DMA Scotland: Legal update


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DMA Scotland: Legal update

  1. 1. Data protection 2013 Friday 8 February #dmadata Supported by DMA Scotland legal update Wednesday 28 May 2014, Standard Life House #dmascotland
  2. 2. 8.30am Registration and breakfast 9.00am Welcome from the chair Lynsey Fusco, CCRM manager, Visit Scotland 9.05am EU draft Data Protection Regulation – the current position, potential changes and Impact on the industry James Milligan, Solicitor, DMA 9.45am Information Commissioner’s Office – trends and issues Maureen Falconer, Senior policy officer, ICO 10.25am Current legal issues affecting the direct marketing industry James Milligan, Solicitor, DMA 11.10am Questions 11.30am Closing comments from the chair Lynsey Fusco, CCRM manager, Visit Scotland Agenda
  3. 3. Welcome from chair Lynsey Fusco, CCRM manager, VisitScotland & Chair of DMA Scotland council #dmascotland
  4. 4. EU Draft Data Protection Regulation – the current position, potential changes and impact on the industry James Milligan, Solicitor, DMA #dmascotland
  5. 5. Impact of the new Data Protection Regulation – Why now? • Data Protection Directive 95/46/EC ("Directive") (implemented in UK by 1998 Data Protection Act) showing its age • New technologies and more complex information networks • Lack of common European law and differences in national implementation • Consumer concern over privacy • Data protection now a fundamental right under EU Charter of Fundamental Rights 5
  6. 6. EU data protection reform timeline • Jan 2012 -first draft Data Protection Regulation ("DPR") • December 2012-amendments suggested by the Rapporteur of EC Committee on Civil Liberties, Justice and Home Affairs ("LIBE Report") • February – May 2013 – Reported that 4000 amendments tabled • May 2013- partial "compromise" draft from Justice and Home Affairs Ministers ( "CD" ) • October 2013 -LIBE voted on amendments • October 2013 – Heads of Government meeting • December 2013 – Inconclusive Justice and Home Affairs Ministers meeting 6
  7. 7. EU data protection reform timeline • Jan 2014 Civil servants working group meetings continue • Mar 2014 Inconclusive Justice and Home Affairs Ministers meeting • Mar 2014 MEPs adopted LIBE report • May 2014 European Parliament elections • June 2014 Next Justice and Home Affairs Ministers Meeting • Nov 2014 New European Justice Commissioner and other Commissioners take office • Dec 2014 Justice and Home Affairs Ministers agree position • 2015 Regulation is passed in Brussels • 2017 Implemented into UK law
  8. 8. 8 8 • LIBE report adopted by all MEPs March 2014 • Proposes a number of changes to European Commission original text • Majority of changes favour consumer rather than businesses Changes proposed by the European Parliament to the draft Data Protection Regulation (LIBE Report)
  9. 9. The "compromise draft" agreed by EU Justice Ministers 31 May 2013 • "More business friendly" compromise draft ("CD") is only partial: Chapters I-IV • More changes to Chapters I-IV may be needed once the remainder has been updated • Regulation or Directive? – wording proposed allows for Regulation to be transformed into a Directive (supported by 8 member states) • June 2014 Chapter V may be added to draft 9
  10. 10. Headline proposed changes • Expanded definitions: “personal data” and “data subject” • Explicit consent required • Right to be forgotten • Greater emphasis on accountability • Notification of data security breaches • More onerous sanctions for breach • Data processors directly covered 10
  11. 11. Consent Consent: Current Position Consent: Proposed Position - Freely given, specific, informed indication of the data subject’s wishes - Explicit consent required for sensitive personal data only -Freely given, specific, informed and explicit indication of data subject’s wishes -Given either by a statement or a clear affirmative action - Data controller / data subject relationship to be taken into account - Burden of proof on controller to demonstrate consent 11
  12. 12. Introduction of opt-in/explicit consent • Review language used at point of data collection to ensure that consent is explicit /opt-in • Do people understand what they are agreeing to? – nation of liars • Think about how you will update legacy databases • Children – consent wording for under 13’s if offering them an information society service 12
  13. 13. Key points in the draft Regulation IP addresses and cookies • Definition of personal data extended so could cover some IP addresses and cookies as “online identifiers” • But IP addresses identify a device not an individual + some IPs are general • Huge implications for digital marketers • Web analytics & profiling made much more difficult, if not impossible • Interaction with new cookie rules problematic 13
