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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

Data processors under the GDPR

In our monthly GDPR Updates we discuss various key issues of the General Data Protection Regulation, (EU) 2016/679 (the GDPR), which applies from 25 May 2018. With the introduction of the GDPR, the existing Directive 95/46/EC and its implementation in the local laws of the various EU Member States will be repealed. The GDPR will bring significant and substantial changes with respect to the processing of personal data. It introduces several new concepts, such as Privacy by Design, Privacy by Default and Data Portability. As the GDPR contains several onerous obligations that require significant preparation time, organisations are recommended to timely commence the implementation process.

We notice that personal data protection is becoming more and more topical within organisations, and that the first steps towards compliance with the GDPR are undertaken. Our GDPR Updates illustrate the relevant changes resulting from the GDPR and provide readers with practical recommendations on the implementation of the GDPR within their organisations.

In the August edition of our GDPR Updates we address the position of the data processor. Under the GDPR the data processor is given certain specific responsibilities, meaning that it will no longer be only the data controller who is responsible for compliance with the privacy regulations. From 25 May 2018 also the data processor can be held liable for not complying with the GDPR requirements and additional legislation relating thereto.

If the data processor falls within the territorial scope of the GDPR (data processors will be confronted with an expansion of the territorial scope of the European privacy regulations), the data processor could face the following obligations:

  • the obligation to designate a representative in the EU if the data processor is not established in the EU but its processing is related to (i) offering of goods and/or services to data subjects in the EU; or  (ii) monitoring of data subjects in the EU;
  • complying with the mandatory requirements with regard to the content of the processing agreement as set out in Article 28 GDPR;
  • the obligation to maintain a written record of processing activities. Note that this obligation is not applicable to organisations employing fewer than 250 employees, unless (i) the processing is likely to result in a risk to the rights and freedoms of data subjects, (ii) the processing is not occasional, or (iii) the processing includes special categories of data. Data processors that provide services whereby the processing of personal data is standard practice are not likely to fall within the scope of the exceptions and will therefore be obliged to maintain a written record of processing activities (e.g. SaaS, hosting and other cloud service providers);
  • the obligation to designate a data protection officer if (i) the data processor is a public authority or body; (ii) its core activities consist of processing on a large scale of special categories of personal data or data relating to criminal convictions; or (iii) its core activities consist of processing operations that require regular and systematic monitoring of data subjects on a large scale; and
  • the obligation to notify the data controller (without undue delay) after becoming aware of a breach of the processed personal data and assist the data controller in ensuring compliance with its subsequent obligations towards the competent supervisory authorities and (where necessary) the data subjects.

Instead of only being contractually liable on the basis of a processing agreement with a data controller, under the GDPR data processors will also be subject to administrative liability in case of non-compliance. Administrative fines can increase up to EUR 20 million or (if higher) 4% of the total worldwide annual turnover of the organisation concerned. In addition to administrative liability and contractual liability towards the data controller, a data processor can be held liable towards data subjects who have suffered damages as a result of a breach of the GDPR by the data processor.

Organisations are recommended to carefully examine their positions within the various data processing activities and to make a very clear assessment on the associated responsibilities and obligations. A careful inventory should be made of the parties involved in the various personal data processing activities within an organisation and their roles (data controller/co or joint data controller/data processor/sub-processor, et cetera). This is particularly relevant as the division of roles directly influences the responsibilities a party has in the personal data processing activity, as well as the corresponding liability.

Please click here to read the entire August GDPR Update.

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Data processors under the GDPR

HHS Issues Quick Response Cyber Attack Checklist

Last month, after the WannaCry ransomware attack infected 230,000 computers in 150 countries, the US Department of Health and Human Services (HHS) Office for Civil Rights (OCR) issued a “Quick-Response Checklist” for HIPPA covered entities and business associates to follow when responding to a ransomware attack or other “cyber-related security incident,” as that phrase is defined under the HIPAA Security Rule. 45 C.F.R. 164.304.

Checklist Recommendations

The checklist provides four recommendations:

  1. Execute the response and mitigation procedures and contingency plans. Entities should immediately fix any technical or other problems to stop the incident and take steps to mitigate any impermissible disclosure of protected health information (either done by the entity’s own information technology staff, or by an outside entity brought in to help).
  2. Report the crime to other law enforcement agencies. This includes state or local law enforcement, the FBI, or the Secret Service. The OCR makes clear that any such report should not include protected health information (unless otherwise permitted by the HIPPA Privacy Rule).
  3. Report all cyber threat indicators to federal and information-sharing and analysis organizations (ISAOs). A cyber threat indicator is defined under federal law as information that is necessary to identify malicious cyber activity. The US Department of Homeland Security, the HHS Assistant Secretary for Preparedness and Response, and private-sector cyber-threat ISAOs are all identified as acceptable information-sharing organizations under the new checklist. The OCR, however, makes clear that it does not receive reports from its federal or HHS partners.
  4. Report the breach to OCR as soon as possible, “but no later than 60 days after the discovery of a breach affecting 500 or more individuals.” Entities should notify “affected individuals and the media unless a law enforcement official has requested a delay in the reporting.” The OCR also presumes that all cyber-related security incidents where protected health information was accessed, acquired, used, or disclosed are reportable breaches unless the information was encrypted by the entity at the time of the incident or the entity determines, through a written risk assessment, that there was a low probability that the information was compromised during the breach. An entity that discovers a breach affecting fewer than 500 individuals has an obligation to notify individuals without unreasonable delay, but no later than 60 days after discovery. And the OCR must be notified within 60 days after the end of the calendar year in which the breach was discovered.

