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Customer alert: Canadian Privacy Commissioner publishes policy on reporting data breaches

Canada's new binding reporting obligations under the Personal Information Protection and Electronic Documents Act (PIPEDA) will enter into force on 1 November 2018. Early this week, the Canadian DPO published a guide providing an outline of what businesses should know about PIPEDA's new disclosure needs in order to (1) alert the DPO of specific violations, (2) inform data subjects, and (3) maintain a record of all violations for at least two years.

Although PIPEDA's text is not specific about its geographic scope, case law indicates that entities that collect, use, or otherwise divulge personally identifiable information from Canadians in the course of business operations are required to comply with legal process served on PIPEDA. The new directive requires businesses to inform the Data Protection Officer of Canada and the data subjects "as soon as possible" of events that constitute a "real threat of significant harm" to the data subjects.

"Substantial damage" is understood to mean "personal injury, degradation, reputational or relationship injury, job losses, commercial or occupational opportunity, monetary losses, identification fraud, adverse credit impact and deterioration or disappearance of ownership. "According to this Directive, the sensitivities of the information concerned and the likelihood that information will be abused are important determinants in determining whether reporting is necessary.

Enterprises must also maintain two years of fine-grained infringement record and make sure that their third parties comply with PIPEDA's policies. This guide provides some insight into the situations in which a business may collect and disclose personally identifiable information to third parties. It is typical that the entity that initially gathers or receives the personally identifiable information is eventually accountable for complying with reporting and recording obligations, even if the third person is violated in the course of the entity's data use.

If, for example, a business transfers personally identifiable information to a third provider and the third provider uses or transfers that personally identifiable information in a way that goes beyond the extent of your business's use of it, the third provider may be the controller. Businesses should therefore make sure that their agreements with external controllers comply with these new requirements and clear the extent of the use of personally identifiable information gathered during the course of the relation.

In addition, the EDPS proposed that the new requirement should cover monetary penalties for insufficient privacy rules, rather than only for not reporting infringements once they have occurred. Making sure your disaster recovery plans reflect the latest legislative changes is critical to safeguarding your business in the face of a potential cyber attack or vulnerability.

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