Is your marketing profiling lawful, fair and transparent?
ICO fines catalogue retailer £1.35 million for ‘invisible processing’
Many companies want to know their customers better. This is not a bad thing. Information gathered about people is regularly used for a variety of activities including improving products and services, personalisation or making sure marketing campaigns are better targeted.
However, the significant fine dished out to catalogue retailer Easylife highlights why companies need to be transparent about what they do, have a robust lawful basis, be careful about making assumptions about people and take special care with special category data.
It also shows how profiling is not limited to the realms of online tracking and the adtech ecosystem, it can be a simpler activity.
What did the catalogue retailer do?
Easylife had what were termed ‘trigger products’ in its Health Club catalogue. If a customer purchased a certain product, it triggered a marketing call to the individual to try and sell other related products. This was done using a third-party call centre.
Using previous transactions to tailor future marketing is not an unusual marketing tactic, often referred to as ‘NBA – Next Best Action’. The key in this case is Easylife inferred customers were likely to have certain health conditions based on their purchase of trigger products.
For example, if a customer bought a product which could be associated with arthritis, this triggered a telemarketing call to try and sell other products popular with arthritis sufferers – such as glucosamine and bio-magnetic joint patches.
Data relating to medical conditions, whether provided by the individual or inferred from other data, is classified as special category data under data protection law and handling this type of data requires special conditions to be met.
The ICO’s ruling
To summarise the ICO’s enforcement notice Easylife was found have failed to:
- have a valid lawful basis for processing
- meet the need to have an additional condition for processing special category data
- be transparent about its profiling of customers
It was found to have conducted ‘invisible processing’ of 145,000 customers.
There were no complaints raised about this activity; it only came to light due to a separate ICO investigation into contraventions of the telemarketing rules. The ICO says it wasn’t surprised no one had complained, as people just wouldn’t have been aware this profiling was happening, due to the lack of transparency.
It just goes to show ICO fines don’t always arise as a result of individuals raising complaints.
Easylife argued it was just processing transactional data. The ICO ruled when this transactional data was used to influence its telemarketing decisions, it constituted profiling.
The ICO said while data on customer purchases constituted personal data, when this was used to make inferences about health conditions, this became the processing of special category data. The ICO said this was regardless of the statistical confidence Easylife had in the profiling it had conducted.
Easylife claimed it was relying on the lawful basis of Legitimate Interests. However, the Legitimate Interests Assessment (LIA) the company provided to the ICO during its investigation actually related to a previous activity, in which health related data wasn’t used.
When processing special category data organisations need to make sure they not only have a lawful basis, but also comply with Article 9 of UK GDPR.
The ICO advised the appropriate basis for handling this special category data was with the explicit consent of customers. In other words legitimate interests was not an appropriate basis to use.
Easylife was found to have no lawful basis, nor a condition under Article 9.
It was ruled there was a lack of transparency; customers hadn’t been informed profiling was taking place. Easylife’s privacy notice was found to have a ‘small section’ which stated how personal data would be used. This included the following:
*Keep you informed about the status of your orders and provide updates or information about associated products or additional products, services, or promotions that might be of interest to you.
*Improve and develop the products or services we offer by analysing your information.
This was ruled inadequate and Easylife was found to have failed to give enough information about the purposes for processing and the lawful bases for processing.
The Data Processing Agreement between Easylife and its processor; the third-party call centre, was also scrutinised. While it covered key requirements such as confidentiality, security, sub-contracting and termination, it failed to indicate the types of personal data being handled.
Commenting on the fine, John Edwards, UK Information Commissioner, said:
“Easylife was making assumptions about people’s medical condition based on their purchase history without their knowledge, and then peddled them a health product – that is not allowed.
The invisible use of people’s data meant that people could not understand how their data was being used and, ultimately, were not able to exercise their privacy and data protection rights. The lack of transparency, combined with the intrusive nature of the profiling, has resulted in a serious breach of people’s information rights.”
Alongside the £1.35 million fine, Easylife’s been fined a further £130,000 under PECR for making intrusive telemarketing calls to individuals registered on the Telephone Preference Service. Currently the maximum fine for contravening the marketing rules under PECR is £500,000, much lower than potential fines under DPA 2018/UK GDPR.
Update March 2023: The ICO announces reduction in GDPR fine from £1.35 million to £250,000.
6 key takeaways
1. If you are profiling your customers, try to make sure this is based on facts. Making the type of assumptions Easylife was making will always carry risks.
2. Be sure to be transparent about your activities. This doesn’t mean you have to use the precise term ‘profiling’ in your privacy notice, but the ways in which you use personal information should be clear.
3. Make sure your clearly state the lawful bases you rely upon in your privacy notice. It can be helpful and clear to link lawful bases to specific business activities.
4. If you’re processing special category data, collected directly or inferred from other data, make sure you can meet a condition under Article 9. For marketing activities the only option is explicit consent.
5. If you’re conducting profiling using special category data, carry out a DPIA.
6. Always remember the marketing rules under PECR for whatever marketing channel you’re using. For telemarketing, if you don’t have the consent of individuals, be sure to screen lists against the TPS.