Cookies and the new ePrivacy Regulation

Nigel Miller (partner)

Why is it important?

While many people may not care too much about cookies, there are a number of reasons why they are important for website owners.

First, you cannot drop a cookie without prior consent. As a result of the changes already brought in by the GDPR since May 2018, it is no longer possible to reply on implied consent for cookies (for example, deemed consent by continuing to browse the website) as the standard for consent under the GDPR is much higher and requires a specific opt-in.

Second, the issue of cookies is high on regulator’s (the ICO) agenda. While many of us suffer from “cookie notice fatigue”, and just click through to get rid of the annoying banners, there has been an increasing number of complaints about cookies to the ICO, nearly 2,000 in the past year.

Third, the ICO is also currently investigating the Adtech sector which is largely driven by cookies. While many cookies are innocuous, others are highly privacy invasive and are involved in systematic monitoring and tracking browsing across devices, device fingerprinting and online behavioural advertising. The intrusive nature of the technology makes this a priority area for the regulators. In response to this, the hugely complex adtech industry will likely be required to adapt and provide much higher levels of transparency.

Fourth, because of the GDPR level fines; there is nothing like the eye-watering fines that can be issued under the GDPR, and have been issued in relation to cookies notably by the French regulator to Google and Amazon, to get this issue high up the corporate agenda (eg CNIL – €100m Google, €35m Amazon).

And finally, the law is developing with a new ePrivacy regulation on the horizon, which we look at below.

What is the current law?

The current law is based on the EU ePrivacy Directive of 2002. In the UK, this was implemented by the Privacy and Electronic Communications Regulations, fondly known as “PECR”.

Actually, the law does not refer to “cookies” as such; the regulation is technology neutral and covers a range of cookie-like technologies. The key point is that PECR covers any technology that can “access” or “store” data on the user device – this includes smartphones, smart TVs and other devices. It can also include technologies like tracking pixel gifs, often used to track if marketing emails have been opened which can provide valuable analytics.

The key requirement under PECR is that, where you deploy a cookie, you must:

  • provide the user with clear and comprehensive information about the purposes of the cookie; and
  • get the consent of the user.

There are a couple of exceptions to this, the most important one being that you do not need consent for cookies that are “strictly necessary” for the service requested by the user.

So, cookies that are helpful or convenient but not essential, or that are only essential for your own purposes, as opposed to the user’s, will still require consent.

For example, cookies used to authenticate a user, to remember items in a shopping cart, or to remember language or other user preferences are regarded as “strictly necessary”, but cookies for analytics purposes, and advertising cookies are non-essential and need consent.

Even where consent is not a requirement, users must still be informed of the use of cookies through means of a cookie banner and policy.

PECR v GDPR

An important thing to bear in mind is that consent for cookies is needed, whether or not the cookie data involves any “personal data”.  If it does involve personal data, such as device ID, username, browsing details etc, then that will be subject to the GDPR as well as PECR.

Under the GDPR, you need a legal basis for processing personal data. Typically, for marketing, this could be either consent or legitimate interests. However, where cookies are deployed and processing of personal data is involved, then PECR trumps the GDPR. This means that, if consent is required under PECR, then consent is also the appropriate legal basis for processing personal data under the GDPR.

There is some debate about this in the adtech sector where it is argued that, while consent is needed for the cookie, “legitimate interests” could be used as the legal basis for any subsequent processing of the data. The regulator does not agree with this, but the actual legal position is not settled.

So, what do we need to do?

The first thing to do would be to carry out a cookie audit to make sure you know exactly what cookies are in use, and the purpose and duration of each. In this audit:

  • Identify any of the cookies that are “strictly necessary”, and so don’t need consent.
  • Identify any 3rd party cookies – in the case of 3rd party cookies, such as Google analytics or affiliate networks, while it is the third party that requires the consent as it is their cookie, in practice the third party requires that the site owner gets the consent on their behalf.
  • Review the consent mechanism you have on the site to make sure it is compliant – everyone seems to do this differently, and some ways are more compliant than others.
  • Review / update your cookie policy – to make sure that it meets the transparency requirement, and importantly that it is consistent with the cookies actually in use. There is no one-size-fits all for this as the policy needs to be specific to the cookies you have implemented and the purposes of those cookies.
  • Finally, you may need to carry out a data protection impact assessment under the GDPR – if the cookies involve personal data and are used for profiling for marketing or other purposes, then you may need to carry out a DPIA. Even if this is not strictly required, it can be good practice to do so to ensure that any risks are identified and any appropriate measure implemented to mitigate those risks.

