Preparations for the upcoming entry into force of the European General Data Protection Regulation ("GDPR") are underway in Canada's House of Commons. On February 28, 2018, the Standing Committee on Access to Information, Privacy and Ethics ("ETHI" or “Committee”) presented its report on the review of the Personal Information Protection and Electronic Documents Act ("PIPEDA"), entitled "Towards Privacy by Design" to the House of Commons.

As its name indicates, this report recommends that the review of PIPEDA by the Government of Canada be guided by the concept of “privacy by design,” which is the idea that privacy considerations should be taken into account at all stages of the development of a product. Accordingly, the Committee put forward numerous suggestions aimed at reinforcing PIPEDA, with a clearly stated goal of ensuring that it will be considered adequate by the European Union in the context of the coming into force of the GDPR in May.

The ETHI made 19 recommendations to potentially update the protection of personal information framework in Canada. This bulletin will focus on the most important recommendations for organizations doing business in Canada, which are as follows:

  • Moving towards an opt-in consent as the default for uses of personal information for secondary purposes;
  • Considering amending PIPEDA to clarify situations where personal information can be used to satisfy legitimate business interests;
  • Examining the best ways to protect depersonalized data;
  • Recognizing a right to erasure and a right to de-indexing, at a minimum for minors;
  • Giving the Office of the Privacy Commissioner of Canada ("OPC") stronger enforcement powers, including the power to make orders and impose fines for non-compliance, as well as broad audit powers, including the ability to choose which complaints to investigate.

Meaningful Consent

The ETHI noted that consent is the cornerstone of PIPEDA. However, the OPC testified that recent innovations have added significant complexity to online interactions and have resulted in more ways to use personal information, a statement affirmed by comments from many witnesses indicating that it has become impossible for individuals to take the time needed to properly inform themselves of the conditions of use for each service and provide informed consent. The ETHI nonetheless expressed its view that consent must stay at the core of PIPEDA’s privacy protection model, as it respects individuals’ autonomy in deciding what to do with their personal information, although it must be enhanced by a greater reliance on express consent (also known as “opt-in consent”) rather than implied consent.

Opt-in Consent as the Default for Using Personal Information for Secondary Purposes

The ETHI heard witnesses argue that opt-in consent should be implemented as the default model, which means that users would explicitly choose to disclose their personal information. Others had reservations about the practical implications of such a system and one witness suggested making a distinction between using personal information for the purpose of providing the service requested by the users and using it for secondary purposes, such as marketing. In this last case, this witness argued that an opt-out option should be clearly and readily available to the individual. This is aligned with the view previously articulated by the OPC in PIPEDA Case Summary #2003-203, which states that the following criteria must be met in order for an organization to be able to rely on an on opt-out consent when using personal information for secondary purposes:

  1. The personal information must be demonstrably non-sensitive in nature and context.
  2. The information-sharing situation must be limited and well defined as to the nature of the personal information to be used or disclosed and the extent of the intended use or disclosure.
  3. The organization's purposes must be limited and well defined, stated in a reasonably clear and understandable manner, and brought to the individual's attention at the time the personal information is collected.
  4. The organization must establish a convenient procedure for easily, inexpensively, and immediately opting out of, or withdrawing consent to, secondary purposes and must notify the individual of the procedure at the time the personal information is collected.1

The ETHI has recommended that PIPEDA be amended to provide for opt-in consent as the default for using personal information for these secondary purposes, "with a view to implementing a default opt-in system regardless of purpose", thereby reopening the issue of the type of consent which must be obtained for using personal information for secondary purposes.

Improving Algorithmic Transparency Privacy

The ETHI heard witnesses highlight the risk posed by algorithms processing large amount of personal information and this data being used to make potentially discriminatory decisions about individuals (for instance, in artificial intelligence applications). Articulating the view that organizations should be more transparent about the use of algorithms to process personal information, the ETHI recommended that the government consider implementing measures to improve algorithmic transparency.

Review the Definition of "Publicly Available Information"

PIPEDA excludes from its scope certain categories of publicly available information specified by regulations. The ETHI recognized that the list specified in the current regulations is obsolete, as it refers to mediums like phone books, and that it should be technology neutral. The ETHI therefore recommended that the government review the definition of "publicly available information" and consider taking into account situations in which individuals post personal information on a public website. While it is unclear if the intent is to completely exclude this type of information from the scope of PIPEDA, this position is probably meant to ensure that the fact that this type of data that is readily available is at least considered when determining the type of protection this type of data actually warrants.

