With the new GDPR legislation, business owners and business managers must follow a new set of complex obligations to ensure customer information is protected otherwise they risk large fines.
Richard J Pickul
What is GDPR?
The GDPR (General Data Protection Directive) is a new EU Regulation which will replace the 1995 EU Data Protection Directive (DPD) to significantly enhance the protection of the personal data of EU citizens and increase the obligations on organisations who collect or process personal data. It applies to all businesses and comes into force on the 25th May 2018. Previously, the 1995 Directive applied to the same type of data however the GDPR is further reaching and bolsters the core requirements regarding customer data.
What was around before GDPR?
GDPR is the topic of 2018 but were you aware that we’ve had regulations governing data protection requirements for a long while already. The 1995 EU Data Protection Directive will be replaced by the GDPR in May 2018, the Directive of personal data by organisations for over two decades. Since the GDPR builds on and improves these base principles, we recommend you familiarise yourself with the current laws before you dive into the changes under the GDPR.
Does GDPR apply to you?
The previous legislation (from 1995) governs entities within the EU, the geographical scope of the GDPR is far wider in that it will also apply to non-EU businesses who 1) market their products or services to folks in the EU, or 2) monitor the behavior of people in the EU. Simplified, even if you’re based elsewhere in the world, if you control of process the data of EU citizens, the GDPR will certainly apply to you and your business.
Important Changes Under GDPR
The GDPR ramps up the standard for disclosures when obtaining consent, as it needs to be “freely given, specific, informed and unambiguous,” with controllers using clear and plain legal language that is clearly distinguishable from other matters. Whenever a data subject is about to submit their personal information the data controller (usually a company) has to make sure the data subject has given their consent. Controllers will also be required to provide evidence that their processes are compliant and followed in each case. Perviously, under the DPD, consent could be inferred from an action of inaction in circumstances where the action or inaction clearly signified consent. Thus, the Directive left open the possbiilty of “opt-out” mechanism. However that will change under the GDPR which requires the data subject to signal agreement by ‘a statement or clear affirmative action’.
Essentially, your customer cannot be forced into consent, or be unaware that they are consenting to processing of their personal data. They must also know exactly what they are consenting to and they must be informed in advance of their right to withdraw that consent. Obtaining consent requires a positive indication of agreement – it cannot be inferred from silence, pre-ticked boxes or inactivity. This means that informing the user during the opt in is becoming more important in the future.
New Rights for Individuals
The regulation also builds in two new rights for data subjects: a “right to be forgotten” that requires controllers to alert downstream recipients of deletion requests and a “right to data portability” that allows data subjects to demand a copy of their data in a common format. These two rights will now make it easier for users to request that any information stored should be deleted or that information that has been collected should be shared with them.
Data subjects always had a right to request access to their data. But the GDPR enhances these rights. In most cases, you will not be able to charge for processing an access request, unless you can demonstrate that the cost will be excessive. The timescale for processing an access request will also drop to a 30 day period. In certain cases, organisations may refuse to grant an access request, for example where the request is deemed manifestly unfounded or excessive. However, organisations will need to have clear refusal policies and procedures in place, and demonstrate why the request meets these criteria.
Privacy by Design and DPIA
There are several new principles for entities that handle personal data, including a requirement to build in data privacy “by design” when developing new systems and an obligation to perform a Data Privacy Impact Assessment (DPIA) when processing using “new technologies” or in risky ways. A DPIA is the process of systematically considering the potential impact that a project or initiative might have on the privacy of individuals so that potential privacy issues can be identified before they arise, giving the organisation time to come up with a way to mitigate them before the project is underway.
Data Privacy Officer
On the security side, the GDPR will require many businesses to have a Data Privacy Officer (DPO) to help oversee their compliance efforts. Organisations requiring DPOs include public authorities, organisations whose activities involve the regular and systematic monitoring of data subjects on a large scale, or organisations who process what is currently known as sensitive personal data on a large scale. While the GDPR currently preserves the DPD’s approved methods for ensuring “adequacy” when transferring personal data to third countries (including the Privacy Shield and the Model Clauses), DPOs will also be helpful in overseeing a controller’s relationships with vendors who process and store personal data, helping to review vendors’ security practices and inform vendors of data subject requests.
Contracts Privacy Documentation
Since the GDPR is all about transparency and fairness, Controllers and Processors will need to review their Privacy Notices, Privacy Statements and any internal data policies to ensure they meet the requirements under the GDPR. If a Controller engages third party vendors to process the personal data under their control, they will need to ensure their contracts with those Processors are updated to include the new, mandatory Processor provisions set out in Article 28 of the Regulation. Similarly, Processors should consider what changes they’ll need to make to their customer contracts to be GDPR ready by May 2018.
One particular item in the GDPR should serve to make the lives of these DPOs easier: the GDPR’s new “one stop shop” provision, under which organizations with offices in multiple EU countries will have a “lead supervisory authority” to act as a central point of enforcement so they don’t struggle with inconsistent directions from multiple supervisory authorities.
The GDPR contains a new requirement that controllers must notify their country’s supervisory authority of a personal data breach within 72 hours of learning of it, unless the data was anonymised or encrypted. In practice this will mean that most data breaches must be reported to the DPC. Breaches that are likely to bring harm to an individual – such as identity theft or breach of confidentiality – must also be reported to the individuals concerned.
While the current legislation, the 1995 EU Data Protection Directive, governs entities within the EU, the territorial scope of the GDPR is far wider, in that it will also apply to non-EU businesses who market their products to people in the EU or who monitor the behavior of people in the EU. In other words, even if you’re based outside of the EU but you control or process the data of EU citizens, the GDPR will apply to you.
This new concept will require Controllers and Processors to be able to demonstrate their compliance with the GDPR to their local supervisory authority. Processes should be recorded, implemented and reviewed on a regular basis. Staff should be trained and appropriate technical and organisational measures should be taken to ensure and demonstrate compliance.
The importance of the GDPR’s new provisions is underscored by the new penalties it imposes for violations. Depending on the type of violation in question, controllers and processors who mishandle personal data or otherwise violate data subjects’ rights could incur fines of up to €20 million or 4% of their global annual revenue (whichever is greater).
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