On March 4, 2016, Innovation, Science and Economic Development Canada (Ministry) published a consultation document soliciting input from stakeholders on the development of regulations that will support mandatory data breach reporting requirements under the Personal Information Protection and Electronic Documents Act (PIPEDA). Parties interested in participating in this consultation must provide comments in writing by May 31, 2016.

BACKGROUND

In June of 2015, the Canadian Parliament enacted the Digital Privacy Act (DPA), which made a number of amendments to PIPEDA (for more information, see our June 2015 Blakes Bulletin: Digital Privacy Act Receives Royal Assent, But Breach Notification Provisions Lag Behind). Though most of the amendments made by the DPA are currently in force, the amendments creating a mandatory data breach reporting scheme will not come into force until regulations setting out prescribed requirements have been enacted. The purpose of the current consultation document is to gather input from interested stakeholders to inform and support the preparation of draft regulations. A second consultation process will be held after draft regulations have been published, which means that final regulations are unlikely before late fall of 2016.

BREACH REPORTING SCHEME

Once these amendments come into force, organizations that experience a “breach of security safeguards” will be required to:

  • Determine if the breach poses a “real risk of significant harm” to any individual whose personal information was involved in the breach
  • Notify individuals as soon as feasible of any breach that poses a “real risk of significant harm”
  • Report any data breach that poses a “real risk of significant harm” to the Privacy Commissioner, as soon as feasible
  • Where appropriate, notify any third party that the organization experiencing the breach believes is in a position to mitigate the risk of harm
  • Maintain a record of the data breach and make these records available to the Privacy Commissioner upon request

A “breach of security safeguards” is defined as “the loss of, unauthorized access to or unauthorized disclosure of personal information resulting from a breach of an organization’s security safeguards that are referred to in Clause 4.7 of Schedule 1 or from a failure to establish those safeguards.” Clause 4.7 of Schedule 1 of PIPEDA requires organizations to protect personal information using security safeguards that appropriate having regard to the sensitivity of the information.

QUESTIONS POSED IN CONSULTATION DOCUMENT

For each provision where regulations setting out prescribed requirements are contemplated, the consultation document outlines various factors to consider in determining the scope of those regulations, including the objective of the provision and how similar objectives are addressed in data breach legislation in other jurisdictions such as Alberta, the United States and Europe and by the voluntary data breach guidelines published by the Office of the Privacy Commissioner of Canada (OPC). The document then poses a number of specific questions for stakeholders to consider. The Ministry has expressed particular interest in receiving input from: specific industry sectors; multi-national organizations; organizations in multiple jurisdictions; and small- to medium-sized organizations.

Determining Real Risk of Significant Harm

The amendments will create a risk-based framework, requiring that a data breach be reported where it creates a “real risk of significant” harm to affected individuals. In making this assessment, organizations are required to consider the sensitivity of the personal information involved and the probability that the information has or will be misused. The consultation document asks stakeholders to consider whether any additional factors should be set out in the regulations as mandatory considerations in the risk-assessment. It also asks whether the regulations should specify that the risk to individuals can be presumed to be low if appropriate encryption has been used.

Report to the Commissioner

The Ministry recognizes that reports to the OPC must contain sufficient information to fulfil the objectives of monitoring organizations’ compliance with their breach reporting obligations and for standardized tracking of serious data breaches in Canada, but should also not pose an unreasonable burden on organizations. With this in mind, stakeholders are asked to consider what information should be mandatory in the report to the OPC, whether organizations should be required to include a risk assessment in the report, whether reporting should be done in multiple stages (preliminary report followed by a final report once all factors are known) and whether the format of the report, and means for reporting, should be mandated (e.g. written or electronic format; reporting by email, mail or via a secure electronic portal). The consultation document does not ask whether legislated privilege or confidentiality protections should apply to such reports, which will be a significant concern in circumstances in which class action litigation is likely, particularly if the regulations require that the report contain an assessment of the type of harm that may result from a breach and the likelihood of that harm occurring.

Notification to Individuals

The amendments require organizations to include sufficient information in the notice to affected individuals to enable the individuals to understand the risks posed by the breach and what steps he or she can take to reduce those risks or mitigate harm. The consultation document asks whether this is sufficient or whether the regulations should identify specific information that must be included in the notice. It also asks what format the notice should take (e.g. email, first class mail, etc.), and in what circumstances indirect notification (e.g. notice in a publication rather than direct contact with affected individuals) should be permitted. Despite inviting comments from multi-national organizations and other organizations working in multiple jurisdictions, the consultation document does not specifically identify as a concern the risk of conflicting requirements in different jurisdictions, or notices becoming confusing or difficult to read as a result of an organization complying with every requirement in every jurisdiction to which it is subject.

Notification to Other Organizations

The consultation document asks stakeholders to consider whether the regulations should set out specific circumstances in which a third party organization would always be required to be notified of a data breach.

Record Keeping

Even where an organization has determined that a breach of security safeguards does not pose a real risk of significant harm, organizations that become aware of a breach are required to maintain a record of it. Stakeholders are asked to consider whether and what specific data fields should be mandatory for such records and whether the regulations should specify how long those records should be required to be maintained, who within the organization is responsible for maintaining them, and whether the duty should apply to “assumed breaches” when the organization has no actual knowledge of a breach.

Stakeholders are also asked to comment on any other issues that should be considered when drafting the regulations.