Hong Kong: A Recap Of 2013 By The Privacy Commissioner Of Hong Kong And Strategic Focus For 2014

Keywords: data privacy, Hong Kong, Privacy Commissioner, direct marketing, personal data,

The year 2013 proved to be a significant milestone in the development of data privacy in Hong Kong. One of the most important changes was the commencement of new statutory provisions regulating direct marketing on 1 April 2013. The year was also significant because of the record high number of enquiries and complaints received by the Privacy Commissioner of Hong Kong. This increase reflects the public's growing concern for data privacy and underscores the belief held by the Privacy Commissioner that all organisations need to treat this subject seriously. This article provides a summary of the Privacy Commissioner's Annual Report for 2012/2013 and his report to the Legislative Council on work carried out by his office in 2013. The article concludes with the strategic focus of the Privacy Commissioner for 2014.

Record-High Number of Enquiries and Complaints

In 2013, the Privacy Commissioner received a total of 24,161 enquiries and 1,792 complaints, a record high in both categories since the commencement of the Personal Data (Privacy) Ordinance, ("Ordinance") in 1996. Interestingly, over half of the enquiries related to the new provisions in the Ordinance, which tightened the requirements for use of personal data for direct marketing. A massive spike of enquires occurred in April and May 2013 right after the new direct marketing provisions came into force on 1 April 2013.

New Statutory Provisions on Direct Marketing

The introduction of the new statutory provisions on direct marketing in April 2013 was one of the most important changes to the data privacy regime in Hong Kong since the enactment of the Ordinance. In essence, the new provisions tighten control over the use of personal data in direct marketing by requiring data users to clearly explain the scope of their intended direct marketing use and obtain explicit consent (as opposed to implicit consent obtained by silence or non-response) from data subjects before they can use or transfer the personal data for direct marketing activities.

Under the new regime, data subjects are also entitled to opt out of or withdraw their consent for further direct marketing use of their personal data at any time. Failure to comply with these new requirements constitutes a criminal offence punishable by a maximum fine of HK$500,000 and imprisonment for up to 3 years; if the data is transferred for gain to a third party for use in direct marketing, non-compliance with the new requirements may result in a maximum fine of HK$1 million and 5 years' imprisonment. A transitional "grandfathering" arrangement was introduced to exempt the use of personal data collected prior to 1 April 2013 from these new requirements, provided that certain conditions had been met, such as that the data users had collected and used such personal data for the same direct marketing purposes before 1 April 2013.

In 2013, since the new provisions came into force, 14 cases were referred to the Police for potential prosecution for suspected contraventions of the new direct marketing requirements.

Legal Assistance for Civil Claims

Another important amendment to the Ordinance which came into force on 1 April 2013 was the introduction of the "Legal Assistance Scheme." The Scheme aims to provide legal assistance to aggrieved individuals to lodge civil proceedings against data users who are in breach of the Ordinance so as to seek compensation from the data user for damage, including injury to feelings. The legal assistance may take the form of legal advice, mediation and legal representation in court. The Scheme is administered by the Privacy Commissioner.

In 2013, the Privacy Commissioner received 16 applications for legal assistance under the Scheme and granted assistance to one applicant.

Increasing Enforcement Efforts

Thirty-two warnings and 25 enforcement notices were issued in 2013—more than double the number of enforcement notices (11) issued in 2012. This increase is a direct result of the enhanced power of the Privacy Commissioner to issue enforcement notices pursuant to the amendments to the Ordinance in 2012. The Privacy Commissioner also conducted more compliance checks and self-initiated investigations in 2013. In particular, the Privacy Commissioner focused its efforts on promoting data privacy compliance in the field of information and communications technologies ("ICT"). The Privacy Commissioner conducted a survey of smartphone applications developed by Hong Kong entities which revealed that their privacy policies were generally inadequate. The Privacy Commissioner advised smartphone application developers to make improvements on data privacy compliance (an information leaf let was issued by the Privacy Commissioner in November 2012 to highlight the privacy implications that mobile applications developers and operators should consider in connection with designing and developing mobile applications).

In 2013, the Privacy Commissioner also received reports of more than 60 data breach incidents affecting 90,000 individuals. These incidents were either made known to the Privacy Commissioner through voluntary notifications from the data users or through reports from the media and the general public.

Strategic Focus for Year 2014

The Privacy Commissioner has made clear that his strategic focus for 2014 will be on:

• The privacy issues associated with the increased use of ICTs and mobile applications;
• Promoting the adoption of privacy management programs for organisations to embrace data privacy protection as part of their corporate governance; and
• Assisting the government in reviewing the regulatory issues concerning cross-border flows of personal data.

The Privacy Commissioner has taken active steps to pursue each of these objectives. In August 2013, the Privacy Commissioner published an investigation report on a smartphone application called "Do No Evil" (which compiled individuals' litigation and bankruptcy data from public sources and allowed users to make searches against targeted individuals), finding that the application seriously invaded data privacy. An enforcement notice was issued against the developer.

Recognising the shift from compliance to accountability, the Privacy Commissioner published a "Best Practice Guide on Privacy Management Programme" on 18 February 2014. The aim of this Guide is to encourage businesses to proactively embrace personal data protection as part of their corporate governance responsibilities rather than merely look at it as a legal compliance issue. As of 18 February 2014, the Hong Kong government (including all bureaux and departments), together with 25 companies from the insurance sector, nine companies from the telecommunications sector and five organisations from other sectors have pledged to implement the Best Practice Guide.

In relation to the regulation of cross-border flows of personal data, the Privacy Commissioner recognised that Section 33 of the Ordinance provides a very comprehensive framework regulating the transfer of personal data outside Hong Kong. The current framework set out in Section 33 prohibits all transfers of personal data to a place outside Hong Kong except in specified circumstances, namely, the place has been specified by the Privacy Commissioner as one which has in force a data protection law which is substantially similar to, or serves the same purpose as, the Ordinance, and that the data user has taken all reasonable precautions and exercised all due diligence to ensure that the data will not, in that place, be handled in a manner tantamount to a contravention of a requirement under the Ordinance. However, Section 33 has not been brought into force since the enactment of the Ordinance in 1995 and the government has no timetable for its implementation. The Privacy Commissioner completed in 2013 a survey of 50 jurisdictions and provided the government with a list of places that have in force data protection laws that are substantially similar to, or that serve the same purpose as, the Ordinance. The Privacy Commissioner commented that global data flows are prevalent and integral to many businesses today and it is very important for the government to bring into force Section 33 as soon as possible to preserve and enhance Hong Kong's status as an international financial centre and data hub.

Conclusion

This year looks to be a busy year again for the Privacy Commissioner. Enforcement of the Ordinance is likely to continue apace and while the plan to bring into force the Data User Return has been shelved for now, the Privacy Commissioner is keen to promote the Privacy Management Programme and will likely take steps to bring into force Section 33 of the Ordinance.

Visit us at www.mayerbrown.com

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2014. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.