Chapter 12 - Privacy and Anti-Spam Laws
Privacy in Canada is governed by a collection of public sector, private sector, and health sector privacy laws, and by Canada’s anti-spam legislation (“CASL”). Depending on the sector, these laws exist at the federal and/or provincial level and may be supplemented by common law considerations. This chapter focuses primarily on Canada’s federal private sector statute (given its broad application to Canadian businesses) and on CASL compliance.
The Personal Information Protection and Electronic Documents Act (PIPEDA) is Canada’s federal private sector law that governs the collection, use, and disclosure of personal information.
Deﬁning Personal Information
Personal information is broadly defined in PIPEDA as “information about an identifiable individual“. Such information can include, among other things, a person’s name, address, phone number, age, sex, ethnicity, religion, education, and health and financial information. Certain government-provided information is also considered personal, such as a person’s social insurance number, provincial health insurance plan number, driver’s licence number, and passport number.
PIPEDA excludes business contact information that is collected, used, or disclosed solely to communicate with an individual in relation to their employment, business, or profession from the definition of personal information.
Application of PIPEDA
In general terms, PIPEDA applies to an organization’s collection, use, or disclosure of personal information in the course of commercial activities, including:
- Provincially regulated organizations in provinces that do not have privacy laws that are substantially similar to PIPEDA (Alberta, British Columbia, and Quebec have their own private sector privacy laws that have been deemed substantially similar to PIPEDA)1
- Organizations transferring personal information across national or provincial borders
PIPEDA also applies to the personal information of employees when it is collected, used, or disclosed in connection with the operation of a federal work, undertaking, or business (such as banks, airlines or other inter-provincial or international transportation, telecommunications companies, offshore drilling operations, and radio and television broadcasting).
PIPEDA does not apply to the collection, use, or disclosure of employees’ personal information where individuals are employees of organizations under provincial jurisdiction (i.e., organizations that are not federal works, undertakings, or businesses). The general principles of PIPEDA are:
- Identifying purposes
- Limiting collection
- Limiting use, disclosure, and retention
- Individual access
- Challenging compliance
PIPEDA and Your Business
Knowledge and Consent
Informed consent is the guiding principle behind PIPEDA. Individuals should be made aware of the purposes for the collection, use, or disclosure of their personal information, and they should have the right to either consent to or refuse such action. Consent is valid only if it is reasonable to expect that the affected individual would understand the “nature, purpose, and consequences” of the collection, use, or disclosure of the personal information to which he or she is granting access.
There are certain exceptions to the consent requirement. For example, there is a consent exemption available for information collection where such collection is for the benefit of the individual in question and consent cannot be obtained in a timely way or where the information is “publicly available” (the scope of which is narrowly prescribed by the regulation). Individuals
can provide consent in a variety of ways, including expressly, impliedly, or through an opt-out mechanism. The appropriate form of consent that an organization must obtain will depend on the sensitivity of the personal information involved and on the individual’s reasonable expectations (given the circumstances).
It is often necessary for organizations to collect, use, or disclose personal information, including employees’ personal information, in relation to due diligence and closing a business transaction.
PIPEDA permits these activities without consent, provided that:
- The organization has entered into an agreement that requires the recipient to (a) use the information for the sole purpose of the transaction, (b) protect the information, or (c) return or destroy the information if the transaction does not proceed.
- The personal information is necessary to determine whether or not to proceed with the transaction and, if a decision is made to proceed, to complete the transaction.
- For completed transactions, the organization must enter into an agreement that requires it to (a) use and disclose the information for the sole purposes for which it was collected, used, or disclosed prior to the transaction; (b) protect the information; and (c) give effect to any withdrawal of consent.
- The information must be necessary for carrying on the activity that was the object of the transaction, and one of the parties must notify the individuals within a reasonable time of the transaction and disclosure.
The above exemption does not apply if the transaction is for the primary purpose of, or results in, the purchase (or other acquisition), sale, disposition, or lease of personal information. The exemption codifies common practice and is modelled on similar provisions in British Columbia and Alberta privacy laws.
Outsourcing of Data Processing to the United States
Canadian corporations may outsource certain data processing activities to a US parent corporation or a third-party processing company located within the United States or another jurisdiction. Although PIPEDA does not prohibit the outsourcing of data processing activities, it does make the Canadian organization accountable for the personal information while it is transferred to a third party for processing on the organization’s behalf.
In addition, the Canadian organization will have to comply with two requirements imposed by the Office of the Privacy Commissioner of Canada (the “commissioner”). First, as with all third-party processing (whether it takes place in or outside of Canada), the organization must protect the confidentiality and security of the personal information through either
In addition to the above requirements, the commissioner expects Canadian organizations to conduct due diligence on the legal requirements in the jurisdiction where the third party operates, including “potential foreign political, economic and social conditions” that may undermine its ability to property safeguard personal information in advance of any transfer. The commissioner also expects organizations to engage in appropriate monitoring, oversight and enforcement of the contractual and other safeguards noted above.
Additional requirements may be applicable in respect of certain types of information and pursuant to provincial privacy laws.2
Breach Notiﬁcation and Record Keeping
PIPEDA requires organizations to notify individuals about (unless prohibited by law), and to report to the commissioner, all breaches where it is reasonable to believe that the breach creates a “real risk of significant harm to an individual.”
PIPEDA defines “significant harm” as including, among other harms, humiliation, damage to an individual’s reputation or relationships, and identity theft. A “real risk” requires consideration of the sensitivity of the information, the probability of misuse, and any other prescribed factor.
The notice to individuals and the report to the commissioner must be given in the prescribed form “as soon as is feasible” after it is determined that a breach occurred. The commissioner may publish information about such notices if it determines that it would be in the public interest to do so.
