10 Principles of PIPEDA Explained: A Comprehensive Guide to Privacy Compliance

The Personal Information Protection and Electronic Documents Act (PIPEDA) is the federal privacy law of Canada that governs how private sector organizations handle personal data.

Every company that operates from Canada or targets Canadian residents must comply with PIPEDA. In addition, some Canadian provinces, such as Quebec, Alberta, and British Columbia, have local privacy legislation in place. Therefore, operating in such provinces requires compliance with the local laws as well.

Complying with the privacy acts in Canada may seem complex for organizations, but the law relies on the same principles. PIPEDA lists ten of them.

Do I Need to Comply with the PIPEDA Principles?

You need to comply with PIPEDA if your business:

1. Operates from Canada, or
2. Operates from abroad but targets Canadian residents.

PIPEDA applies to Canadian businesses and foreign businesses that have a connection to Canada through activities like collecting and processing the personal information of Canadians.

More specifically, Canadian law explicitly applies to Canadian businesses while remaining silent on the subject of foreign companies.

Nevertheless, based on general case law, it can be inferred that Canada's data protection law extends to foreign organizations that possess a genuine and significant connection to the country.

According to Section 4 of PIPEDA, it applies to personal information that:

• Any organization collects, uses, or discloses for commercial purposes, or
• Identifies an employee or job applicant.

It explicitly does not apply to:

• Government institutions
• Personal information collected, used, or disclosed for personal or domestic purposes, and
• Personal information collected, used, or disclosed for journalistic, artistic, or literary purposes.

The Office of the Privacy Commissioner of Canada (OPC) has determined that PIPEDA applies to foreign businesses when they handle the personal information of Canadians.

For example, in the 411Numbers case, the OPC concluded that PIPEDA is applicable to a business that has a genuine and significant connection to Canada. This connection could be based on factors such as whether the business processes the personal data of Canadians, whether its privacy practices could affect Canadians, whether they promote its products and services in Canada, and similar considerations.

What Are the 10 Principles of PIPEDA?

Entities that are subject to PIPEDA and process personal information must adhere to ten fair information principles. These principles are as follows:

1. Accountability
2. Identifying purposes
3. Consent
4. Limiting collection
5. Limiting use, disclosure, and retention
6. Accuracy
7. Safeguards
8. Openness
9. Individual access
10. Challenging compliance
    

Accountability

The accountability principle under PIPEDA requires businesses to designate at least one individual whose responsibility is to ensure compliance with this data privacy law.

The designated individual responsible for PIPEDA compliance should create a simple and easily understandable privacy notice that outlines the ten crucial principles. They may also be responsible for responding to access requests, assisting in conducting data security audits, and other related tasks.

It is important to ensure that your PIPEDA compliance appointee is qualified and adequately supported to fulfill their duties.

Identifying Purposes

Regarding this principle, Canada's PIPEDA requires you to clearly define and communicate the reasons why you are collecting a specific type of data. The purpose of this requirement is to ensure that you:

1. Inform individuals about why their information is being collected.
2. Take necessary measures to avoid using the collected data for purposes other than those specified.
3. Notify consumers if the collected information will be used for a new purpose, allowing you to seek fresh consent to use the data for that purpose.
   

Consent

If you are a data controller subject to Canada's PIPEDA, you are obligated to seek implied or explicit consent, depending on the circumstances. The consent has to be meaningful. In some cases, implied consent is considered meaningful, while in other cases, only express consent is considered meaningful.

It is important to ensure that your data subjects are fully aware of what giving consent means and that they do not feel coerced or deceived into giving consent. This includes informing them about any potential risks or significant harm that may arise from the collection, use, or disclosure of their personal information.

Additionally, you need to keep records of instances where you do not deem user consent necessary, especially when there may be a risk of significant harm or when dealing with sensitive personal health information.

Limiting Collection

It is essential to review your processes for the collection of personal information to differentiate between information that is absolutely necessary to collect and information that you do not need to collect.