Clarifying When Personal Information Can Be Used for "Legitimate Business Interests"

Under the European model, businesses may collect, use and disclose personal information without consent for their legitimate business interests. Some witnesses before the ETHI suggested that PIPEDA should operate in a similar manner to address situations where obtaining consent is difficult, such as for search engines results, in the context of big data and when new possibilities for use arise after the initial collection of the data. The OPC testified against this idea on the basis that such an exception would be too broad and therefore could therefore lead to abuse by organizations.

The ETHI, while noting concerns regarding the implementation of a new exception, recommended that the government consider amending PIPEDA to at least clarify situations where personal information can be used to satisfy legitimate business interests. We note that the inclusion of an exception in that sense in PIPEDA could potentially compensate for the more stringent opt-in consent model for secondary purposes, if secondary purposes were to be considered legitimate business interests.

Protecting Depersonalized Data

The legal treatment of depersonalized data (usually referred to as "anonymized" or "de-identified" data) is an important issue for businesses and individuals in the era of big data and artificial intelligence, where data does not always have to identify an individual to be of value to businesses. The ETHI noted that some witnesses believed that depersonalized data should not be considered "personal information," while others were of the view that they should be exempted from the consent requirement. The OPC has recently recommended in its 2017 "Report on Consent" that Parliament examine this issue as de-identified data may provide the "flexibility needed to achieve a better balance between privacy protection and economic value of data."

The ETHI was not ready to recommend an exception to the consent requirement for depersonalized data and simply recommended that the government examine the best ways to protect such data, for instance from risks of re-identification, thus addressing a concern that was raised by the OPC in its 2017 report, when it noted that “re-identification is a real risk not only because of the availability of data sets that can be used to re-identify personal information, but also because of the lack of rigour in de-identification methods.”

Data Portability Should be Explicitly Recognized in PIPEDA

The GDPR provides individuals the right to "data portability," which is the right to receive the personal information individuals have provided to an organization, in a common and machine-readable format, so that the individual can easily transmit this data to another organization. The ETHI noted that such right means that service provides must ensure that their processes for collecting and storing personal information are compatible with that of their competitors and recommended that PIPEDA explicitly recognize this right.

Last month, the OPC issued its "Draft Position on Online Reputation," which we discussed in a previous bulletin and where it essentially stated that PIPEDA already contains protection akin to the European right to be forgotten (or "right to erasure," as it is named in the GDPR). In its new report, the ETHI covered this subject in great detail. In its opinion, the right to be forgotten refers to two concepts: the right to erasure and the right to de-indexing (or “dereferencing” or “delisting”).

Recognizing the Right to Erasure (at a Minimum for Minors)

According to the ETHI, the right to erasure is the right to have information removed from a website. It noted that PIPEDA contains very limited provisions regarding the deletion, correction or accuracy of personal information. When they have self-provided the information, individuals should be able to withdraw their consent and have their information deleted (except in certain situations, such as when there are contractual provisions to the contrary). Citing the testimony of Privacy Commissioner of Canada Daniel Therrien, the ETHI stated that individuals should have an absolute right to have information they posted on social media removed.

According to the ETHI, when information about an individual (e.g. a photo posted on social media by a friend of the individual) has been provided to an organization by someone else, the situation is more complex. In such a situation, the ETHI indicated that the right under PIPEDA to have organizations correct inaccurate, incomplete or out-of-date information, as well as the notion that organizations may only collect, use or disclose personal information for reasonable purposes should find application. That said, according to the ETHI, these principles do not provide for a comprehensive regime and do not allow for redress in cases where factual yet potentially harmful information is posted online, such as embarrassing acts or photos, which could have serious consequences for those affected, especially minors.

The ETHI therefore concluded that while a right to erasure is not a concept that is foreign to PIPEDA, a more robust regime should be included in the statute and that as a general principle individuals should be entitled to have their personal information removed from online sources when they end a business relationship with an organization.

