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Canada’s Privacy Commissioner Pursues a Stronger Consent Framework and More Proactive Enforcement

On September 21st, 2017, Daniel Therrien, Canada’s Federal Privacy Commissioner, tabled his annual report to Canada’s Parliament today. The report to Parliament includes results and recommendations with respect to the OPC’s study on consent. In addition, the Commissioner requests Parliament overhaul Canada’s federal private sector legislation – the Personal Information Protection and Electronic Documents Act (PIPEDA).

Consent and Technology

A key issue for regulators and businesses is how to obtain meaningful and valid consent to collect and use personal information in the digital age. Revisiting and enhancing the consent model under PIPEDA is grounded in the Commissioner’s five year strategic privacy priorities. In 2016, the OPC issued a consultation paper regarding the challenges of obtaining meaningful consent in a continuously evolving technological ecosystem where the traditional “privacy policy” may not always be suitable. The OPC received feedback through roundtables, focus groups, surveys and receipt of 51 submissions from organizations, information technology specialists, academics, advocacy groups and other stakeholders.

Four Key Elements in Privacy Policies: The Commissioner stated that the OPC will be issuing an updated version of its consent guidelines that will require businesses and organizations to highlight in a user friendly way the following four key elements in their privacy notices:

  1. What information is being collected
  2. Who is it being shared with, including an enumeration of third parties
  3. The purposes for collecting, using or sharing including an explanation of purposes that are not integral to the service, and
  4. Identify the risk of harm to individuals, if any.

Risk of Harm: The OPC is amending its guidelines to require organizations to consider the risk of harm to individuals when considering the form of consent used. This consideration will be in addition to the sensitivity of the personal information and the reasonable expectations of the individual. We expect to learn more about this in the updated guidelines.

No-Go Zones: Expect new guidance for businesses and no-go zones where the use of information, even with consent, should be prohibited as inappropriate. The guidance will be aimed to provide clarity on what the OPC considers “inappropriate uses” under subsection 5(1) of PIPEDA.

Alternatives to Consent: The Commissioner outlined three potential solutions for enhancing privacy protection where traditional consent models conflict with advances in technology, including:

  1. De-identification: In some circumstances, like big data, de-identification protocols may be the right solution. The OPC will be issuing guidance on de-identification that will help businesses assess their protocols and reduce risk of re-identification to a low level where the information may be used without consent.
  2. Publicly available information: The Commissioner agrees that the categories of publicly available information in PIPEDA’s regulations are out of date, and should be revisited by Parliament. For now these exceptions remain the same, but we may someday see changes to the regulations.
  3. Call for reform of new exceptions: The Commissioner has requested that PIPEDA be amended to include new exceptions to consent (section 7 of PIPEDA) to address social activities not contemplated when PIPEDA was first drafted. The goal is to help organizations use data for new purposes that would benefit individuals and obtaining consent is not practical. For example, a mobile app wishes to now use information collected for geolocation mapping, and the business can demonstrate that the benefit of the new use of information outweighs the privacy incursion. This option would be considered a last resort and require pre-approval by the OPC.

Overhaul of PIPEDA including new Powers

The Commissioner reported that it is time to revisit how Canada’s federal privacy legislation, enacted in 2000, meets the realities of today’s digital world, including advances technology as well the addition of new enforcement powers already used by the OPC’s counterparts in the U.S. and Europe. The Commissioner proposed to Parliament that this overhaul include a new enforcement model that emphasizes proactive powers that are backed up by order-making authorities, including:

  • involuntary audits
  • issuing binding orders, and
  • impose administrative monetary penalties.

The request for reform of PIPEDA is certainly a hot topic as businesses and organizations await how Canada’s status as an adequate country is, or is not affected as a result of Europe’s General Data Protection Regulations.

Expect a more aggressive OPC

However, do not expect the OPC to wait for new powers. The Commissioner ended his report to Parliament adding that, beginning today, we can expect a more proactive and aggressive OPC with respect to enforcement. The OPC is sending a signal that complaints to the OPC will no longer be the primary tool and the OPC will be shifting itself as a proactive regulator ready to initiate investigations. The Commissioner reported that a complaint-driven model has its limits:

People are unlikely to file a complaint about something they do not know is happening, and in the age of big data and the Internet of Things, it is very difficult to know and understand what is happening to our personal information. My Office, however, is better positioned to examine these often opaque data flows and to make determinations as to their appropriateness under PIPEDA.

