Understanding the Personal Information Protection and Electronic Documents Act (PIPEDA) is critical for businesses operating in Canada. This comprehensive privacy law governs how private sector organizations collect, use and disclose personal information in the course of commercial activities.
As cyber threats evolve and consumers become increasingly aware of their privacy rights, grasping what PIPEDA is and how it applies to your business is not just a legal requirement — it’s a competitive advantage.
What is PIPEDA?
PIPEDA was introduced in 2000 and fully implemented by 2004. Its purpose is to balance individuals’ right to privacy with the need for organizations to collect, use or disclose personal information for legitimate business purposes. This federal law sets the ground rules for how businesses must handle personal information in the course of their commercial activities.
While PIPEDA shares similarities with other privacy laws, such as the EU’s General Data Protection Regulation (GDPR) and California’s Consumer Privacy Act (CCPA), it has its own unique requirements tailored to the Canadian context. For instance, PIPEDA places a strong emphasis on consent and is based on ten fair information principles, which we’ll explore later in this article.
Does PIPEDA apply to my business?
You must comply with PIPEDA if your organization collects, uses or discloses personal information in the course of commercial activities. This applies to most businesses, nonprofit organizations and professional associations operating in Canada. Even if you’re a small business or a startup, if you’re engaging in commercial activities that involve personal information, PIPEDA likely applies to you.
However, there are some exceptions. Provincial privacy laws similar to PIPEDA may apply instead in certain provinces. For example, Alberta, British Columbia and Quebec have their own private sector privacy laws. Additionally, some non-commercial activities of nonprofit organizations, political parties and associations may be exempt. It’s important to note that even if your organization is exempt from PIPEDA, following its principles is still a best practice in data protection.
Personal information under PIPEDA
Under PIPEDA, personal information is defined broadly as any information about an identifiable individual. This encompasses a wide range of data, including:
- Name, age and address
- Social insurance number and income
- Ethnicity and blood type
- Opinions, evaluations and comments
- Employee files, credit records and loan records
- Medical history and education information
However, certain information is not considered personal under PIPEDA. This includes business contact information or information about organizations. For instance, an employee’s name, title and business phone number are not considered personal information under PIPEDA when used for business communications.
It’s crucial to understand this distinction because it affects how you collect, use and disclose different types of information in your business operations.
How to comply with PIPEDA
To comply with PIPEDA, your business must adhere to the ten fair information principles. Let’s break these down:
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Accountability
You must designate someone responsible for your organization’s compliance. This person should be familiar with the requirements of PIPEDA and be able to address any privacy-related questions or concerns.
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Identifying purposes
Before or during collection, you need to identify the reasons for collecting personal information. Be clear and specific about why you need the information and how you’ll use it.
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Consent
You must obtain an individual’s consent before collecting, using or disclosing their personal information. The form of consent (express or implied) may vary depending on the circumstances and the type of information.
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Limiting collection
Only collect personal information necessary for the identified purposes. Avoid collecting extra information “just in case” you might need it later.
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Limiting use, disclosure and retention
Use or disclose personal information only for the purposes for which you collected it and keep it only as long as necessary. Once the purpose is fulfilled, you should securely dispose of the information.
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Accuracy
Ensure that personal information is as accurate, complete and current as necessary for the purposes for which you use it. This might involve giving individuals the opportunity to review and update their information periodically.
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Safeguards
Protect personal information with appropriate security measures. This could include physical measures (like locked filing cabinets), organizational measures (like employee training) and technological measures (like encryption and firewalls).
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Openness
Make your privacy policies and practices readily available to individuals. This often takes the form of a clear, easily accessible privacy policy on your website.
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Individual access
Give individuals access to their personal information upon request. They should be able to challenge the accuracy and completeness of the information and have it amended as appropriate.
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Challenging compliance
Allow individuals to challenge your compliance with these principles. Have a clear process in place for receiving and responding to complaints or inquiries.
PIPEDA and cross-border data transfers: how they work
In our interconnected world, many businesses transfer data across borders or to third parties. When doing so under PIPEDA, you must ensure that the level of protection is comparable to what PIPEDA requires. This means using contractual or other means to provide a comparable level of protection while the information is being processed by a third party.
Transparency is key here. You need to be open about your personal information handling practices, including informing individuals that their information may be sent to another jurisdiction for processing and may be accessible to law enforcement and national security authorities of that jurisdiction.
Additionally, you must ensure that the third party only uses the information for the purposes for which it was transferred. This often involves due diligence in selecting service providers and including appropriate clauses in your contracts with them.
PIPEDA enforcement and penalties
The Office of the Privacy Commissioner of Canada (OPC) oversees compliance with PIPEDA. They have the power to investigate complaints, conduct audits and pursue court action if necessary. While the Commissioner can’t impose fines directly, they can name non-compliant organizations publicly, which can significantly damage a company’s reputation.
Courts can order organizations to change their practices and award damages to affected individuals. For certain offenses, non-compliance can result in fines of up to $100,000. Recent enforcement actions have focused on issues such as inadequate safeguards, unauthorized access and improper consent practices.
It’s worth noting that beyond these direct penalties, the true cost of non-compliance often lies in lost customer trust and damage to your brand’s reputation.
PIPEDA and emerging technologies
As technology evolves, so do the challenges of privacy protection. PIPEDA is principle-based, allowing it to adapt to new technologies. However, emerging areas such as artificial intelligence, biometrics and the Internet of Things (IoT) raise new questions about data collection and use.
The OPC has provided guidance on these issues, emphasizing the need for transparency in AI-driven decisions, special considerations for biometric data and privacy by design in IoT devices. As you adopt new technologies in your business, it’s crucial to consider their privacy implications and how they align with PIPEDA’s principles.
Navigating PIPEDA with support from BPM
Understanding what PIPEDA is and how it applies to your business is crucial. By prioritizing PIPEDA compliance, you not only avoid potential penalties but also build trust with your customers and protect their privacy rights. This trust can become a competitive advantage in a marketplace where consumers are increasingly concerned about how their personal information is handled.
Navigating the complexities of PIPEDA can be challenging, especially as technologies and business practices evolve. That’s where BPM can help. Our experienced team can guide you through the intricacies of PIPEDA compliance, supporting you in developing robust privacy practices that better protect your business and your customers’ personal information.
We’re here to help ensure that your business not only meets the requirements of PIPEDA but excels in its commitment to data privacy. To find out more, contact us.