  14. 14. IP addresses and cookies • Think about how you will deal with extension to Include location data, IP addresses, cookies, online identifiers • Pseudonymous/annonymous data – will you be able to take advantage of exceptions? 14
  15. 15. • Right for individuals to request organisations to delete any information held on them • Drafted with social media in mind – but goes beyond this • Problem of information that has already been passed on to third parties • Possibility of misleading consumers by raising unrealistic expectations • Changes to current text likely • European Court of Justice Google Spain case 15 Key points in the draft Regulation The right to be forgotten
  16. 16. The right to be forgotten • Prepare to respond to requests • Deletion/ suppression • Other legal requirements to keep information e.g. accounting, tax, money-laundering 16
  17. 17. Key points in the draft Regulation Data Breach notification • Any data security breach to be notified to ICO and the individuals concerned within 24 hours • Report to cover: • nature of breach • number of data subjects • categories of data • proposed mitigation • Not always obvious if there has been a breach or how extensive it is • Problem of notification fatigue • No threshold level specified 17
  18. 18. Data security breach notification • Introduce breach notification detection procedures • Think about how you will notify data protection authorities and affected individuals within whatever timescale is agreed • Develop/review your data breach response plan 18
  19. 19. Key points in the draft Regulation Subject Access Requests (SARs) • Data subjects to be able to request full information on data held on them free of any charge • Currently can levy a £10 fee – doesn’t cover cost but deters time-wasters, frivolous or vexatious requests • Costs organisations £50 million p.a. now to meet SARs • Proposal that can provide data in electronic form if data subject agrees to this • Particular problem for financial services with mis-selling issues and claims management firms 19
  20. 20. Subject Access Rights • New Regulation may lead to increased public awareness of rights e.g., right to request information ( Data Subject Access Requests, Right to be forgotten) • Plan ahead for increase in queries from clients/public • Training for client/customer service teams • Amend wording on privacy policies/data collection notices to take account of new rules on profiling. 20
  21. 21. Key points in the draft Regulation Compliance obligations • Data protection obligations now shared between agencies and clients, for example if holding client’s database • Privacy by Design/Privacy by Default • Appointment of DP officer (250+ employees) - 2 year appointment - Independent reporting to board - Information and training - Maintenance of documentation - Data protection impact reports • International transfers of data outside EEA – law would apply to any processing of data or EU citizens 21
  22. 22. Compliance obligations • Review amount of data being processed, erasure policies and data retention policies • Requirement to demonstrate compliance will mean more documentation in respect of policies and procedures • Contact centres, mailing houses, email/SMS broadcasters will also be subject to these new obligations, especially in respect of data security • Review staff training in data protection. • Appointment of a data protection officer? • Risk- based approach to compliance and data protection impact assessments 22
  23. 23. Key points in the draft Regulation Proposed enhanced sanctions • Up to €500k or 1% annual worldwide turnover intentional or negligent failure to respond to subject access requests in accordance with Regulation • Up to €1m or 2% of annual worldwide turnover for other compliance failures • Depends on:- - size of organisation involved - nature and gravity of breach - whether intentional or negligent - technical and organisational measures - previous breaches - co-operation with ICO 23
  24. 24. Enhanced sanctions/fines • Watch out if you get it wrong! • Increase focus on compliance – board level issue • Review internal policies and procedures 24
  25. 25. Key Points in the draft Regulation Delegated Acts • Many details to be implemented through additional delegated legislation – some 45 Delegated Acts mentioned. • Details will not be clear until Regulation is passed • These areas of secondary legislation will include: - powers to specify further procedures - technical standards for Privacy by Design/Default - specification of lawful processing condition - additional responsibilities for national data protection authorities; etc. • European Commission taking significant powers to itself away from the national authorities - raises serious issues of subsidiarity and accountability • National governments and Data Protection Authorities are concerned 25