How to get consent?

The consent required under PECR follows the GDPR standard, meaning it must be freely given, specific, informed, and an unambiguous indication of the end user’s wishes through a clear affirmative action. There are a few key points to bear in mind:

  • As above, there is no need to get consent for “strictly necessary” cookies. And there is no need therefore for a pre-ticked box for these cookies.
  • Where consent is needed, do not use pre-ticked boxes; this would not be a valid consent, as consent has to be signified by a positive step such as ticking the box.
  • This is important – do not set cookies before you get the opt-in, so you may need to do some technical work on the site to make sure that this is the case.
  • Provide clear and comprehensive information. This is because, if the information is not clear and comprehensive then, as well as breaching the transparency requirement, it will undermine the consent as it will not be a “fully informed” consent.
  • Do not bundle multiple consents into one; ideally, there would granular consents for each cookie, or at least each category.
  • There should also be an “Accept All” and a “Reject All” button.
  • Provide an option for users to revisit consents that they have given.

The new ePrivacy Regulation

A new ePrivacy Regulation has been on the horizon since the GDPR came into force but has been batted back and forth in Europe since 2017 without agreement being reached.  However, the text was finally agreed in February 2021 and it is now going to the European Parliament.

The objective of the ePrivacy Regulation is to update the ePrivacy Directive – which is nearly 20 years old – and to bring it into line with GDPR.  It aligns with the substantial fines possible under the GDPR, whereas at the moment fines under PECR are limited to £0.5m. The ePrivacy Regulation also allows for individuals to bring claims which could involve class action claims.

Also, like the GDPR, the regulation provides for extraterritorial application, so it will apply to businesses outside the EU insofar as it relates to end users in the EU. However, unlike the GDPR, it does not require that EU users are specifically targeted — the extraterritorial application is triggered as soon as users in the EU are implicated regardless of whether there was an intention to direct activities at the EU market.

So far as the cookie requirement is concerned:

  • There is still a need for affirmative consent, except in a number of circumstances which are a little broader than at present, and will include cookies for the purpose of audience measuring (e.g., web analytics) and for IT security purposes.
  • The regulation also allows for consent to be given by selecting technical settings in the browser, for example by having a whitelist of sites which the user consents to dropping cookies. But browsers will need to develop to facilitate this.
  • Also, users who have given consent must be reminded every 12 months of their right to withdraw consent.

Once the ePrivacy Regulation is finalised there will be a two year transition period before it comes into force.

As regards the UK, following Brexit, the ePrivacy Regulation will not automatically extend to the UK, but the UK may amend PECR to align it to the ePrivacy Regulation, especially in so far as the Regulation is more business-friendly and provides additional exceptions to the cookie rule. Also, because of the extraterritorial application of the Regulation, it will effectively apply to all UK businesses as regards end users in the EU.

If you have any questions about these issues in relation to your own organisation, please contact a member of the team or speak with your usual Fox Williams contact.

Happy Data Privacy Day 2021!

Annually on 28 January, Data Privacy Day (or, if you prefer, Data Protection Day) is an “international effort to create awareness about the importance of respecting privacy, safeguarding data and enabling trust”.

We take the opportunity to highlight a number of key current issues with data protection.

