United States: Privacy Alert: The Privacy Shield, As It Stands Today

Following the invalidation of the US-EU Safe Harbor by the Court of Justice of the European Union in October last year (see From a Safe Harbor to a Privacy Shield), the U.S. Department of Commerce and the EU Commission have recently released a draft of a replacement regime, called the EU-U.S. Privacy Shield. The new framework is intended to increase protections for transferring EU residents' personal data to the U.S. and thereby facilitate the transatlantic flow of data. Now that the dust has settled, we take a look at the key provisions of the Privacy Shield as they relate to U.S. organizations and assess the hurdles that must be overcome before the Privacy Shield becomes a reality.

Eligibility for the Privacy Shield

Participation in the Privacy Shield Framework, like the Safe Harbor, is based on the principle of self-certification, requiring a U.S.-based company to make certain representations to the Department of Commerce. A participating organization must commit to: (i) be subject to the jurisdiction of either the U.S. Federal Trade Commission ("FTC") or other U.S. agency such as the Department of Transportation; (ii) publicly declare that it will comply with and in fact implement the Privacy Principles, described below; and (iii) publicly disclose its privacy policies. Once an organization is included in the Department of Commerce's list of certified organizations, it becomes eligible to receive EU individuals' personal data under the Privacy Shield, with the requirement to re-certify at least annually.

Privacy Shield Principles

Again, like Safe Harbor, the Privacy Shield is based on a number of Privacy Principles. These are summarized below:

  1. Notice: There is an obligation placed on participating organizations to inform individuals of a broad range of information (over 15 different notice requirements), including type of personal data collected, the purpose of collecting the data, the identity of third parties to whom the data is transferred, conditions for onward transfers, rights of access by the individual and recourse mechanisms. This notification obligation will require a detailed reassessment of even the most robust of privacy policies.
  2. Choice: The participating organizations must provide clear, conspicuous and readily available mechanisms to allow individuals to opt out of: (i) direct marketing; (ii) the disclosure of their personal data to any third party not acting as an agent for the underlying participating organization; and (iii) the use of their personal data for a purpose materially different from the purpose for which the data was originally collected. If the organization is collecting sensitive data (e.g., health conditions, racial or ethnic origin, sexual preference, trade union membership, etc.), then the data subject must affirmatively "opt in" to allow the participating organization to collect such information. Whilst these concepts may have become familiar to organizations based in the EU, U.S. participating organizations will soon need to familiarize themselves and adopt appropriate opt-in and opt-out mechanisms before collecting an EU individual's data.
  3. Accountability for Onward Transfer: Participating organizations may transfer personal data to third parties, but only limited to specified purposes to which the data subject has consented. The pertinent organization must enter into a contract with each such third-party data processor, consistent with the level of protection afforded by the Privacy Principles. The entity that received the personal data under the Privacy Shield in the first place remains responsible for ensuring that all data is processed lawfully and in compliance with the Privacy Principles. The practical consequence is therefore an increased focus on diligence and audit of vendors to ensure compliance down the chain by all data recipients.
  4. Security: The participating organizations must take reasonable and appropriate security measures, based on the nature of the personal data and inherent risks involved. As described in 3) above, these obligations would need to flow down to any and all third parties receiving the data.
  5. Data Integrity and the Purpose Limitation: The participating organizations must limit the collection of data to only such data that is "relevant for the purposes of processing," and must take reasonable steps to ensure that personal data is accurate, complete, current and reliable for the intended use. Even after an entity's certification has lapsed, that organization will remain bound by the Privacy Principles when processing data collected during a period of certification under the Privacy Shield.
  6. Access: The participating organizations must provide each data subject with: (i) the opportunity to confirm whether the organization is processing his or her personal data; (ii) a way to obtain a copy of such data within a reasonable time (at a fee that is "not excessive"); and (iii) the ability to correct, amend or delete information that is inaccurate or was processed in violation of the Privacy Principles. Formal channels of communication will need to be established to facilitate these access rights.
  7. Recourse, Enforcement and Liability: The new Privacy Shield provides EU individuals with detailed mechanisms for recourse and dispute resolution. Each participating organization must implement processes for handling complaints, regardless of whether it has actually received any complaints, including mechanisms to: (i) enable independent recourse for the data subjects; (ii) verify the authenticity of the Privacy Shield-related attestations and assertions made by the organization; and (iii) provide effective redress for individuals who file complaints about the processing of their personal data (with an obligation to respond to each complaint within 45 days). U.S. organizations will therefore need to implement not only procedures to train staff on these mechanisms but also measures to comply with the new recourse requirements.

Remedies for EU Data Subjects

Outside of the mechanisms that the participating organizations must put in place, EU citizens will now be provided a plethora of avenues of redress. These include: (i) direct complaints to the participating organization that collected the data; (ii) alternative dispute resolution, which will be made available free of charge; (iii) complaints to the EU citizens' local Data Protection Authorities, which in turn will work with the FTC and Department of Commerce to resolve the complaints; (iv) access to an Ombudsperson designated by the U.S. government; and (v) as a last resort, access to an Arbitration panel. We have yet to see the details of all of these mechanisms, but collectively they have been considered one of the Privacy Shield's key improvements upon the Safe Harbor regime.

So, should you sign up?

No—not yet anyhow. From a regulatory perspective, the EU Commission's decision on the adequacy of the Privacy Shield is still in draft form. Consequently, we are awaiting: (i) a consultation with the committee of the representatives of the EU member states; (ii) an opinion from the committee of the regulators from the EU member states; and (iii) a formal adoption of the Commission's decision. Then, or maybe in parallel, the FTC will need to implement the framework enabling organizations to begin to self-certify. Once these regulatory hurdles are overcome, given that the new framework is disliked by most of the interested parties who disliked the Safe Harbor, it will almost certainly be immediately challenged in court in the EU, as the Safe Harbor regime was by Max Schrems.

The outcome of all this uncertainty will likely result in two camps emerging. In one camp will be the "wait-and-see" organizations that will not want to spend the time or the money going through the self-certification procedure until they know whether or not the Privacy Shield is here to stay—and, given the new detailed requirements and recourse mechanisms, self-certification should not be taken lightly. In the other camp will be the adopters—those who will see the Privacy Shield as an investment, which at best will become the foundation of a permanent robust policy and at worst will be a temporary marketing tool.  

Either way, it is almost certain that other methods of legitimizing transatlantic data transfers, such as model clauses or binding corporate rules, will be used to supplement the Privacy Shield—at least until the market in Europe begins to trust the new regime.​​

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
25 Sep 2018, Conference, California, United States

We're excited to introduce Women's IP Strategy, a 2-day conference that tackles both the IP, legal as well as broader career development obstacles, risks and rewards for women lawyers working in male-dominant industries.

2 Oct 2018, Webinar, California, United States

This CLE webinar will offer suggestions to litigators to help them comply with the new GDPR during e-discovery.

10 Oct 2018, Webinar, California, United States

For the past years, 3D printing has significantly revolutionized the business industry as it provides innovations and improvement to pre-existing processes.

Similar Articles
Relevancy Powered by MondaqAI
Lewis Brisbois Bisgaard & Smith LLP
Smith Gambrell & Russell LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Lewis Brisbois Bisgaard & Smith LLP
Smith Gambrell & Russell LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions