UK: Directors Beware Your Risk, France Issues Biggest GDPR Fine So Far

Last Updated: 15 May 2019
Article by James Tumbridge

As of December 17th 2018, company directors and senior officers may now be held personally liable for nuisance calls made by their companies, and could be forced to pay fines of up to £500,000.

This follows proposed amendments to the Privacy and Electronic Communications Regulations (PECR), which sets out the legal framework for electronic direct marketing in the UK. The PECR prohibits direct marketing to consumers by companies that transmit or instigate the transmission of unsolicited e-communications, unless the recipient of such communications has given prior consent or the sender can demonstrate an existing relationship with the recipient within a limited exception. The ICO can fine companies that breach these rules up to £500,000.

However, prior to December 17th the ICO could only fine the breaching companies, which resulted in several companies opting for liquidation in order to avoid paying fines. In fact, between 2010 and April 2018, the ICO was only able to secure payment on 55% of the PECR fines handed down.

Following Met Police Enforcement Notice, ICO issues guidance regarding use of Gang Matrix

In November, we reported on the issuance of an ICO enforcement notice against the Metropolitan Police. The ICO held that the police breached data protection rules in using a controversial database, known as the 'Gangs Matrix,' which is intended to track the likelihood of individuals being involved in gang-related violence but which failed to distinguish between criminals and victims.

The ICO has recently released a guidance checklist, specifically for police forces using or considering the use of the Gangs Matrix or similar databases, in order to help assess compliance with data protection law:

  1. Has the Data Protection Officer been consulted?
  2. Is there a clear, justifiable purpose for processing? Is it a tool to support the investigation of crime, or to prevent individuals from becoming perpetrators?
  3. Is a risk score linked to individuals? What is the threshold for including people on the matrix? What are the purposes and consequences of the scoring? Is it being applied consistently?
  4. Are victims included in the matrix? What is the justification for this? If they are, then they should be clearly labelled in order to distinguish them from convicted or suspected offenders.
  5. If social media is being accessed, there should be rules in relation to its use as a source of 'verifiable intelligence' in relation to personal data

It is important that all police forces take note of this guidance, whether or not they currently employ a Gangs Matrix or similar database, as the considerations impact on data protection compliance across wider policing activities.

US Judge approves data breach suits against Equifax

In the state of Georgia, US federal Judge Thomas Thrash Jr. has approved a series of consolidated lawsuits against Equifax regarding its 2017 data breach, which we previously reported on here, in which almost 150 million personal records were stolen by hackers. The data included names, social security numbers, taxpayers ID numbers and credit card numbers and expiries.

The orders, handed down on January 28th, permitted challenges brought by card issuers and ordinary citizens, but refused permission for certain financial institutions and a class-action suit brought by a group of small businesses.

Card issuers and financial institutions argued the breach caused harm by impacting the organizations and their customer authentication measures. Furthermore, they claimed they incurred considerable expense in the breaches' aftermath by having to: Respond to the leak of personal information, fully assess the impact, and take mitigation action against fraud. Judge Thrash held the suits brought by card issuers could proceed, given the tangible costs associated with refunding fraudulent charges, but denied the suits brought by other financial institutions, stating the injuries claimed were too abstract.

The consumer group, currently comprising almost 100 people, stated that the exposure of their personal data has resulted in an immediate and continuing increased risk of harm. In permitting the suits, Judge Thrash held Equifax owed a duty of care to safeguard personal data and that their failure to act despite knowledge of system security deficiencies was sufficient to allege bad faith.

The small business class-action suit claimed that the businesses suffered harm due to their owners' data had being compromised, jeopardizing the creditworthiness of both owners and businesses. However, Judge Thrash opined that while the harm to the owners was real, any harm to the businesses was too speculative, as further events would have to unfold before they suffered any actual damage. Judge Thrash also highlighted that Equifax had made positive comments regarding the strength of their data security measures prior to the 2017 breach. Companies should keep this in mind when considering their public statements about their data security measures as they will be considered, and so you need to be able to defend them.