  1. The EU / UK Trade Agreement: Three myths busted – Privacy and data protection
    Still reeling from the Brexit deal done on Christmas eve? The media (and social media in particular) are myth-ridden. Here, we consider and bust some myths related to privacy and data protection.
  2. Post-Brexit – data transfers
    As the UK and the EU reached a deal on Brexit, we provide a high level summary of the position on data transfers as from 1 January 2021.
  3. New – Standard Contractual Clauses
    Standard Contractual Clauses (SCCs) are the most commonly used mechanism to authorise transfers of personal data from the UK / EEA. We take a look at the proposed new SCCs and find some interesting developments.
  4. New guidance for international transfers post-Schrems II
    In July 2020, the European Court of Justice  thoroughly shook up the international data transfer regime when handing down its decision in the Schrems II case. We look at the European Data Protection Board guidance on handling cross-border data transfers post-Schrems.
  5. AI and data protection – uncomfortable bedfellows? 
    Artificial intelligence (AI) has been around for a long time. However, it is only fairly recently that we have seen its use spread into our daily lives. With the gradual uptake of AI, one might wonder what the GDPR has to say on the matter. We look at some of the key data protection issues.
  6. ICO resumes investigation into Adtech 
    On 22 January 2021 the ICO announced that it was resuming its investigation into the AdTech sector. The ICO’s initial views were that RTB is unlawful. It can be expected that the ICO will issue assessment notices to specific companies in the coming months.  We look at the key issues.
  7. Lessons learned from BA, Marriott and Ticketmaster fines
    The Information Commissioner’s Office (ICO) recently fined British Airways (BA), Marriott International (Marriott), Ticketmaster £20 million, £18.4 million and £1.25m respectively for failures to keep customers’ personal data secure.  We look at lessons to be learned.
  8. Covid-19 and WFH – can you monitor your employees under GDPR?
    The pandemic has resulted in a seismic shift in the number of employees working from home. A question which often arises is: can employers use technology to monitor employees work patterns? We set out some of the key data protection considerations.
  9. Six data protection steps for returning to the workplace
    As lockdown restrictions may ease in the coming weeks / months, we look at the key steps organisations need to consider in relation to the use of personal information.
  10. Do you need to register under the Data Protection Act?
    One of the most-read items on our website! Maybe it’s because it could save you from a fine up to £4,350.  While that’s not in the same league as GDPR fines generally, it’s easily avoided by making sure your ICO registration is up to date.

Contact us

If you have any questions about these issues in relation to your own organisation, please contact a member of the team or speak with your usual Fox Williams contact.

Lessons learned from BA, Marriott and Ticketmaster fines

Kolvin Stone
Kolvin Stone (partner)

Ben Nolan
Ben Nolan

The Information Commissioner’s Office (ICO) recently fined British Airways (BA), Marriott International (Marriott), Ticketmaster £20 million, £18.4 million and £1.25m respectively for failures to keep their customers’ personal data secure.  These companies suffered separate data breaches in 2018 which resulted in a large number of their customers having their personal data, including credit card details, compromised.

Whilst all these fines are significant (a record fine in the case of BA), what is interesting is the huge change of approach by the ICO which had originally issued notices of intention (“NOIs”) to fine BA an incredible £183.4 million and Marriott £99.2 million back in July 2019.  The NOI to fine for Ticketmaster was £1.5M.

Clearly, something has changed.  But what is it?

Why were the fines reduced by so much?

The most significant reason for the reduction in the level of the fines issued against the companies appears to be due to the ICO using a fresh methodology to calculate the fines.

For the BA and Marriot NOIs, the ICO had relied on a methodology set out in an unpublished, internal document. This provided that turnover should be the key consideration for the ICO when setting fines under the GDPR. However, BA argued that reliance upon this was unlawful and, ultimately, the ICO decided to depart from this methodology entirely when calculating the fines issued against BA and Marriott.  It did not use this methodology for Ticketmaster and hence there was only a small reduction from £1.5M to £1.25M.

Instead, the ICO calculated the fines in line with its Regulatory Action Policy (“RAP”). The RAP sets out a five step process that the ICO must follow when issuing fines.  Steps 1 to 4 deal with factors which add to the level of the fine (including, amongst other matters, whether the infringing party obtained any financial gain from their actions and the severity of the infringement). Taking into account these factors alone, the ICO deemed that BA’s breach of GDPR would warrant a fine of £30 million, Marriott’s would warrant a fine of £28 million and Ticketmaster £1.5 million.

However, step 5 of the process requires the ICO to take into account any mitigating factors (a list of which are set out in the RAP) which should result in the fine being reduced.

A number of overlapping mitigating factors were considered to be present in the case of both the BA and Marriott breaches. These mitigating factors included:

  • both companies implemented immediate measures to minimise and mitigate the effects of the attacks;
  • both companies cooperated fully with the ICO as part of its investigations into the incidents;
  • the broad press coverage relating to the cyber-attacks likely raised awareness with other companies as to the risks involved with cyber-attacks; and
  • both companies suffered significant reputational loss as a result of the cyber-attacks.

Taking into account all mitigating circumstances, the ICO determined that each company should have their fine reduced by 20% (representing a £6 million reduction in the case of BA and a £5.6 million reduction in the case of Marriott).

Finally, the ICO took account of the impact of Covid-19 on the companies. In the case of both BA and Marriott, this resulted in the fine being reduced by a sum of £4 million. In the case of Ticketmaster this was £250,000.

This is a relatively small amount considering how hard these companies have been hit by the pandemic and suggests that companies should not expect too much leniency for infringements during this time.