This is an important message. The Commissioner is not waiting for legislative reform and has put businesses and organizations on notice to expect a more active OPC, one that will be on the lookout for “specific issues or chronic problems” that must be addressed – possibly resulting in more Commissioner-initiated investigations.

More information

You can read the OPC’s news release here.

You can read the Commissioner’s remarks and full Annual Report to Parliament here.

Canada’s Privacy Commissioner Pursues a Stronger Consent Framework and More Proactive Enforcement

Private Right of Action under CASL coming July 2017

Canada’s Anti-Spam Law came into force on July 1, 2014.  Since then, all eyes have been on the Canadian Radio-television and Telecommunications Commission (CRTC) for decisions concerning CASL violations.  In the cases made public to date, monetary penalties or settlement payments have ranged from $48,000 to $1.1 million.  Canadian and foreign companies have learned some things in the past two years about how CASL applies to their business, and many have taken steps to put in place policies and procedures to avoid violations.

Whatever steps you have taken to date, 2017 will be the time to revisit CASL compliance

On July 1, 2017, the private right of action (PRA) comes into force under CASL.  An individual or organization who is affected by a contravention may litigate to enforce the new private rights directly.  While CASL does not expressly provide for class actions, it is broadly expected that such actions will be launched to permit large numbers of applicants (for example, the recipients of alleged spam) to pursue compensation as a group.

Where the court finds a violation, it may order not only compensation for the applicant’s damages, but also monetary payments up to the following amounts:

  • for sending commercial electronic messages contrary to CASL – $200 per contravention, to a maximum of $1 million for each day that the conduct occurred
  • for altering the transmission data of a commercial electronic message – a maximum of $1 million for each day that the conduct occurred
  • for installing apps or other computer programs contrary to CASL – a maximum of $1 million for each day that the conduct occurred
  • for scraping, generating or otherwise accessing electronic addresses contrary to PIPEDA – a maximum of $1 million for each day that the conduct occurred
  • for sending commercial electronic messages with false or misleading information, including sender, locator or subject matter information, contrary to the Competition Act – $200 per contravention, to a maximum of $1 million for each day that the conduct occurred

When the court sets the amount to be paid, it must consider the purpose of the payment order – which “is to promote compliance…and not to punish”, the nature and scope of the violation, the history of compliance, any financial benefit or compensation from the conduct, ability to pay, and “any other relevant factor”.

CASL also provides for extended liability.  Directors, officers, agents or mandataries of a corporation may be liable if they directed, authorized, assented to or participated in the contravention.  Where an employee’s conduct in the course of his or her employment breaches CASL, the employer may be vicariously liable.

Revisiting CASL

CASL provides that where a person establishes that they exercised due diligence to prevent a violation, they cannot be found to have contravened CASL.  Despite this provision, a number of well-meaning businesses have been found offside CASL’s provisions, have made significant penalty or settlement payments, and in some cases have received negative media coverage for their failure to meet CASL requirements.

In July 2017, the risk exposure will increase.  Now is the time to revisit your CASL compliance.

  1. Discuss with your Board and Senior Management team why you need to revisit CASL in 2017.
  2. Make sure that you have a CASL Compliance Policy and Procedure that covers your operations, and that is easy for employees to understand and use.
  3. Ensure that existing and new employees have access to – and receive appropriate training in – the Policy and Procedure.
  4. Conduct an audit under the Compliance Policy and Procedure, including how consent is obtained and documented; whether unsubscribe requests are fulfilled quickly; whether CASL-compliant message templates are consistently used; how complaints are addressed (etc.).
  5. Consider whether you need to check in with service providers (to send messages or install apps or other computer programs) about their CASL compliance.
  6. Consider whether service provider contracts include the appropriate clauses to address CASL compliance, liability, and indemnification.

