Canada’s Proposed Privacy Law Aims to Impose Stronger Fine of Up to 5% of Global Revenue or $25 Million

Canada’s Proposed Privacy Law Aims to Impose Stronger Fine of Up to 5% of Global Revenue or $25 Million

The federal government of Canada, through the Office of the Minister of Innovation, Science and Industry, has proposed a new privacy law for the private sector that aims to impose a stronger fine on organizations that remiss in protecting the privacy of Canadians.

The new proposed privacy law called the “Consumer Privacy Protection Act (CPPA),” also known as the Digital Charter Implementation Act, 2020, aims to impose administrative fines of up to 3% of global revenue or $10 million, whichever is higher, for non-compliant organizations. This new proposed privacy law also aims to impose fines for certain serious violations of the proposed law of up to 5% of global revenue or $25 million, whichever is higher.

Section 57, paragraph 3 of the Digital Charter Implementation Act, 2020 states that “security safeguards must protect personal information against, among other things, loss, theft and unauthorized access, disclosure, copying, use and modification.”

"The COVID-19 pandemic has accelerated the digital transformation, which is changing how Canadians work, access information, access services, and connect with their loved ones,” said Navdeep Bains, Minister of Innovation, Science, and Industry. “This transformation is making concerns about privacy, and how companies handle Canadians’ data, more important than ever. As Canadians increasingly rely on technology, we need a system where they know how their data is used and where they have control over how it is handled.”

Right to be Forgotten

The new proposed privacy law has its own version of the principle of "Right to be Forgotten." This right, also known as the right to erasure, gives individuals the right to ask organizations to delete their personal data.

The Digital Charter Implementation Act, 2020 gives Canadians the ability to demand that their personal information on platforms, including social media platforms, be permanently deleted in case when consent is withdrawn or when information is no longer necessary.

Canada’s Major Data Breach

In November 2019, LifeLabs, Canada’s largest provider of general diagnostic and specialty laboratory testing services, informed the Office of the Information and Privacy Commissioner of Ontario (IPC) and the Office of the Information and Privacy Commissioner for British Columbia (OIPC) that cybercriminals gained entry into the company’s systems, extracted data and demanded a ransom. LifeLabs informed the IPC and OIPC that the data breach affected systems that contained information of approximately 15 million LifeLabs customers (nearly half of Canada’s total population), including names, physical addresses, email addresses, customer usernames and passwords, health card numbers, and lab tests. The vast majority of these affected customers are from British Columbia and Ontario.

A joint investigation conducted by IPC and OIPC found that LifeLabs failed to protect the personal information of millions of Canadians resulting in a significant data breach in 2019. According to the two offices, LifeLabs failed to take the following reasonable steps:

• Protect the personal health information in its electronic systems;
• Adequate information technology security policies in place; and
• Collected more personal health information than was reasonably necessary.

The Office of the Information and Privacy Commissioner of Ontario and the Office of the Information and Privacy Commissioner for British Columbia both ordered LifeLabs to implement a number of cybersecurity measures to address the company’s shortcomings. Despite their findings, however, the two offices didn’t impose financial penalties on LifeLabs as there’s no law that allows them to.

“LifeLabs exposed British Columbians, along with millions of other Canadians, to potential identity theft, financial loss, and reputational harm,” said Michael McEvoy, Information and Privacy Commissioner of British Columbia. “This investigation also reinforces the need for changes to BC’s laws that allow regulators to consider imposing financial penalties on companies that violate people’s privacy rights. This is the very kind of case where my office would have considered levying penalties.”

In a separate statement, LifeLabs said that as a result of the cyberattack, it took several measures, including retrieving the data by “making a payment.” The company, however, didn’t mention how much it paid to the attackers.

The company also didn’t mention ransomware. While the LifeLabs cyberattack has the markings of a ransomware attack, it isn’t confirmed whether the attack was a ransomware attack. 

Traditionally, ransomware attacks encrypt victims’ files, locking out victims from these files. Ransomware attackers then demand ransom from victims in exchange for the decryption keys that would unlock the locked files. Majority of today’s ransomware attackers also demand an additional ransom payment in exchange for the non-publication of the stolen data gathered during the ransomware attack.

Personal Health Information Protection Act (PHIPA)

On March 25, 2020, the Ontario government amended the Personal Health Information Protection Act (PHIPA), Ontario’s health privacy law. Once implemented, Ontario will be the first Canadian province to levy monetary penalties against individuals and companies that contravene the province’s health privacy law.

The amendment to PHIPA doubles the maximum fines for an offense to $200,000 for individuals and $1,000,000 for corporations. The amendment also mandates that an individual be imprisoned up to a year for an offense.

“Perhaps most significantly, once regulations are in place, my office [Information and Privacy Commissioner of Ontario] will be given the power to levy monetary penalties against those who contravene our health privacy law, including for breaches, such as those resulting from abandoned records,” said Brian Beamish, Information and Privacy Commissioner of Ontario. “Privacy commissioners across the country have been calling for the power to impose administrative penalties, and Ontario will be the first to enshrine it into legislation.”