Other key take-aways

In addition to the above, a number of other conclusions can be drawn from the enforcement notices. We have set out a summary of these below:

  1. Importance of security frameworks – the ICO found that the companies should have had in place various security measures (such as multifactor authentication and encryption) which would have either prevented the cyber-security incidents from occurring or at least mitigated their effects. In reaching these conclusions, the ICO referred to guidance from various IT security institutes and bodies, including the National Cybersecurity Centre, OWASP and NIST. As a result, it appears that all companies should have regard to well-known security frameworks when assessing and implementing their security protocols.
  2. Intent not required for heavy sanctions – both BA and Marriott argued that it was unfair for them to be heavily sanctioned for the cyber-security incidents given that they themselves were victims of the cyber-attacks and not the perpetrators. However, the ICO found that, given their size and sophistication, the companies were negligent in failing to implement proper security measures and therefore the breaches fell within the bracket of the most severe type of infringement under the ICO’s RAP. This is in line with the wording in Art. 83 GDPR which allows supervisory authorities to take into account the “negligent character of the infringement” when issuing fines.
  3.  Act fast and cooperate in the event of a breach – BA and Marriot, both companies had their fines significantly reduced in part due to their speedy action to mitigate the effects of the breach and their cooperation with the ICO. However, Tickmaster’s slowness to respond was perceived to be an aggravating factor.  It is clear that cooperating with the ICO in the event of a breach will be received positively.
  4.  Compliance with principles is essential – the companies were all found by the ICO to have violated the principle of integrity and confidentiality under Art. 5(1)(f), as well as the security obligations set out under Art. 32 GDPR. Violation of the GDPR’s principles attracts the highest levels of fines and therefore compliance with these should be considered a priority for all organisations caught by the GDPR.

The latest Ticketmaster fine highlights that the ICO has honed its regulatory enforcement approach and we are unlikely to see the massive reduction in fines as in the cases of BA and Marriot.  It also establishes a marker for that future in that we are more likely to see fines in the single and tens of millions instead of hundreds of millions.

If you have any questions about these issues in relation to your own organisation, please contact a member of the team or speak with your usual Fox Williams contact.

H&M 35m

Fashion retailer H&M hit with €35m fine

As a result of the monitoring of several hundred employees at their service centre in Nuremberg, the Hamburg Data Protection Commissioner has issued an eye-watering fine of €35.25m against H&M. This is the second largest fine under the GDPR to date.

Since 2014, employees of H&M had been subject to extensive recording of data relating to their private lives including sensitive personal data (special category data). For example, after vacation and sick leave – even short absences – the team leaders conducted a so-called “welcome back talk”. After these talks, details were recorded including not only the employees’ vacation experiences, but also symptoms of illness and diagnoses. In addition, supervisors acquired a broad knowledge of their employees’ private lives through casual conversations, ranging from harmless details to family problems and religious beliefs. Some of the findings were then recorded, digitally stored and accessible by up to 50 managers throughout the company.

The data collected in this way was used, among other things, to profile the employees and to support employment decisions.

The practice came to light following a data breach in October 2019 when, as a result of a configuration error, the data became accessible company-wide for several hours.

Aside from the fine, to show its contrition, H&M has expressly apologized to the affected employees and has also agreed to pay compensation. Other measures which H&M has agreed to take include the appointment of a data protection coordinator, monthly data protection status updates and enhanced whistle-blower protection.

Comment:

The case serves as a reminder that the GDPR applies equally to HR data as it does to consumer / customer data. In fact, given that HR data routinely involves processing of higher risk “special category” data, such as sickness records and details of employee personal issues, great care is needed in relation to the collection and storage of such data.

Aside from the data security breach, H&M would seem to have breached several of the data protection principles: for example,  data minimisation (only collecting data that is relevant and limited to the purpose for which it is collected), purpose limitation (collecting data only for legitimate purposes) and processing data fairly and in a transparent manner, making sure that employees are aware of the data which you are collecting and storing.

If your GDPR compliance programme did not focus on HR data with at least the same rigour as other data, or needs a refresh, there are 35m reasons why now would be a good time.

Data Protection and COVID-19 – Regulator Guidance

The ICO has published in a blog post some helpful guidance on data protection compliance and COVID-19. This also draws on a statement issued by the European Data Protection Board (EDPB).

