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Privacy Law and your business

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Privacy law in Canada is increasingly important and increasingly complex. Understanding how privacy law affects your business is crucial to maintaining good relations with your clients, and regulatory authorities and the general public. To help you stay on top of this essential area, new developments in three critical areas – spam protection, protected activity and access to information requests – are outlined below.

CANADA’S ANTI-SPAM LEGISLATION WILL SOON BE IN FORCE – ARE YOU READY?

Unwanted electronic communications, or spam, accounts for a majority of the electronic communications being transmitted on the Internet, clogging the flow of ecommerce. As businesses become more reliant on the Internet for all facets of commerce, including marketing, sales, fulfillment and customer service, threats to the network such as spam and spyware can have a real impact on the bottom line.

Canada’s new Anti-Spam Act

Many industrialized countries, including the US, have enacted legislation to combat spam and other malicious Internet practices. Canada’s new Anti-Spam Law (CASL) represents Canada’s efforts to fight spam, and is considered to be one of the toughest anti-spam laws in the world. CASL received Royal Assent in December 2010, but is not expected to come into force until 2013, once a second draft set of regulations prepared by Industry Canada has been subject to public comment, revised and approved. CASL is federal legislation that will affect all Canadian enterprises that conduct business online by sending or receiving electronic communications.

CASL will attempt to limit the volume of spam cluttering inboxes while allowing users the opportunity to consent to receiving commercial messages. The purpose of CASL is to prohibit commercial electronic messages from being sent without the prior consent of the recipient and to provide rules for those types of messages. CASL also restricts the installation of spy-ware, address-harvesting and pharming (faking another legitimate website).

CASL regulates to whom a commercial message may be sent and imposes potential penalties when a user receives a message that does not comply with the new rules. Although the precise content rules are yet to be determined, messages will likely have to include the sender’s name and contact information as well as an “unsubscribe” option or other mechanism for withdrawing consent.

Consent to receive a commercial electronic message may be implied in certain circumstances, such as where the parties have had a previous business relationship in the last two years, or where message recipients have published or disclosed their email addresses without stating they do not wish to receive unsolicited commercial messages. Implied consent also applies to existing “non-business” relationships, such as those arising from making donations, doing volunteer work or become a member of an organization.

What’s covered?

CASL applies not only to emails, but also to instant messages, voicemail and messages sent to similar accounts for the purpose of encouraging participation in a commercial activity. This includes offers to sell a product or service, or advertising or promoting products, services and people.

Certain types of commercial messages, however, are exempt from CASL, such as messages providing quotations or information about previously completed transactions, messages completing or confirming transactions and messages related to an employment relationship. Messages sent to someone with whom the sender has a personal or family relationship are also exempt, but the precise definitions of such relationships have not yet been determined.

CASL widely casts its shadow and applies to many forms of electronic communication by broadly defining key concepts. Those engaging in Internet marketing will be particularly hard-hit by the new rules as will professionals using email for communications about their services.

Why should I care?

CASL gives the government broad investigative and administrative powers and imposes substantial penalties for breaches of the rules: up to $100,000 for a first offence by a corporation and $250,000 for a second ($10,000 and $25,000 for offences by an individual). Notably, directors of a corporation may be held personally liable for violations of CASL, unless a director can successfully prove a due diligence defence. CASL also provides individuals with a private right of action against those engaging in, for example, spamming and hacking and installing malware and spyware.

Considering the breadth of CASL and the potential for severe penalties and director liability, it is important to take stock of your business’ current practices with respect to electronic communications:

  • What types of “commercial electronic messages” do you currently send?
  • Which of your business contacts have an existing business relationship with you?
  • What contact information and opt-out mechanisms will you include on commercial electronic messages, websites and agreements once the new rules take effect?
  • How will you track when a contact has provided or denied consent to receive messages from you?
  • How will you develop internal guidelines for electronic messages and train your staff?

The members of our Privacy Practice Group are available to assist you in preparing for CASL, reviewing your existing and proposed practices and delivering staff training.

PRIVACY LEGISLATION MAY BE BROADER THAN YOU THINK

Since 2004, private sector organizations in Ontario have been subject to the requirements of the Personal Information Protection and Electronic Documents Act ("PIPEDA") with respect to personal information that is collected, used or disclosed in the course of “commercial activities".

PIPEDA defines commercial activity as "any particular transaction, act or conduct or any regular course of conduct that is of a commercial character, including the selling, bartering or leasing of donor, membership or other fundraising lists."

A commercial activity is easy to identity in many cases, such as when monetary consideration is exchanged for a product or service. In other cases, it may appear unclear whether an activity is commercial in nature, such as when non-monetary consideration is exchanged, or when a not for- profit organization engages in charitable activity.

