments

Clyde & Co invite our insurance sector readers to complete a short survey on GDPR and the insurance industry. These results will be shared with any reader that completes the survey.

Click here to take our survey.

Government consultation on derogations from the GDPR

The Government has sought views on the areas where member states are permitted to make exemptions from the General Data Protection Regulation (GDPR), which comes into force next May. Whilst the GDPR is an EU Regulation, which means it is immediately enforceable in all EU Member States without the need to be transposed directly in to member states' national law, it does provide member states with discretion over the application of certain provisions.

The Government requested views on all potential areas of derogation contained within the Regulation via a survey. The survey divided the incoming legislation into 14 themes, providing an open format in which opinions can be given.

The Government requested feedback by midday on 10 May 2017. We have worked with the LMA in submitting their views as part of the consultation. If you would like to discuss the survey themes further, please feel free to contact Mark Williamson or Isabel Ost.

Click here to view the Government's consultation paper

EU Parliament passes resolution calling on the EU Commission to assess the EU-US Privacy Shield

The EU Parliament has passed a resolution calling on the EU Commission to assess the Privacy Shield's compliance with data protection laws. This vote follows a declaration last month by the LIBE Committee that the Privacy Shield is inadequate.

The Privacy Shield is a current method by which personal data may be transferred from the EU to the US in compliance with EU data protection laws. It was established last year following the invalidation in late 2015 of the Safe Harbour agreement.

MEPs' concerns about the legitimacy of the Privacy Shield include: new rules in the US permitting data sharing between US agencies (including the FBI and NSA) without court or legislative permission; news about surveillance activities during the Privacy Shield negotiations conducted by a service provider at the request of government agencies and effective redress for EU individuals whose data is transferred to the US.

The first annual review of the Privacy Shield is expected this September.

Click here to read the EU Parliament press release

Article 29 Working Party publishes GDPR guidelines on Data Protection Impact Assessments, Data Protection Officers, Data Portability and identifying a lead supervisory authority

The Article 29 Working Party (WP29) has published an initial version of guidelines on Data Protection Impact Assessments (DPIA) and final versions of guidelines on data protection officers (DPO), data portability and lead supervisory authorities.

The initial guidelines on DPIAs set out: criteria to be considered when assessing whether a risk requires a DPIA; guidance on how this could be carried out; and criteria for an acceptable DPIA. As these are initial guidelines, the WP29 is seeking feedback on them until 23 May 2017. Any comments should be sent to JUST-ARTICLE29WP-SEC@ec.europa.eu and presidenceg29@cnil.fr.

The WP29 has provided detailed final guidance (updating December 2016 initial guidelines) on DPOs, data portability and identifying a lead supervisory authority under the GDPR.

DPOs are mandatory under the GDPR in certain types of companies. The guidelines published say that DPOs must have expertise in national and European data protection laws and report to the highest management level of their organisation, which is a change from the December 2016 version which stated they "should" have such expertise. The WP29 highlighted two areas where conflict of interests with the role of DPO may occur: firstly, senior management positions such as chief executive, chief operation, head of IT departments and head of HR - persons that fill these positions within a company would not be suitable for the DPO role and secondly where an external DPO is also requested to represent the company in court cases related to data protection issues.

The data portability guidelines explain the rules around data portability, which is the right of data subjects to receive their personal data in a structured and transmittable format. Controversially, the guidelines state that data subjects are allowed to receive "observed data", which is data obtained due to use of a product or service such as search history, location data or data gathered from wearable devices. The guidelines do say that the right should not cover data inferred by the controller, such as a resulting health profile.

The guidelines on identifying a lead supervisory authority help data controllers or processers carrying out cross-border processing of personal data identify their supervisory authority. The guidelines discuss steps to take to identify a lead supervisory authority and provide questions to aid this process as well as guidance for companies without their central administration in the EU.

Click here to reach the WP29 page from which all four guidelines can be downloaded and here for further analysis of the finalised guidelines

WP29 publishes opinion on draft E-Privacy Regulation

The draft E-Privacy Regulation, published in January of this year with the aim of coming into force from 25 May 2018 with the GDPR, proposes to replace the current E-Privacy Directive regulating the processing of personal data and privacy protection in the electronic communications sector.

The WP29 opinion notes that there are positive aspects of this draft regulation, such as European uniformity, alignment with the GDPR such as on fines and the responsible enforcement authority, extension and clarification of the scope currently in the directive and the improvement of the concept of consent.

However, the WP29 highlights four key areas of concern: the requirements for tracking the location of terminal equipment; the different levels of protection provided to metadata and content; the inconsistency between the GDPR and this draft regulation over requirements for terminal equipment and software to prevent unlawful interference by default; and the regulation should explicitly prohibit tracking walls.

The WP29 has provided suggestions for clarifications on the wording of the draft regulation based on the above concerns.

Click here to reach the WP29 page from which the opinion can be downloaded

Is Facebook allowed to collect data from your WhatsApp account?

In Germany Facebook has been prevented from collecting data gathered from users of Facebook owned WhatsApp, losing its attempt to suspend the order made last year, pending a full trial examination.

Last August, WhatsApp changed its terms to permit Facebook access to elements of personal data on WhatsApp. Whilst, with careful review, it was possible to opt out of Facebook using data for such purposes, it was not possible to prevent data being transferred to Facebook. The Hamburg Data Protection Commissioner said that Facebook had not obtained genuine consent to use such data.

This order means that WhatsApp may not transfer the data of its 35 million German users to Facebook. However, the court did not uphold, in accordance with the previous order, the requirement to delete data already transferred by WhatsApp to Facebook. Facebook has said its use of WhatsApp users' data in Europe has been suspended pending discussions with regulators.

Click here to read a press article

FCA launches discussion on Distributed Ledger Technology

The FCA has published a discussion paper on distributed ledger technology (DLT). DLT is a form of storing and adding to data which creates an immutable record; this technology is developing rapidly and is the basis for technology such as bitcoin.

The discussion paper discusses some of the issues raised by firms using DLT such as outsourcing arrangements and security. It also notes that this technology might raise potential regulatory challenges in terms of storing and processing client's data. The FCA is seeking views on this issue, under question 17, about parts of regulation where DLT might offer a new market convention. The FCA is seeking responses in relation to their paper by 17 July 2017. If you would like to discuss the survey themes further, please feel free to contact Mark Williamson or Isabel Ost.

Click here to open the discussion paper and here to open the response paper

2017 Cyber Security Breaches Survey

The Government has produced a report after conducting a cyber security survey, which included telephone interviews with over 1500 businesses and 30 in-depth interviews.

An interesting finding from the survey was that just under half of businesses (46%) discovered at least one cyber security breach or attack. The top 3 types of breaches experienced related to fraudulent emails received by staff (72%), virus/spyware/malware issues (33%) and people impersonating the organisation online (27%). It also shows that over a fifth of senior managers (22%) are never given an update on cyber security issues.

The survey shows an increase in the use of externally hosted web services, such as Cloud technology, in up to 59% of businesses.

Click here to read the cyber liability survey in full

ICO fines 11 charities for misuse of personal data

A large number of charities have been fined, for misusing donor's personal data, by the Information Commissioner's Office (ICO). ICO investigations since 2015 found that many charities secretly screened millions of donors to be targeted for further contributions. A number of charities used personal data from external sources to target new or old donors, and others had been trading personal data between themselves to create a larger pool of data.

The fine for each charity ranged from £6,000.00 to £18,000.00, with the Information Commissioner having exercised her discretion in relation to the amounts given the particular circumstances. The charities are further being investigated by the Charity Commission.

Click here to read the ICO's press release

ICO fines two firms for emails about marketing preferences

The ICO has fined two companies for misusing personal data by sending unlawful marketing emails.