Broadly, data protection rules (such as the GDPR) do not hinder measures taken in the fight against the pandemic. The EDPB says that it is in the interest of humanity to curb the spread of diseases and to use modern techniques in the fight against scourges affecting great parts of the world. Even so, the EDPB underlines that, even in these exceptional times, the data controller and processor must ensure the protection of the personal data of data subjects.

The ICO recognises the unprecedented challenges we are all facing during the pandemic, and that organisations might need to share information quickly or adapt the way they work.  The ICO confirms that data protection will not stop you doing that. It’s about being proportionate, and not going beyond what people might reasonably expect.

Core principles

Core data protection principles need to be followed even for emergency data uses. This includes the following:

  • Personal data that is necessary to attain the objectives pursued should be processed for specified and explicit purposes.
  • Data subjects should receive transparent information on the processing activities that are being carried out and their main features, including the retention period for collected data and the purposes of the processing. The information provided should be easily accessible and provided in clear and plain language.
  • It is important to adopt adequate security measures and confidentiality policies ensuring that personal data are not disclosed to unauthorised parties.
  • Measures implemented to manage the current emergency and the underlying decision-making process should be appropriately documented.

Delays in compliance

ICO guidance:  Organisations with concerns about complying with GDPR requirements are offered assurance. The ICO says they understand that resources, whether finances or people, might be diverted away from usual compliance work. The ICO indicate that they won’t penalise organisations that they know need to prioritise other areas or adapt their usual approach during this extraordinary period.

While the ICO can’t extend statutory timescales, they will tell people that they may experience understandable delays when making information rights requests during the pandemic.

Comment:  This offers some comfort, for example, to businesses that are currently grappling with lack of resource or access to documents for responding to data subject access requests (DSARs) which have a deadline for response of one month or, in complex cases, extendable to three months. A key factor will be to keep the data subject up to date with progress on the response.

Homeworking

ICO guidance:  Data protection is not a barrier to increased and different types of homeworking. During the pandemic, staff may work from home more frequently than usual and they can use their own device or communications equipment. Data protection law doesn’t prevent that, but you’ll need to consider the same kinds of security measures for homeworking that you’d use in normal circumstances.

Comment:  Employers should carry out a data privacy risk assessment of the data protection implications of employees working from home on a scale greater than might be usual. This could include review of the following:

  • ensuring staff have been given training and guidance and regular reminders about their obligations to safeguard personal data, including not saving sensitive data to unsecured devices or cloud storage;
  • as there is an uptick in cybercriminals and email scams looking to profit from the crisis, warning staff about emails that may look as if they are from official sources but include malicious software, as well as fake phishing emails impersonating people within the organisation;
  • requiring the use of complex passwords and the need to change them often;
  • taking care when using wifi, avoiding public wifi and using known secure wifi where possible.

Can you tell staff that a colleague may have contracted COVID-19?

ICO Guidance: Yes. You should keep staff informed about cases in your organisation. Remember, you probably don’t need to name individuals and you shouldn’t provide more information than necessary. You have an obligation to ensure the health and safety of your employees, as well as a duty of care. Data protection doesn’t prevent you doing this.

The EDPB adds that in cases where it is necessary to reveal the name of the employee(s) who contracted the virus (e.g. in a preventive context), the concerned employees should be informed in advance and their dignity and integrity protected.

Comment: even though such information relates to a person’s health, which is classified as special category (or sensitive) personal data, an employer is entitled to process / disclose this information where necessary to comply with employment law which includes ensuring the health, safety and welfare of its employees. Again, this only extends to what is necessary and proportionate for this purpose.

Can you collect health data in relation to COVID-19 about employees or from visitors?

ICO Guidance:  You have an obligation to protect your employees’ health, but that doesn’t necessarily mean you need to gather lots of information about them.

It’s reasonable to ask people to tell you if they have visited a particular country, or are experiencing COVID-19 symptoms.

You could ask visitors to consider government advice before they decide to come. And you could advise staff to call 111 if they are experiencing symptoms or have visited particular countries. This approach should help you to minimise the information you need to collect.

If that’s not enough and you still need to collect specific health data, don’t collect more than you need and ensure that any information collected is treated with the appropriate safeguards.

Comment: while this guidance was issued only in the past few days, it can become rapidly out of date as Government / NHS guidance on COVID-19 changes.

 

Nigel Miller is a partner in the commerce & technology team at City law firm Fox Williams LLP and is a Certified Information Privacy Professional (CIPP/E). Nigel can be contacted at nmiller@foxwilliams.com