In May 2012, the Office of the Privacy Commissioner of Canada ("OPC") released an interpretation guide regarding the concept of “commercial activity” within the meaning of PIPEDA. The guide, which is available on the OPC website, provides helpful examples of when the OPC will consider an activity commercial in nature. The OPC includes the following as examples of commercial activity to which PIPEDA applies:

  • a non-profit daycare organization providing childcare services, even though it was subsidized by a municipality;
  • a landlord collecting financial and other information about tenants in order to administer a lease or insure property; and
  • a dog breeder posting endorsements from previous customers on her website.

What you can do

As a reminder, all organizations engaged in the course of commercial activity in Ontario should ensure that they are meeting the requirements of PIPEDA, including having an updated privacy policy in place, appointing a privacy officer, and conducting privacy training of their staff.

It may have been some time since your organization has reviewed its privacy policy or educated its staff on compliance with privacy law and policy. Violations of personal privacy involving the inappropriate disclosure of personal information are not uncommon. Information can be inadvertently disclosed, such as when an employee loses an unprotected mobile device, or it can be deliberately stolen by a rogue individual. Consider whether a review of existing internal privacy policies and practices, or refresher privacy training, may be appropriate in your organization.

PROTECTING YOUR BUSINESS INFORMATION IN THE HANDS OF THE GOVERNMENT

Access to information legislation enables information seekers to gain access to data and documents in the hands of federal, provincial and municipal governments, most government agencies and government-regulated entities. As many governmental bodies collect information from private businesses, your information could be the subject of an access request. The government has little choice about whether to comply with such requests, and the cost for making a request is minimal. No wonder, then, that business competitors take advantage of the process.

Business information about “third parties” (like you)

If a government body has documents in its possession that were provided by a “third party” (a non-government source such as a private business), the third party will be given a brief opportunity to object to disclosure of its information. The government body will consider the objection and then notify the third party of its decision to release or withhold the disputed information. If it disagrees with this decision, the third party has a time-limited opportunity to appeal.

If your business relies on government contracts, you have probably already faced requests seeking disclosure of your business information. As well, your business model, practices and even the manner in which you prepare your bid documents have no doubt been honed by your company over the years in order to secure the best outcome in government bid processes. This information is extremely valuable to you and should only be disclosed to the public or your competitors where the legislation absolutely requires it.

Contrast the obvious value of this information with the funds budgeted for responding to access requests. When faced with an access request, most companies will agonize over the potential cost of disclosing sensitive information to the public. However, most companies also do not wish to spend much money on responding to such requests or on disputing the government’s decision to release their information.

When and how to fight back

In fact, some access requests warrant the expense and some do not. How do you know which requests to fight and to what extent?

Two guidelines:

1. Become familiar with your contract terms. Some government contracts specify what information will be subject to disclosure from the outset of the bidding process. These terms are usually contained in the “general contract terms” which are referenced by number, not set out in full in the standing offer documents. The general contract numbers need to be cross-referenced to the applicable government index of contract terms in order to see the full language.

2. Become familiar with the access to information regime. Under the federal Access to Information Act, your objection to a proposed disclosure must fit under section 20 which protects “third party confidential information”. The scope of this protection has been the subject of court and tribunal decisions. For example, the unit pricing and total cost of a contract for services is often disclosed, but the service pricing model breaking down the unit pricing to show salary, profit, overhead, etc., is protected. Reported decisions may assist you in forming arguments to resist disclosure.

The most valuable way in which to ensure that your access requests are handled appropriately is to consult a lawyer about the merits of resisting disclosure in each case. There are several reasons why this is a best practice for your company:

1. Using a lawyer at the outset of the access process helps you avoid rushing to meet the strict deadlines imposed by the legislation and allows you to have an early discussion about your concerns and the possible your written submissions.

2. Navigating the applicable legislation and legal tests justifying non-disclosure can be complicated. Knowing the right wording and referencing previous decisions often succeeds in influencing the decision maker in your favour;

3. Using the same lawyer repeatedly allows for familiarity with your business and its sensitive information, which in turn expedites response time and legal analysis required for additional requests;

4. Your lawyer may also develop a relationship with the government body and, sometimes, the decision-makers themselves, particularly if it comes to expect that well reasoned and complete objections are being made on your behalf. This can provide your lawyer with an early opportunity to address the decision-makers’ concerns and provide missing information before a formal decision is rendered.

A small investment in legal advice at the start of the first access process can go a long way in protecting your business’ valuable and sensitive information from competitors.


Pallett Valo LLP Privacy Law Group

Pallett Valo LLP's Privacy Law Group advises and supports private sector organizations to comply with their obligations under the Personal Information Protection and Electronic Documents Act. We assist our clients in developing privacy policies and practices to meet strategic business needs and to ensure compliance with privacy legislation. We are also experienced in advising clients regarding the Freedom of Information Act and Protection of Privacy Act and the Municipal Freedom of Information and Protection of Privacy Act.

Contact Members of the Privacy Law Group

Andy Balaura abalaura@pallettvalo.com
Direct Dial: 905.273.3022 Ext. 225

 

This article provides information of a general nature only and should not be relied upon as professional advice in any particular context. For more information about Privacy Law, contact a member of our Privacy Law Group at 905.273.3300.

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