In the end, the OCR states that it considers “all mitigation efforts taken by the entity during any particular breach investigation,” including the voluntary sharing of breach-related information with law enforcement agencies and other federal and analysis organizations, as outlined in the checklist.

Takeaways

The OCR’s checklist makes clear that preparing for, and responding quickly to any potential breach should be a priority for HIPPA covered entities and their business associates. This includes preparing or updating enterprise wide incident response plans, training leadership, implementing effective governance programs, and having the ability to rapidly mobilize a response to malicious activity. Dentons’ global Privacy and Cybersecurity Group, in conjunction with Dentons’ leading healthcare practice, has extensive experience helping entities prepare and execute such plans and dealing with the rapidly changing legal and regulatory landscape that emerges in the aftermath of a security incident.

Dentons is the world’s largest law firm, a leader on the Acritas Global Elite Brand Index, a BTI Client Service 30 Award winner, and recognized by prominent business and legal publications for its innovations in client service, including founding Nextlaw Labs and the Nextlaw Global Referral Network. Dentons’ global Privacy and Cybersecurity Group operates at the intersection of technology and law, and was recently singled out as one of the law firms best at cybersecurity by corporate counsel, according to BTI Consulting Group.  

HHS Issues Quick Response Cyber Attack Checklist

US Government Accountability Office Releases New Report On The Internet of Things (IoT)

On May 15, 2017, the US Government Accountability Office (GAO) released a new report entitled “Internet of Things: Status and implications of an increasingly connected world.” In the report, the GAO provides an introduction to the Internet of Things (IoT), describes what is known about current and emerging IoT technologies, and examines the implications of their use. The report was prepared by reviewing key reports and scientific literature describing current and developing IoT technologies and their uses, concentrating on consumers, industry, and the public sector, and interviewing agency officials from the Federal Trade Commission (FTC) and Federal Communications Commission (FCC). The GAO also convened a number of expert meetings during the drafting process, bringing together experts from various disciplines, including computer science, security, privacy, law, economics, physics, and product development.

Technological Advancements Leading To IoT Surge

The GAO identified four technological advancements that have contributed to the increase in IoT devices:

  • Miniaturized, inexpensive electronics. According to the GAO, the cost and size of electronics are decreasing, making it easier for the electronics to be embedded into objects and to be enabled as IoT devices. For example, the price of sensors has significantly declined over the past decade. One sensor called an accelerometer cost an average of $2 in 2006. The average price of the unit in 2015 was $.40.
  • Ubiquitous connectivity. The GAO notes that the expansion of networks and decreasing costs allow for easier connectivity, and for IoT devices to be used almost anywhere. The proliferation of Wi-Fi options and Bluetooth creates a more expansive space for IoT to operate.
  • Cloud computing. Cloud computing allows for increased computer processing. Because IoT devices create a large amount of data, they require large amounts of computing power to analyze the data. The increase and availability of cloud computing is helping IoT devices expand.
  • Data analytics. New advanced analytical tools can be used to examine large amounts of data to uncover hidden patterns and correlations. According to the GAO, advanced algorithms in computing systems can enable the automation of data analytics, and allow for valuable information to be collected by IoT devices.

Common Components Of IoT Devices

The GAO identifies three major components that make up nearly all IoT devices: (1) hardware, (2) network connectivity, and (3) software. The hardware used in IoT devices generally consists of embedded components, such as sensors, actuators, and processors. Sensors generally collect information about the IoT environment, such as temperature or changes in motion. Actuators perform physical actions, such as unlocking a door. And processors serve as the “brains” of the IoT device. The network component of an IoT device connects it to other devices and to networked computer systems. And the software in IoT devices perform a range of functions, from basic to complex. These three components are common across the IoT industry, and serve as the bedrock foundation for understanding the security challenges facing the IoT space.

Benefits and Uses

According to the GAO, the benefits and uses of IoT for consumers, industry and the public sector are widespread. From wearable IoT devices, such as fitness trackers, smart watches and smart glasses, to smart homes, buildings and vehicles, IoT is changing the landscape of consumer products and how people interact with their space. IoT is also impacting supply chain and agriculture industries, enhancing productivity and efficiency.

Potential Implications

With these benefits comes potential risk. The GAO report identifies five risk categories presented by the onset of new IoT technology: (1) information security; (2) privacy; (3) safety; (4) standards; and (5) economic issues.