ICO fines Leave.EU and Eldon Insurance over breaches of PECR

The ICO has fined the Leave.EU campaign and prominent Brexiteer Arron Bank's Eldon Insurance – trading as Go Skippy Insurance – a total of £120,000 for breaching electronic marketing laws. The ICO's investigation found that the two companies were closely linked, and that the segregation between the personal data of Eldon's customers from that of political subscribers to Leave. EU was ineffective. The smaller of the two Leave.EU fines, for £15,000, was handed down after 300,000 political marketing messages were sent using Eldon's customer details. The larger £45,000 fine was for a separate incident, in which Eldon sent over one million messages to Leave. EU subscribers, offering discounted insurance services, without establishing sufficient consent. It was this incident that also resulted in Eldon's £60,000 fine. The fines were issued under the PECR which, as outlined above, requires companies to establish recipient consent in order to send such direct marketing communications.

On top of these fines, the ICO will continue to audit the companies' data protection practices, including observing how personal data is processed and considering what policies and training procedures are in place. The ICO also issued Eldon with an enforcement notice ordering the firm to take steps in order to ensure compliance with the PER going forward.

French data protection authority issues fine in 'test case' on GDPR consent and transparency rules

The French data protection authority, CNIL, has issued its decision in relation to one of several 'test' complaints made against large technology companies immediately following the coming into force of the GDPR in May 2017. The complaint at issue was made by the Austrian solicitor and privacy activist Max Schrems, alleging that Google's privacy terms did not meet the GDPR requirements for consent and transparency in respect of the use of data processing for personalised advertising. The CNIL concluded that Google's approach to obtaining user consent fell short in two respects: First, because users would need to navigate through several information documents in order to have a full picture of the data processing taking place across services such as YouTube, Google Search and Google Maps; and second, because ads personalisation services were enabled by default using 'pre-ticked' boxes, consent was found not to be 'unambiguous'. The CNIL issued a fine of €50 million, the largest ever fine for a data protection infraction.

It is not yet known whether Google will appeal the CNIL findings, but the decision could have far reaching implications for businesses that rely on personalised advertising, as well as profiling, for revenues. Another important consequence of the CNIL decision is procedural. The GDPR introduced a 'one stop shop' approach to regulation whereby a lead regulatory authority would spearhead any data protection investigations for EEA member states which are subject to the GDPR. This reduces the number of different regulators you must deal with. Google's EU headquarters are in Dublin, but the CNIL concluded that because data processing decisions were being taken at Google's global headquarters in California, the operations being in Dublin was not relevant and the French authority was therefore able to handle the complaint. This is very concerning and emphasises the need to think about corporate structure and the consequence on which regulator you will deal with. Subsequent to Mr. Schrems's complaint being lodged, Google amended its privacy terms to make its Dublin based entity the data controller for the processing of personal data within the EU. Businesses with headquarters outside the EU should review their privacy terms and their approach to data processing for EU data subjects, in order to ensure you know which regulator you will deal with.

Dutch surgeon wins 'right to be forgotten' case

A Dutch surgeon has won the right to have her data erased by Google, in a landmark case following the principles first established in 'the right to be forgotten' case (Google Spain). The surgeon had been formally sanctioned for medical negligence in relation to the post-operative care given to one of her patients. The surgeon successfully appealed the regulator's decision, and as a result her suspension was downgraded to a conditional sanction, during which time she was allowed to continue to practise. However, upon googling her name, the first results seen by patients continued to contain links to the original suspension and a blacklist of doctors, which the surgeon said had sullied her reputation.

The surgeon made a formal request to Google to remove her data, but Google refused arguing that the public had the right to know about the original suspension. The Dutch Data Protection Authority, Autoriteit Persoonsgegevens, agreed with Google that the information about the surgeon remained relevant. However, the Dutch Court disagreed, and ordered that the links be removed as the websites were misleading and the surgeon's right to privacy was ultimately more important than the public interest in past medical negligence. Article 17 of the GDPR introduced a qualified right to have personal data erased. It has been reported that since the Google Spain case in 2014, Google has removed over one million URLs from various search results. However, this is the first case involving the medical profession and the privacy concerns of doctors.

It is understood that Google is appealing the decision.

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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