Worldwide: Privacy Shield: Year One Updates You Need To Know

Last Updated: October 17 2017
Article by Daniel M. Goldberg

This month we're celebrating Privacy Shield's first birthday (admittedly, a bit belated) with an update on everything Privacy Shield. There have been a number of developments on the Privacy Shield-front that companies certified or seeking self-certification under Privacy Shield need to know. If you are looking for a quick primer on Privacy Shield, please check out our previous post here. Once you're ready, read on:

FTC Enforcement Has Arrived

On September 8, we got our first taste of Privacy Shield enforcement. The FTC announced enforcement actions against three companies for allegedly making false statements in their privacy policies that they participated in Privacy Shield when they had not actually registered as participants with the Department of Commerce (DoC). The FTC entered into consent orders with the companies, which prohibited the companies from misrepresenting their participation "in any privacy or security program sponsored by a government or any self-regulatory or standard-setting organization, including but not limited to the EU-U.S. Privacy Shield framework and the Swiss-U.S. Privacy Shield framework." Further, the consent orders required the companies to comply with report and notice, recordkeeping, and monitoring obligations, some of which extend 20 years.

These enforcement actions shed light on basic mistakes that can lead to FTC scrutiny. Each of the companies involved in these enforcement actions posted a privacy policy indicating it participated in Privacy Shield. Further, each of the companies started the Privacy Shield registration process with the DoC, but did not complete it. And it is not difficult to imagine the facts that led to such circumstances – because the Privacy Shield registration process requires companies to update their privacy policies prior to DoC review, these companies likely updated their privacy policies as part of the registration process, yet failed to complete their applications for one reason or another. The DoC then identified these companies as failing to complete their applications, cross-referenced the companies' privacy policies for representations about Privacy Shield, and referred them as violators to the FTC.

So how do you avoid these mistakes? For starters, if you begin the Privacy Shield registration process with the DoC, make sure to complete the process, which may require responding to specific requests from the DoC. If you are already registered, do not forget to renew your self-certification on an annual basis – for many companies, the first annual renewal is already due. If you decide not to complete the process or renew your self-certification, remove any references to Privacy Shield from your privacy policy. As always, never copy and paste template language from another company's privacy policy as that could result in representations that do not accurately reflect your practices.

Expect Continued and Amplified Enforcement by the FTC

The Court of Justice of the European Union (CJEU) invalidated the old Safe Harbor Framework, in part due to alleged lack of oversight and enforcement. When constructing Privacy Shield, EU and U.S. representatives worked to address this issue by adding a requirement that the U.S. government and participants must submit each year to a review by the European Commission of their compliance with the Privacy Shield Principles. The first annual review took place during the week of September 20, and concluded with a joint statement from the European Commission and U.S. Secretary of Commerce indicating continued support and commitment to Privacy Shield. European regulators are expected to publish a written report later this month detailing the discussions and potential areas for improvement.

While Privacy Shield appears to have survived its first annual review, we expect the written report to demand stronger enforcement by the FTC. Such outcome is particularly likely given that the FTC previously brought enforcement actions similar to those announced on September 8 for alleged violations of the Safe Harbor Framework, yet such enforcement actions were not sufficient to save Safe Harbor from invalidation. In order to prove its commitments under Privacy Shield, the FTC will need to look beyond companies that misrepresent their participation in Privacy Shield, and it is likely that future FTC enforcement actions will dig deeper into company practices. If you participate in Privacy Shield, you should routinely document your compliance with the Privacy Shield Principles, including the Principles of Choice and Accountability for Onward Transfer, and make sure to complete your annual compliance review requirement.

All Participants Must Pay a New Fee to Establish the Arbitral Fund

Privacy Shield requires the DoC to establish a fund to cover arbitrator costs for proceedings brought pursuant to the Privacy Shield arbitration requirement. Earlier this month, the DoC announced details about the arbitral fund, including that the fund will be managed by the Dispute Resolution-American Arbitration Association (ICDR-AAA) and all Privacy Shield participants must pay a fee to establish the fund. This arbitral fund fee is in addition to the required registration and renewal fees. Companies applying to participate in Privacy Shield must now pay the fee when they register with the DoC while companies already participating in Privacy Shield must pay the fee no later than November 2. If you participate in Privacy Shield, make sure to pay the fee before the deadline as failure to pay the fee could cause your participation status to lapse and potentially result in an FTC enforcement action. You can pay the fee here.

Standard Contractual Clauses under Scrutiny

As most Privacy Shield participants know, Privacy Shield is only one option for lawful data transfers from the EU to the U.S. Standard contractual clauses or "model clauses" are another important option, which became even more prevalent after the CJEU invalidated Safe Harbor. Following the invalidation of Safe Harbor by the CJEU in October 2015, the plaintiff from that matter, Max Schrems, brought a similar case with the Irish Data Protection Commission (DPC) against Facebook challenging the validity of standard contractual clauses. In May 2016, the DPC referred the case to the Irish High Court on grounds that standard contractual clauses are likely invalid but the DPC does not have the authority to declare them invalid under EU law. Last week, on October 3, the Irish High Court also punted by finding that standard contractual clauses pose "well founded concerns" and referring the case to the CJEU. We now find standard contractual clauses in a similar position to the circumstances that led to the invalidation of Safe Harbor in 2015.

Although standard contractual clauses are still valid and the CJEU is not expected to render a decision for a year or two, companies currently dependent on standard contractual clauses for the transfer of data from the EU to the U.S. should strongly consider applying for self-certification under Privacy Shield. While Privacy Shield does not address data transfers from the EU to countries other than the U.S., having an alternative mechanism in place to address EU-U.S. data transfers may help companies become less dependent on standard contractual clauses and be better prepared in the event the CJEU invalidates standard contractual clauses.

www.fkks.com

This post first appeared in Frankfurt Kurnit's Focus on the Data blog (www.focusonthedata.com). It provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions