On May 25, 2018, the EU General Data Protection Regulation (GDPR) will come into effect requiring companies that process personally identifiable information of EU residents to comply with a significant number of enhanced data-protection requirements. One of these requirements is an individual’s “right to explanation” of an algorithmic decision made about him or her by a machine.

This right will affect companies that monitor the behavior of European residents for the purposes of data-subject “profiling” that produces legal effects or significantly affects the natural persons whose personal information is being collected and analyzed. This includes “profiling” that consists of any form of automated processing of personal data evaluating the personal aspects relating to a natural person, in particular to analyze or predict aspects concerning the data subject’s performance at work, economic situation, health, personal preferences or interests, reliability or behavior, location or movements.

Article 13 of the GDPR will require data controllers collecting personal information to inform data subjects of the existence of automated decision-making, including profiling, and, in certain cases, to provide “meaningful information about the logic involved,” as well as significance and consequences of such processing. Article 22 of the GDPR states that data subjects shall have the right not to be subject to a decision based solely on automated processing, including profiling, that produces legal effects.

The GDPR will carry hefty fines that will be based on case-specific multi-factor analysis. Depending on the type of infringement, GDRP violators can be fined up to €10 – €20 million, or up to 2% – 4% of total worldwide annual turnover, whichever is higher.