  26. 26. • Main establishment/ one- stop shop provisions • Think about which country’s national data protection authority will be lead regulator • Possibility of changing country where head office is located • Review arrangements for transfers of data outside EEA (28 Member States of EU + Iceland ,Liechtenstein, Norway) • Global group – application to EU citizens’ personal data. • European Court of Justice Google Spain right to be forgotten case - link between Google Spain and Google USA 26 Key Points in the draft Regulation Cross – border issues
  27. 27. Impact on direct marketing • Existing databases may not be usable: could decimate prospect lists. Legacy data? • No tracking data, profiling or segmentation without explicit consent – less targeted and more generic communication? • List broking severely restricted • New information requirements and rights of the data subject, e.g Right to be Forgotten • Increased costs - £76,000 per business to comply + possible £47 billion of lost sales in UK 27
  28. 28. Draft Regulation - DMA View • DMA welcomes the Commission’s aim to reduce red tape and simplify bureaucracy – but proposals do not achieve that: overly strict, bureaucratic and unworkable • Needs to be a fair balance between privacy and legitimate business interests • Current proposals will stifle innovation, add considerably to business costs and place unnecessary obstacles to e- commerce jobs growth • Will be particularly harmful to SMEs – MoJ says demonstrating compliance will cost £10m p.a. • Hard to say how Commission’s estimate of 2.3 billion euro saving to businesses was calculated 28
  29. 29. Ministry of Justice • Disagrees with Commission’s 2.3bn Euro savings – burdens imposed will far outweigh net benefits: in UK cost @ £100- 360 million • Many unintended consequences, esp for SMEs • Changes to consent, profiling & definition of personal data particularly costly to industry • Likely knock-on effects for growth in technological sector and internet economy • Regulatory Impact Assessment quotes DMA’s figures & examples • Impact on behavioural advertising • Creates unrealistic expectations for consumers – R2BF proposal is “unworkable” 29
  30. 30. Key lobbying messages • Data is essential for economic growth - UK has leading role in EU digital economy - SMEs particularly affected • Transparent and responsible use of data is a vital business practice - In industry’s interests to handle data with care - Self-regulation has valid role to play - Regulation will not stop bad players • The proposed regulation is bad for consumers - Would damage users’ online experience - Danger of tick-box culture & unrealistic expectations • Need a proportionate data regime that recognises that not all data is the same - Personal data, sensitive data, anonymous/pseudonymous data - Different levels of protection required 30
  31. 31. Lobbying activity • In Brussels with key individuals in Council, Commission & Parliament, e.g. MEPs & advisers; party groups • In UK, Ministers in MoJ, DCMS, BIS, HM Treasury + Opposition spokesmen • Alliance of interests – UK Data Group, FEDMA, CBI, etc. - for collective lobbying of Council and Parliament & lobbying directly where there is no national DMA • Position papers on priorities for industry + draft amendments to text • Research on consumer attitudes to privacy and on economic value of the dm industry 31
  32. 32. DMA lobbying toolkit 32
  33. 33. Contacts James Milligan, Solicitor, DMA T - 020 7291 3347 Legal Advice Helpline T - 020 7291 3360 33
  34. 34. Information Commissioner’s Office - Trends & issues Maureen Falconer, Senior policy officer, ICO #dmascotland
  35. 35. Information Commissioner’s Office Trends & Issues Maureen H Falconer Senior Policy Officer
  36. 36. Key statistics - DPA
  37. 37. Key statistics - DPA
  38. 38. Key statistics - DPA
  39. 39. Key statistics - PECR
  40. 40. Key statistics - PECR
  41. 41. Key statistics - PECR
  42. 42. Key statistics - Enforcement
  43. 43. Key statistics - Enforcement
  44. 44. Trends - what goes wrong? Lack of training, both DPA and job specific eg data ‘hidden’ in spreadsheets; Inadequate, outdated or poorly communicated policies eg homeworking; Insufficient procedures eg checking documents before posting; Failure to implement appropriate technical solutions eg encryption & updates; Absent, inadequate or unclear contracts with data processors eg what to do with data at contract end/termination. All of the above have featured in CMPs issued by the ICO
  45. 45. Wheel of data ‘misfortune’ *Adapted from David O’Hare (2000) the ‘Wheel of Misfortune’; a taxonomic approach to human factors in accident analysis in aviation and other complex systems. Ergonomics, 2000, vol 43 No 12 2011-2019 External Stakeholders External Pressures Tertiary Layer of Cause Secondary Layer of Cause Task (policies & procedures) Equipment / means (Failure to secure appropriately) Management (lack of commitment to DPA) Technical weakness (failure to encrypt) Training & EducationThe Human Factors (distractions, missed steps etc.)