This distinction is important because the fourth principle of Canada's PIPEDA requires your business to only collect information that is strictly necessary and consistent with the purposes for which your users have given consent. This includes being mindful of collecting sensitive personal health information and ensuring that its collection is justified and appropriate for the intended purposes.

Limiting Use, Disclosure, and Retention

To achieve compliance with Canada PIPEDA, you need to create policies and guidelines, which guarantee that you utilize consumer information for reasons that are in line with what your users consented to. 

Similarly, you need to institute policies concerning the duration you intend to retain this data. Ideally, the duration should not exceed the time necessary period to execute the stated purposes of collection.

Conversely, if you employ this data to draw conclusions about a user, you are required to retain this information for a period considered enough to allow the user in question to review this information. 

Accuracy

According to this principle, you are expected to ensure that all the personal information you collect is precise, complete, and updated as required for the stated purpose. 

Compliance with Canada PIPEDA requirements in line with this principle is dependent on how you utilize the information you collect.

Ideally, you need to ensure the information you use to make inferences about users is updated to minimize the risk of making decisions about individuals using inaccurate data.

Safeguards

Considered one of the most crucial principles under Canada's PIPEDA, you need to ensure that the information you collect is safeguarded against unauthorized access, theft, copying, or modification.

It is important to note that the security of user information is essential even when you are disposing of records.

The level of protection should be proportionate to the sensitivity of the information you collect. Your data protection measures can include physical access barriers, such as passwords, organizational measures, such as granting access to specific staff members, or technological approaches, such as encryption. 

Openness

This principle requires you to ensure that you inform users about how you gather, process, and store their data. You should provide information about your personal data policies and processes in your privacy policy.

Additionally, you need to include the name and contact information of the individual you have appointed to facilitate compliance with PIPEDA.

Furthermore, you are required to provide users with information on how they can access the data you have collected about them and how you share it.

Individual Access

If an individual submits a written request regarding their personal data, you must respond by providing information about whether you have collected data about them, the type of data collected, how it has been used, and the third parties who have had access to it.

Furthermore, this PIPEDA principle requires you to allow individuals to determine whether the data you hold about them is inaccurate or incomplete. If they identify inaccuracies or incompleteness, you must allow them to correct or update the information.

Essentially, you are required to provide a complete response within 30 days of receiving the initial request.

Challenging Compliance

The tenth principle of Canada's PIPEDA requires you to establish procedures for receiving, reviewing, and addressing complaints of non-compliance.

Typically, you are expected to investigate the complaint and take necessary actions if you find the complaint to be valid. This may involve modifying your policies or processes.

Next, you need to inform the complainant about the actions taken and provide information on the steps they can take if they are not satisfied with your response to the complaint.

It is important to provide information to consumers on how they can challenge compliance with the privacy policy.

How Does PIPEDA Compare to Other Data Protection Laws Worldwide?

PIPEDA is a comprehensive law on the protection of personal information. When compared to other data privacy laws worldwide, it shares both similarities and differences with them.

In the global landscape, there are two general trends in data protection: one set by the General Data Protection Regulation (GDPR) of the European Union and the other set by the few US state laws we have so far, most notably the California CCPA.

In terms of individual consent requirements, PIPEDA leans more toward the GDPR. It doesn't mandate explicit consent in every single case, but the majority of online interactions with users would still require some form of consent.

This sets it apart from the opt-out framework present in the CCPA, but they do share a similarity in terms of applicability. PIPEDA applies only to the collection, use, or disclosure of personal information in the course of commercial activities. This means that if the data has not been collected as part of a commercial activity, it does not fall under the scope of PIPEDA.

If you have any doubts about whether PIPEDA applies to your organization, we recommend consulting our comprehensive compliance guide to learn more about Canada's PIPEDA and ensure that your business meets its data protection obligations. You can also explore how to have a PIPEDA-compliant cookie banner.

Alternatively, you can book a call today and speak to a data protection expert.