See also:

Lessons Learned: E-Learning Company Faces $50K Spam Fine

CRTC Enforcement Advisory – Records to Show Consent

Privacy Law and Anti-Spam – Guidance from the Office of the Privacy Commissioner

Canada’s Anti-Spam Law: Not just for Canadians

CASL Applies to Software January 15 2015

New CASL Compliance and Enforcement Guidelines

 

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Private Right of Action under CASL coming July 2017

New York Proposes First-in-the-Nation Cybersecurity Regulation for Financial Institutions

On September 13, 2016, the New York Department of Financial Services introduced a new rule that would require banks, insurance companies and other financial institutions regulated by the Department to establish and maintain a cybersecurity program designed to protect consumers and ensure the safety of New York’s financial services industry.  The proposed regulation is subject to a 45-day notice and public comment period, following the September 28, 2016 publication in the New York State register before final issuance.

Under the proposed rule, regulated financial institutions would be required to:

  • Establish a cybersecurity program;
  • Adopt a written cybersecurity policy;
  • Designate a Chief Information Security Officer responsible for implementing and overseeing the new cybersecurity program and policy; and
  • Have policies and procedures designed to ensure the security of information systems and nonpublic information accessible to third-parties.

Establishment of a Cybersecurity Program

According to the proposed rule, regulated financial institutions will need to establish a “cybersecurity program designed to ensure the confidentiality, integrity and availability of information systems that performs five core cybersecurity functions:”

  • Identification of cyber risks.
  • Implementation of policies and procedures to protect unauthorized access / use or other malicious acts.
  • Detection of cybersecurity events.
  • Responsiveness to identified cybersecurity events to mitigate any negative events.
  • Recovery from cybersecurity events and restoration of normal operations and services.

Additional requirements for each “cybersecurity program” include:

  • Annual penetration testing and vulnerability assessments.
  • Implementation and maintenance of an audit trail system to reconstruct transactions and log access privileges.
  • Limitations and periodic reviews of access privileges.
  • Written application security procedures, guidelines and standards that are reviewed and updated by the CISO at least annually.
  • Annual risk assessment of the confidentiality, integrity, and availability of information systems; adequacy of controls; and how identified risks will be mitigated or accepted.
  • Employment and training of cybersecurity personnel to stay abreast of changing threats and countermeasures.
  • Multi-factor authentication for individuals accessing internal systems who have privileged access or to support functions including remote access.
  • Timely destruction of nonpublic information that is no longer necessary except where required to be retained by law or regulation.
  • Monitoring of authorized users and cybersecurity awareness training for all personnel.
  • Encryption of all nonpublic information held or transmitted.
  • Written incident response plan to respond to, and recover from, any cybersecurity event.

Adoption of a Cybersecurity Policy

The new rule would require regulated financial institutions to adopt a written cybersecurity policy, setting forth “policies and procedures for the protection of their information systems and nonpublic information that addresses, at a minimum, the following:”

  • Information security.
  • Data governance and classification.
  • Access controls and identity management.
  • Business continuity and disaster recovery planning and resources.
  • Capacity and performance planning.
  • Systems operations and availability concerns.
  • Systems and network security.
  • Systems and network monitoring.
  • Systems and application development and quality assurance.
  • Physical security and environmental controls.
  • Customer data privacy.
  • Vendor and third-party service provider management.
  • Risk assessment.
  • Incident response.

Creation of Chief Information Security Officer

The new rule would require regulated financial institutions to designate a qualified individual to serve as a CISO, responsible for “overseeing and implementing the institution’s cybersecurity program and enforcing its cybersecurity policy.”  The new rule also would require the CISO to “report to the board, at least bi-annually to:”

  • Assess the confidentiality, integrity and availability of information systems.
  • Detail exceptions to cybersecurity policies and procedures.
  • Identify cyber risks.
  • Assess the effectiveness of the cybersecurity program.
  • Propose steps to remediate any inadequacies identified.
  • Include a summary of all material cybersecurity events that affected the regulated institution during the time period addressed by the report.