  46. 46. Regulatory action options Closed – compliance likely Closed – compliance unlikely: No further action taken Remedial action taken Referred to Enforcement – Civil investigation team: Information Notice Undertaking Enforcement Notice Civil Monetary Penalty
  47. 47. Framework for CMPs Step 1 • Seriousness of the contravention Step 2 • Aggravating and mitigating factors Step 3 • Financial impact on the data controller Step 4 • Underlying objective Step 5 • Final determination
  48. 48. Factors for consideration: the nature of the contravention or breach; the scope of the potential harm caused; and consideration of what is reasonable and proportionate. Rating bands: Serious = £40,000 to £100,000; Very serious = more than £100,000 but less than £250,000; Most serious = £250,000 up to the maximum of £500,000. Step 1 • Seriousness of the contravention
  49. 49. Factors for consideration: The behaviour of the data controller following the breach; Whether the data controller had previously declined to submit to an audit; The general record of the data controller; and Any other factors taken into account that were not considered at Step 1. Step 1 • Aggravating and mitigating factors
  50. 50. Factors for consideration: Any proof of genuine financial hardship which has been supplied. The Information Commissioner will not impose a CMP that would cause a business to cease trading! Step 1 • Financial impact on the data controller
  51. 51. Factors for consideration: Is the level consistent with comparable cases? Is the level sufficient to promote compliance with the Act? It is important that there is consistency in the monetary penalties set by the ICO. Step 1 • Underlying objective
  52. 52. Factors for consideration: Is the level reasonable and proportionate? Is the level consistent with similar cases? Is the level sufficient to promote compliance with the Act? Final sign-off is undertaken by the Information Commissioner or his Deputy. Step 1 • Final determination
  53. 53. Amber UPVC Fabrications Ltd: CMP - £50,000 June 2006 - First complaints about unsolicited marketing calls received. May 2011 - April 2013 - 513 complaints to TPS from registered individuals who had received unsolicited direct marketing calls from Amber Windows. On 377 occasions Amber Windows failed to respond to the TPS. When it did, the following excuses were made: On 67 occasions Amber Windows said it was a “programming error”. On 37 occasions Amber Windows said “we use Telephone Europe Ltd for outbound calling”. On 24 occasions Amber Windows said it was “human error”. On 3 occasions no reason was given. On 3 occasions Amber Windows claimed that “there is no record of the call being made by us”. On 1 occasion Amber Windows claimed “we had prior consent to call this number”. On 1 occasion Amber Windows stated that “they need more information”.
  54. 54. First Financial (UK) Limited: CMP - £175,000 February - March 2013 First Financial instigated the sending of or sent 4,031 unsolicited direct marketing texts to mobile phone subscribers who had not consented to receive them. It used unregistered SIM cards for the campaign to avoid detection by the mobile telephone networks’ spam detectors. The texts were sent at inconvenient and unsociable hours of the morning and evening and at weekends e.g. 01:00 hours; The texts interrupted people’s sleep; The texts caused particular problems for vulnerable recipients; People texted ‘stop’ only to receive the same message minutes later; The texts, especially when sent at unsociable times, caused unnecessary alarm and fears for the welfare of relatives particularly where the recipient’s number was used only for contact with a sick, elderly or otherwise vulnerable relative or close friend; The texts were designed to appear as if they were from a friend and were deceptive;
  55. 55. Tameside Energy Services Ltd: CMP - £175,000 May 2011 - January 2013 TPS received 1,062 complaints from persons registered with them who had received unsolicited direct marketing calls. 612 of these were during the time when Tameside was engaged in correspondence with the Commissioner about the contraventions. Tameside have held a TPS licence since March 2006, and, in spite of assurances to the contrary, did not start downloading the list until January 2013. The number of complaints against Tameside increased during the period when the correspondence referred to was entered into, rather than decreased.
  56. 56. Better Together Campaign Sent out 100,000 text messages promoting the Better Together Campaign. Complaints made to ICO by rival political campaigners and members of the public who received the texts. Extensive investigation by ICO discovered some permissions given as long ago as 2006 and from unrelated sources.