Pursuant to the Breach of Security Safeguards Regulations under PIPEDA, the notice to an individual must contain certain information, including a description of (a) the circumstances of the breach, (b) the personal information that is the subject of the breach, (c) the steps taken by the organization to reduce the harm that could result, and (d) the steps the individual can take to reduce or mitigate the harm. The notice must be conspicuous and given directly to the individual except in certain circumstances where indirect notice (e.g., posting to a website) may be permitted.
The report to the commissioner must contain certain information, including the number of individuals affected, contact information for someone who can answer the commissioner’s questions, and a description of (a) the circumstances of the breach, (b) the personal information that is the subject of the breach, (c) the steps taken by the organization to reduce the harm that could result, and (d) the steps the organization has taken to notify the affected individuals. The report may be sent by “any secure means of communication” and may be updated with new information as the organization becomes aware of it.
Where notice is given to individuals, Section 10.2 of PIPEDA requires organizations to notify other organizations (e.g., credit bureaus) and government agencies if such notice could reduce the risks or mitigate the harm. Consent is not required for such disclosures.
In addition to the above notification and reporting requirements, PIPEDA requires organizations to keep and maintain a record of every breach of safeguards involving personal information under their control. Pursuant to Section 6 of the Breach of Security Safeguards Regulations, these records must be maintained for 24 months after the day on which the organization
determines the breach happened. The records must also contain the information necessary to allow the commissioner to verify compliance with the above reporting and notification requirements.
In addition, upon request, organizations must provide the commissioner with such records. The commissioner may publish information from such records if it would be in the public interest.
It is important to note that there is no threshold associated with the record-keeping obligation; a record of all breaches of security safeguards must be kept, irrespective of whether or not they gave rise to a real risk of significant harm. Nor is there any threshold before an organization would be required to provide its “breach file” to the commissioner.
The provinces of Quebec, Alberta, and British Columbia have enacted privacy legislation that is substantially similar to PIPEDA. As a result, the provincial legislation may apply to the collection, use, or disclosure of personal information within those jurisdictions (and PIPEDA will also apply to inter-provincial and international transfers of personal information and to employees of federally regulated organizations).
Federal, provincial, and territorial statutes regulate the collection, use, and disclosure of personal information by public bodies. Additionally, the Canadian Charter of Rights and Freedoms (“Charter”) protects certain privacy interests (for example, section 8 of the Charter protects “personal, territorial and informational” privacy through the right to be free from unreasonable search and seizure by the government). The Criminal Code also provides some privacy protections, such as the offense of voyeurism.
Most provinces and territories have their own health privacy legislation. Health privacy legislation applies to healthcare providers, as well as their service providers and agents. In addition to that legislation, regulators of health professions will also impose requirements regarding patient confidentiality.
Modernization of Canada’s Privacy Laws
Canadian federal and provincial governments are modernizing Canada’s privacy laws. At the federal level, the modernization of PIPEDA has been underway for some time, and is expected to result in new proposed legislation in the near future.
Quebec has passed Bill 64, “An Act to modernize legislative provisions as regards the protection of personal information,” in 2020. Bill 64 will bring significant changes to Quebec’s private sector and public sector privacy laws. Most of those changes will come into force in late 2023 – although it remains to be seen whether some of those changes will be tempered in the interest of harmonizing Canada’s privacy laws, as the federal and other provincial governments modernize their privacy legislation.
Sending commercial electronic messages (CEMs) to and from Canada and installing computer programs on systems in Canada is primarily governed by a statute commonly known as Canada’s Anti-Spam Law (CASL) and the regulations made pursuant to it.
A CEM is defined broadly in CASL as “an electronic message that, having regard to the content of the message, the hyperlinks in the message to content on a website or other database, or the contact information contained in the message, it would be reasonable to conclude has as its purpose, or one of its purposes, to encourage participation in a commercial activity, including an electronic message that (a) offers to purchase, sell, barter, or lease a product, goods, a service, land, or an interest or right in land; (b) offers to provide a business, investment, or gaming opportunity; (c) advertises or promotes anything referred to in paragraph (a) or (b); or (d) promotes a person, including the public image of a person, as being a person who does anything referred to in any of paragraphs (a) to (c) or who intends to do so”.
Requests for permission to send CEMs are also deemed to be CEMs, so organizations must carefully consider CASL requirements before sending a message to request consent to send CEMs.
Unlike other anti-spam laws, including the US CAN-SPAM Act, CASL is an opt-in regime. With limited exceptions, CASL prohibits the sending of a CEM unless prior express or implied consent exists. Express consent must be obtained in a prescribed form under CASL. Implied consent is limited to certain enumerated categories, such as “existing business relationships” as defined in the legislation.
In addition, prescribed contact information and an unsubscribe mechanism must be included in each CEM.
In general terms, CASL prohibits installing or causing to be installed a computer program on any other person’s computer system or, having so installed or caused to be installed a computer program, causing an electronic message to be sent from that computer system without the express consent of the owner or an authorized user of the computer system or in accordance with a court order.
This prohibition applies if the computer system is located in Canada at the relevant time or if the person is either in Canada at the relevant time or is acting under the direction of a person who is in Canada at the time when the direction is given.
Additional notice and consent requirements and other obligations apply in respect of programs that perform certain enumerated functions that the person who seeks express consent knows and intends will cause the computer system to operate in a manner that is contrary to the reasonable expectations of the owner or an authorized user of the computer system, such as collecting personal information stored on the computer system.
Consequences for Violations of CASL
CASL violations can lead to significant monetary penalties (up to $10 million for organizations), directors’ and officers’ liability, and extended liability for those involved in committing the violation.