The ETHI also heard witnesses discuss the risks of a right to erasure with respect to the right of freedom of expression and the public interest, and therefore expressed the view that a right to erasure would have to be carefully framed to strike an appropriate balance between freedom of expression and protection of privacy. The ETHI concluded by recommending that the government consider amending PIPEDA to include a framework for a right to erasure based on the GDPR model that would, at a minimum, include a right for young people to have information posted online either by themselves or through an organization taken down.

Recognizing a Right to De-Indexing (at a Minimum for Minors)

Unlike the right to erasure, the right to de-indexing does not involve deleting the information in question, but rather ensuring that the results no longer appear in search engines results. The ETHI noted that Canada does not have an explicit de-indexing regime like the EU, where the right to de-indexing was established in a 2014 decision by the Court of Justice of the European Union, which found that it existed under the directive that is soon to be replaced by the GDPR.

In the OPC "Draft Position on Online Reputation" mentioned above, the OPC argued that under PIPEDA, search engines would be required to remove links in certain circumstances, but when testifying in front of the ETHI, Commissioner Therrien recognized that this position has its critics and that it would be worth clarifying PIPEDA in this respect.

The ETHI noted that the most important concern with respect to de-indexing relates to having a private organization (such as Google) receiving requests and making the decision of whether to de-index content.

Despite critics of de-indexing, the ETHI concluded that implementing a legal framework allowing individuals to request, in specified circumstances, the de-indexing of harmful personal information is a good way of protecting Canadian’s reputation and privacy. The public interest and freedom of expression would be protected by implementing a framework providing for a rigorous and transparent decision-making process. The ETHI therefore recommended that the government consider including a framework on the right to de-indexing in PIPEDA, and that the right be expressly recognized in the case of personal information posted online by minors.

In its 2017 Report on Consent which we discussed in a previous bulletin, the OPC asked for a change to the current ombudsman model and requested stronger enforcement powers. The ETHI heard many witnesses on both sides of the issue, some arguing for more powers to the OPC while others favouring the status quo. The ETHI sided with the parties asking for stronger powers and a departure from the ombudsman model, recommending using the United Kingdom system as a model. In the end, the ETHI recommended that PIPEDA be amended to give the OPC stronger enforcement powers, such as:

  • The power to make orders and impose fines for non-compliance; and
  • Broad audit powers, including the ability to choose which complaints to investigate.

Under the GDPR, organizations in the European Union are prohibited from transferring personal data to any non-member state whose laws do not adequately protect this data. The EU will therefore have to assess the adequacy of PIPEDA under the GDPR. Commissioner Therrien testified before the ETHI that the GDPR contains rights and provisions that do not appear in PIPEDA, such as the right to data portability and data erasure and the concept of privacy by design. The GDPR also contains rigorous enforcement measures, including fines which may amount to the higher of €20 million or 4 per cent of the organization’s total worldwide annual turnover for the preceding fiscal year, which is not the case for PIPEDA.

In this context, the ETHI made the following recommendations:

  • That the government work with its European Union counterparts to determine what would constitute adequacy status for PIPEDA in the context of the new GDPR;
  • That the government determine what changes to PIPEDA, if any, will be required in order to maintain its adequacy status under the GDPR;
  • That if it is determined that the changes required to maintain adequacy status are not in the Canadian interest, the government create mechanisms to allow for the seamless transfer of data between Canada and the European Union;
  • That the government work with the provinces and territories to make sure that all relevant jurisdictions are aware of the requirements for adequacy status to be granted by the EU.

This new report gives a preview of what the upcoming amendments to PIPEDA could look like. In some cases, these amendments may be inspired by the upcoming new European privacy protection framework, especially in light of the Commissioner Therrien’s statement before the ETHI that reassessing PIPEDA’s adequacy status "is a pressing issue with possible far-ranging implications for Canada’s trade relationship with the EU."

Organizations doing business in Canada should therefore start to prepare to the possibility of a more stringent regime, including stricter consent rules (particularly around the use of personal information for secondary purposes); having to comply with new requirements and individuals’ rights, such as the right of portability and the right to erasure; as well as ensuring that they are compliant to avoid punitive fines, in light of the fact that Canada is currently considering a potential shift from an ombudsman model to a regulator with the power to impose administrative fines. The ETHI did not take a strong stance on the issues of de-identification and processing for legitimate business interests, so perhaps the final review of PIPEDA will provide more details in these areas.