What you should know about PIPEDA

March 02, 2020 / Time to read: 3 minutes
What you should know about PIPEDA
Concern over online security and privacy is one of the major barriers to doing business online. Companies, large and small must ensure that they use customer data in a responsible, ethical way without putting them at risk. This was the primary motivation behind the government’s PIPEDA initiative to safeguard personal data, particularly in the fast-growing digital space, help customers gain a higher level of control over their data and ensure transparency through the data collection.  

What is PIPEDA? 

The Personal Information Protection and Electronic Document Act (PIPEDA) is a Canadian data privacy law regulating how organizations in the private sector collect, use, and share personal information. Contained within the act are several provisions for the use of electronic documents (e-documents), particularly concerning their signing, validity, and legal weight. 

PIPEDA was enacted by the Parliament of Canada and made into law in April 2000. Every five years, the act is reviewed and updated as deemed necessary by the Office of the Federal Privacy Commissioner. The act was designed to protect consumer data held by e-commerce businesses to help promote customer-business trust. 

The act was also partly intended to reassure the EU that Canadian organizations can sufficiently protect the personal data of EU citizens trading and interacting with businesses on this side of the Atlantic. The EU later went ahead and enforced a similar act of their own in 2018, called the General Data Protection Regulation (GDPR), to oversee data protection and privacy for businesses involving EU citizens. 



Where does PIPEDA apply? 

PIPEDA is a national law that applies to all private organizations in Canada that, in one way or another, gather, utilize, and deal with personal information during their commercial processes. Some provinces, such as Quebec, Alberta, and British Colombia, have their own provincial laws that are substantially similar to PIPEDA. Organizations operating within such territories don't necessarily have to comply with PIPEDA regulations. 

However, any organization that handles personal information across provincial or national borders must observe PIPEDA requirements and laws. These include businesses based in provinces with data privacy laws similar to PIPEDA. All Federal regulated businesses operating in Canada are also subject to PIPEDA. 


PIPEDA provisions and responsibilities 

The PIPEDA act defines personal details as any subjective information, whether recorded or not, regarding an identifiable individual. In this case, personal information includes:

  • Personal identification and orientation details such as ID number, name, ethnicity, and demographic 
  • Socially subjective information such as evaluation reports, social status, opinions, and comments 
  • Details in employee files, such as credit records and medical reports 


There are, however, a few exceptions in which PIPEDA does not apply. For instance, personal information held by federal, provincial or territorial governments does not fall under PIPEDA regulations. Also, business contact information and publicly available data is not affected by the act. 

From a general perspective, the act follows a straightforward premise. Any organization compliant with PIPEDA must obtain consent from the individual before it can collect, use, or disclose personal information. There should be transparency when it comes to handling personal data. In other words, the collected information must only be used for the intended purposes of which the individual must consent to and be aware of. 

Also, citizens have the right to access their personal data retained within the organization. Anyone can also request changes to their own information to contest or correct inaccuracies. 

The PIPEDA act is broken down into 10 fair information principles that dictate how complaint organizations should handle personal information. 


Why compliance is a big deal 

There is an ever-growing global concern over how organizations, commercial or otherwise, should use personal information collected from consumers and employees. These concerns stem from the fact that many organizations nowadays collect vast amounts of sensitive data from consumers through e-commerce transactions and online interactions. 

As a response to the situation, international, regional, and national governments have taken initiatives to safeguard their citizens' private information when it is in the hands of merchants and institutions. Through data privacy and protection laws, government and standardization agencies can set limits on just how much power organizations have over personal information. 

Compliance with such laws and regulations is mandatory for organizations that fall within the targeted group, business model, or region. Failure to comply often attracts fines and other penalties. For instance, recent changes made on the act impose a $100,000 fine for non-compliance. 

Staying on the right side of privacy laws calls for businesses to implement proactive data protection measures and follow ethical and considerate practices when handling sensitive, incriminating, subjective, and private data. Overall, these laws and practices make data-driven e-commerce much safer and transparent, which helps build trust among businesses and their customers. 

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