  • Information security. The IoT brings the risks inherent in potentially unsecured information technology systems in homes, factories, and communities. IoT devices, networks, or the cloud servers where they store data can be compromised in a cyberattack.
  • Privacy. Smart devices that monitor public spaces may collect information about individuals without their knowledge or consent.
  • Safety. Researchers have demonstrated that IoT devices, such as connected automobiles and medical devices, can be hacked, potentially endangering the health and safety of their owners.
  • Standards. IoT devices and systems must be able to communicate easily. Technical standards to enable this communication will need to be developed and implemented effectively.
  • Economic issues. While impacts such as positive growth for industries that can use the IoT to reduce costs and provide better services is a beneficial outcome, economic disruption is also possible, such as the need for certain types of businesses and jobs that rely on individual interventions, including assembly line work or commercial vehicle deliveries.

As IoT technology increases, so too will the regulatory landscape governing its use. Although there is no single US federal agency that has overall regulatory responsibility for IoT, various agencies oversee or regulate aspects of the IoT, such as specific sectors, types of devices, or data. If you or your business is operating, or plans to operate in the IoT space, the Dentons’ global Privacy and Cybersecurity group can help you navigate this fast-paced, and shifting environment.

Dentons is the world’s largest law firm, a leader on the Acritas Global Elite Brand Index, a BTI Client Service 30 Award winner, and recognized by prominent business and legal publications for its innovations in client service, including founding Nextlaw Labs and the Nextlaw Global Referral Network. Dentons’ global Privacy and Cybersecurity Group operates at the intersection of technology and law, and was recently singled out as one of the law firms best at cybersecurity by corporate counsel, according to BTI Consulting Group.  

US Government Accountability Office Releases New Report On The Internet of Things (IoT)

SEC Issues Cybersecurity Alert For Brokers And Financial Advisers

On May 17, 2017, the US Securities and Exchange Commission (SEC), through its National Exam Program, issued a “Risk Alert” to broker-dealers, investment advisers and investment firms to advise them about the recent “WannaCry” ransomware attack and to encourage increased cybersecurity preparedness. The purpose of the alert, according to the SEC, was to “highlight for firms the risks and issues that the staff has identified during examinations of broker-dealers, investment advisers, and investment companies regarding cybersecurity preparedness.”

Based on a 2015 survey of 75 SEC registered broker-dealers, investment advisers and investment firms, the SEC National Exam Program staff recognized certain firm practices that registrants may find relevant when dealing with threats such as the WannaCry ransomware attack:

  • Cyber-risk Assessment: Five percent of the broker-dealers, and 26 percent of the investment advisers and investment companies examined “did not conduct periodic risk assessments of critical systems to identify cybersecurity threats, vulnerabilities, and the potential business consequences.”
  • Penetration Tests: Five percent of the broker-dealers, and 57 percent of the investment companies “did not conduct penetration tests and vulnerability scans on systems that the firms considered to be critical.”
  • System Maintenance: All broker-dealers, and 96 percent of investment firms examined “have a process in place for ensuring regular system maintenance, including the installation of software patches to address security vulnerabilities.” And only ten percent of the broker-dealers, and four percent of the investment firms examined had a significant number of critical and high-risk security patches that were missing important updates.

The SEC recommends registrants undertake at least two separate tasks: (1) assess supervisor, compliance and/or other risk management systems related to cybersecurity risks; and (2) make any changes, as may be appropriate, to address or strengthen such systems. To assistant registrants, the SEC highlights its Division of Investment Management’s recent cybersecurity guidance, and the webpage of the Financial Industry Regulatory Authority (FINRA), which has links to cybersecurity-related resources.

The SEC cautions that the recommendations described in the Risk Alert are not exhaustive, “nor will they constitute a safe harbor.” Factors other than those described in the Risk Alert may be appropriate to consider, and some factors may not be applicable to a particular firm’s business. Moreover, future changes in laws or regulations may supersede some of the factors or issues raised in the Risk Alert. Ultimately, the “adequacy of supervisory, compliance, and other risk management systems can be determined only with reference to the profile of each specific firm and other facts and circumstances.”

The SEC recognizes that it is not possible for firms to anticipate and prevent every cyber-attack. However, “appropriate planning to address cybersecurity issues, including developing a rapid response capability is important and may assist firms in mitigating the impact of any such attacks and any related effects on investors and clients.”

Dentons is the world’s largest law firm, a leader on the Acritas Global Elite Brand Index, a BTI Client Service 30 Award winner, and recognized by prominent business and legal publications for its innovations in client service, including founding Nextlaw Labs and the Nextlaw Global Referral Network. Dentons’ global Privacy and Cybersecurity Group operates at the intersection of technology and law, and was recently singled out as one of the law firms best at cybersecurity by corporate counsel, according to BTI Consulting Group.  

SEC Issues Cybersecurity Alert For Brokers And Financial Advisers