Third Party Protections

The new rule also would require regulated financial institutions to have policies and procedures designed to ensure the security of information systems and nonpublic information accessible to, or held by, third-parties, including the following:

  • Identification and risk assessment of third-parties with access to such information systems or such nonpublic information.
  • Minimum cybersecurity practices required to be met by such third-parties.
  • Due diligence processes used to evaluate the adequacy of cybersecurity practices of such third-parties.
  • Periodic assessment, at least annually, of third-parties and the continued adequacy of their cybersecurity practices.

A draft of the proposed rule is here.

New York Proposes First-in-the-Nation Cybersecurity Regulation for Financial Institutions

The TPP Agreement and Privacy

The Trans-Pacific Partnership Agreement (the “TPP Agreement”) is a regional trade and investment agreement negotiated by 12 Pacific Rim countries representing 40 percent of the global economy. Canada, the United States, Mexico, Japan, Malaysia, Vietnam and Australia are signatories. The TPP Agreement, which has 30 Chapters, ushers in a comprehensive program of tariff reduction for goods and services and establishes binding rules in a wide-range of subject areas, including financial services, cross border trade in services, investment, competition policy, intellectual property, telecommunications and electronic commerce. The TPP Agreement also touches on a number of privacy-related issues, including the cross-border flow of information, spam and encryption technology.

Cross-Border Flow of Information

The free flow of information across borders is important for international commerce and the trade in services, particularly information technology services. However, a number of countries regulate the export of data to other jurisdictions and/or require that service providers use local data servers, equipment and infrastructure as a condition of doing business. This has raised concerns that restrictions on cross-border information flows and data localization requirements may be misused as disguised trade barriers to favour domestic service providers.

Under the TPP Agreement, each Party must allow the cross-border transfer of information by electronic means, including personal information, in the course of business activities. In addition, no Party can require a service provider to use or locate computing facilities in its territory as a condition for conducting business in the territory. Exceptions are permitted in order to achieve a legitimate public policy objective, provided that the measure adopted is proportional to the objective and the measure is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade.

Unsolicited Commercial Electronic Messages

Unsolicited commercial electronic messages (CEMs) – also known as spam – can be exploited to deliver malware, spyware and other related network threats, which can undermine network security and privacy. The TPP Agreement requires each Party to adopt or maintain measures to minimize unsolicited CEMs, but provides each Party with flexibility on how to address the problem. A Party may either require organizations that send CEMs to obtain prior consent from recipients or provide recipients with the ability to prevent ongoing reception of those messages (unsubscribe mechanism).

Canada’s current anti-spam legislation (“CASL”) meets (and far exceeds) the obligations under the Agreement. CASL generally requires both opt-in consent and an unsubscribe mechanism for CEMs and sets out a myriad of disclosure and form requirements. It also implemented a strict enforcement regime.

Encryption

Encryption protects the security, confidentiality and privacy of data by converting data (plaintext) into unreadable data (ciphertext) through the use of a cryptographic algorithm. The use of encryption technology is a major policy issue with technology companies adopting strong encryption for devices (full-disk encryption) and communications on the internet (end-to-end encryption) to ensure data security and protect user privacy. National security agencies and law enforcement allege though, that the use of encryption undermines their ability to investigate criminals and terrorists, and are subsequently pressuring technology companies (and lawmakers) to allow for access to decrypted data (“backdoors”).

The TPP Agreement wades into this debate to ensure that encryption policies are not obstacles to trade, particularly with respect to Information and Communication Technology (ICT) products. Under the Agreement, a Party is not permitted to require a manufacturer or supplier of a commercial product that uses encryption to transfer a decryption key to the Party or integrate a particular encryption in the product as a condition for conducting business in the territory.

However, there are a number of important exceptions to this rule. First, the section does not apply to products used by a government entity. Second, the section does not preclude law enforcement authorities from requesting unencrypted communications pursuant to lawful authority (i.e. court order).  Third, the section does not apply to investigations by financial market regulators. Finally, the section is subject to the Security Exception in Chapter 29 of the TPP Agreement that permits a Party to apply any measure that it considers necessary to maintain or restore international peace and security, including the protection of its own essential security interests.