Honda Motor Europe Ltd sent nearly 290,000 emails to customers regarding their preferences for marketing. The company believed that the emails were not marketing but service emails to assist the company in its data protection compliance. Honda Motor Europe however could not demonstrate that the customers had consented to receiving this type of email. The ICO fined the company £13,000 and stated that emails cannot be sent to determine if people want to receive marketing without consent as this is deemed marketing and not permitted.

Flybe sent over 3.3 million emails with the title "Are your details correct?" requesting the individual to update information and marketing preferences, and in doing so would be entered in a prize draw. The recipients however had already opted out of marketing emails. The company has been fined £70,000 for breaking the Privacy and Electronic Communication Regulations.

Click here to read the ICO's press release

ASA decides marketing emails were sent without consent, where recipients opted-in to receiving third party marketing, on the basis that the wording of the original opt-in notice was unclear

The Advertising Standards Agency (ASA) has ruled that Lands' End Europe Ltd sent unsolicited mails breaching the CAP code.

Lands' End requested an agency to send emails to e-mail addresses provided by a third party company called Clic-Plan, which obtained this information and individuals' consent to receive third party marketing via affiliate partners providing offers on products. This partner website required positive opt-in for third party marketing, facilitated unsubscribe requests and required a tick next to a statement saying "You understand and agree that you are establishing a business relationship with our network of affiliate partners, and you may be contacted by one of our partners by telephone or mobile using automated dialling or electronic mail. You also agree to our Privacy Policy. There is no obligation for submitting your information."

ASA ruled that the CAP code had been breached as explicit consent of customers was required before electronic marketing can be sent and crucially the nature of the third parties or affiliate partners or types of communications which the customers were agreeing to receive was not expressly set out. ASA further noted that there was no obvious link between the goods provided by Lands' End and the website on which customers gave their consent to receive marketing, therefore no "soft opt-in" could be relied on here.

Click here to read the full ruling

ICO fines two marketing firms a total of £220,000 for nuisance marketing

The ICO, in separate investigations, has fined PRS Media £140,000 for sending about 4.4 million spam texts and Xternal Property Renovations £80,000 for nuisance phone calls.

PRS Media was found not to have the consent of those sent marketing texts. The company's website required people to agree to marketing to enter competitions on its website, which is not proper consent. Further, the privacy policy on the website was not specific about the third parties with whom their data would be shared.

Xternal Property Renovations called over 109,000 persons registered with the Telephone Preference Service (i.e opted out of receiving marketing calls). The ICO stated that the company should have cross-checked their list with Telephone Preference Service subscribers. A legal notice compelling the company to stop unlawful marketing calls has been issued as part of the enforcement notice.

Click here to read the ICO's press release

Individual fined for accessing sensitive medical records without the data controller's consent

A former NHS employee has been prosecuted, in the Magistrates Court, for unlawful access of sensitive medical records without the data controller's consent. The records of two individuals, estranged family members, were accessed a number of times over 5 months without business need and each of the individual's up-to-date address obtained. The former employee was fined £650, reduced from £1000 for early guilty plea credit, ordered to pay costs of over £650 and a victim surcharge of £65.

Click here to read the ICO's press release

Financial Brokerage firm fined £40,000 for spam texts

Monevo Limited sent over 44,000 unsolicited marketing texts promoting loans in a three month period.

Monevo did not have specific consent for this type of marketing. The personal data, obtained by Monevo's marketing affiliate, came from competition and money saving websites whose privacy policies were unspecific about the third parties with whom their data would be shared, none of which expressly indicated their details would be used by Monevo for marketing by text.

Click here to read the ICO's press release

Search warrants for homes and businesses performed

Two search warrants for properties were executed this month as part of an ICO investigation into nuisance calls. The ICO is investigating calls made about personal injury claims following road traffic accidents and the connection with data from car repair shops.

Click here to read the ICO's press release

Global Data & Privacy Update - May 2017

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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