  57. 57. Better Together Marketing Campaign – data sources (2006-2013) Better Together Marketing Company Data Company Marketing Company Marketing Company Data Company Data Company Media Company Insurance Company Data Company Marketing Company Price Comparator Data Company Data Company Loan Company Catalogue Company Marketing Company Car Company Data Company Finance Company Loan Company Telephone Marketing Sales Company Insurance Company Media Company Loan Company Marketing Company Marketing Company Marketing Company Finance Company Car Insurance Bank Car Insurance Price Comparator Car Loans Data Company Marketing Company Graphics Company Travel Company Insurance Company Price Comparator Media Company Media Company Instigator Sender List broker Data collector
  58. 58. Keep in touch Scotland Office: 45 Melville Street Edinburgh EH3 7HL T: 0131 244 9001 E: Subscribe to our e-newsletter at or find us on…
  59. 59. Current legal issues affecting the direct marketing industry James Milligan, Solicitor, DMA #dmascotland
  60. 60. What we are going to look at Current UK ICO Issues Changes to UK Consumer law Nuisance calls Financial services Other Issues – electoral roll, employment, environment and postal New DMA website 60
  61. 61. Current UK ICO issues Direct marketing guidance Privacy impact assessments Annonymisation code New approach to data protection concerns ICO 2020 Strategic Vision CCTV Code of Practice Protecting Personal Information in online services 61
  62. 62. Direct marketing guidance • ICO interpretation does not change law • Issued 9 September2013 • Retrospective , transitional period • Respect consumer expectations and preferences • Tightening up of third party consent for digital marketing • Time limits for consent • Proof of consent • DMA clarified issues with ICO • Supplementary DMA guidance issued May 2014 62
  63. 63. Privacy Impact Assessment Code of Practice • Published 25 Feb 2014 • Annex 1 – PIA screening questions • Annex 2 – PIA template • Annex 3 – PIA and data protection principles • Relevance to draft Regulation 63
  64. 64. Anonymisation Code of Practice • Issued 20 November 2012 • Re-identification – "motivated intruder" test and risk assessment of future identification • Big Data – does it make annoymisation of data impossible? • Consent – "legitimate interests“ • Pseudonymous and annoymous data may be included in draft Regulation • Currently ICO asking for comments prior to review 64
  65. 65. ICO- How we deal with complaints and concerns- A guide for data controllers • ICO wants organisations to handle their own data protection complaints and concerns in the first instance • ICO will direct members of public to contact organisation in first instance • If public not satisfied then may follow up with ICO • ICO will then use explanation you gave them to make it’s decision about your organisation's compliance with DPA • Need for your organisation to demonstrate to its customers and to ICO that you understand your information rights obligations • Link to ICO’s plan – more for less 65
  66. 66. ICO 2020 Strategic vision • Challenges • What and how the ICO expects to do over next 5 years 66
  67. 67. CCTV Code of Practice Consultation • Revision of existing code of practice to take account of new technologies, including drones • Consultation closes 1 July 2014 67
  68. 68. Protecting personal data in online services: learning from the mistakes of others • ICO has identified eight important areas of computer security that have arisen during investigations of online breaches, Examples of problems and best practice • Areas are: • Software updates • SQL injection • Unnecessary services • Decommissioning of software or services • Password storage • Configuration of SSl and TLS • Inappropriate locations for processing data • Default credentials 68
  69. 69. Changes to Consumer Law Consumer Protection Amendment Regulations Consumer Contracts Regulations Consumer Rights Bill 69
  70. 70. Consumer Protection Amendment Regulations • Come into force 1 October 2014 • Rights for consumers for redress in respect of aggressive and misleading practices • Aggressive and misleading practices defined in Consumer (Protection from Unfair Trading) Regulations • Redress includes: • Right to end the contract and get a full refund • Right to a discount depending on seriousness of practice • Right to seek damages 70
  71. 71. Consumer Rights Bill • Now delayed until later in 2014 • Will be carried over into 2014-15 Parliamentary Session • Updating and reform of UK based consumer law • Increase consumer confidence • Improve enforcement powers 71
  72. 72. Nuisance Calls 72
  73. 73. Nuisance Calls • 2013 2 parliamentary inquiries • All Party Parliamentary Group on Nuisance Calls • Commons Select Committee on Culture Media and Sport • 2014 Government Published Nuisance Call Action Plan • Which? Taskforce on Consent • ICO raided a SIM card ‘farm’ last week • Make sure you are compliant with legal requirements in this area 73
  74. 74. Financial Services Financial Conduct Authority and Consumer Credit Regulation Mortgage Credit Directive 74
  75. 75. FCA replaces FSA • New Vision – “To make relevant markets work well so consumers get a fair deal” • Consumers get financial services and products that meet their needs from firms they can trust • Markets and financial systems are sound and stable and resilient with transparent pricing information • Firms compete effectively with the interests of their consumers and the integrity of the market at the heart of how they run their business 75
  76. 76. Other issues Electoral register Employment Environment Postal 76
  77. 77. Other issues • Electoral register – Electoral Registration & Administration Bill – introduction of individual electoral registration and system opened up for digital application. – Edited version of register will be kept but issue on opt- outs. • Employment – TUPE – Government consultation – outcome no changes • Environment – Unaddressed mail preference service - awaiting DEFRA input 77
  78. 78. Other issues • Postal – Postcode address file – new changes. – Simplify licensing process – Change payment structure 78
  79. 79. New DMA Website 79
  80. 80. A central hub for 1 to 1 to Millions Communication
  81. 81. Contacts James Milligan, Solicitor, DMA T - 020 7291 3347 Legal Advice Helpline T - 020 7291 3360 81
  82. 82. Questions #dmascotland
  83. 83. Closing comments from chair Lynsey Fusco, CCRM manager, VisitScotland & Chair of DMA Scotland council #dmascotland