The TPP Agreement demonstrates that with the growth in digital trade and electronic commerce, international trade and investment agreements will increasingly address privacy-related issues.

For more information on the TPP Agreement or any of the subjects covered in this note, please contact a member of our team.

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The TPP Agreement and Privacy

Canadian Privacy Compliance: Time for your Online Checkup

In a previous post on online behavioural advertising (OBA), we wrote about the Office of the Privacy Commissioner’s “call to action” to stakeholders in the advertising industry on OBA, and we discussed the industry’s response to that call: self-regulation.

2012 – Call to Action: the Privacy Commissioner’s Expectations 

In its 2012 Policy Position on Online Behavioural Advertising, the Office of the Privacy Commissioner (OPC) stated that it “may” be acceptable to rely on implied or opt-out consent when tracking and targeting individuals for OBA purposes, “provided that”:

  • Individuals are made aware of the purposes for the practice in a manner that is clear and understandable – the purposes must be made obvious and cannot be buried in a privacy policy. Organizations should be transparent about their practices and consider how to effectively inform individuals of their OBA practices, by using a variety of communication methods, such as online banners, layered approaches, and interactive tools;
  • Individuals are informed of these purposes at or before the time of collection and provided with information about the various parties involved in OBA;
  • Individuals are able to easily opt-out of the practice – ideally at or before the time the information is collected;
  • The opt-out takes effect immediately and is persistent;
  • The information collected and used is limited, to the extent practicable, to non-sensitive information (avoiding sensitive information such as medical or health information); and
  • Information collected and used is destroyed as soon as possible or effectively de-identified.

2013 – Industry Response: Self-Regulation

In response, the industry developed and launched the Canadian Self-Regulatory Program for Online Behavioural Advertising (the “Ad Choices program”), an initiative tailored to meet the requirements of Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA), as well as the OPC guidelines.  The initiative is led by the Digital Digital Advertising Alliance of Canada (DAAC), and is monitored and administered by the non-profit industry body Advertising Standards Canada (ASC). A growing number of brands and media companies have registered for the program.

We noted in our previous post that the OPC would no doubt be watching to see whether and how industry self-regulation meets its expectations under PIPEDA and its OBA guidelines.  We also noted, however, that the self-regulatory solution was not designed to cover all OBA activities.  For example, certain types of activities are expressly excluded from the Ad Choices program, such as “online advertising of entities within a web site they own or control” and “contextual advertising”, including ads based on the content of a web page being visited, a consumer’s current visit to a web page, and a search query.

Ongoing OPC Guidelines, Investigations and “Sweeps”

The OPC is not staying on the sidelines – it continues to take a keen interest in OBA and online consent more broadly.  For example, in January 2014, the OPC found that Google ads triggered by web surfing on health sites violated privacy rights.  As a result, Google committed to several measures, including closer monitoring of potential violations by advertisers.  In May 2014, the federal, British Columbia and Alberta Privacy Commissioners issued new guidelines for online consent, calling for transparent and dynamic privacy notices, and greater protections for personal information belonging to children and youth.

In 2015, the OPC is investigating websites visited by Canadians for compliance with OBA requirements.

The OPC has in past years conducted investigation and enforcement “sweeps”.  In 2013, the OPC led and participated in the first annual Global Privacy Enforcement Network (GPEN) Internet Privacy Sweep.  The sweep targeted privacy policies, and the OPC published the initial results of its investigations under the headings “The Good, the Bad, and the Ugly“. In 2014, the OPC again participated in the GPEN Sweep, investigating the transparency of privacy practices for 151 mobile apps that were made in Canada or frequently downloaded by Canadians.  The Results of the 2014 Global Privacy Enforcement Network Sweep are an overall, anonymous mobile app “report card”, ranking transparency to users, ease of access/reading on the small screen, and whether privacy information is available before download.

An OPC “report card” on OBA is expected to be released sometime in the Spring.

 

In the news:  see the recent Globe & Mail article “Watchdog to study ‘privacy compliance’ among Canadian advertisers” 

 

Canadian Privacy Compliance: Time for your Online Checkup