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Source: Internet.com

Posted on December 22, 2000

      Canada's new privacy legislation, set to go into effect the early part of January, 2001, has a number of e-tailers worried about compliance and disclosure issues. A recent study of Canadian Web sites indicates most online businesses are not nearly ready for the legislation.

      The new law specifies e-commerce sites must disclose the identity of all data collection sources over the Internet. The Personal Information Protection and Electronic Documents Act is slated to go into effect January 1, 2001. Yet a major study, conducted at the University of Ottawa between May and September this year, indicates that most leading Canadian Web sites are not ready for the new law. In fact, the study suggests that public privacy fears may be well-founded, since at least 25 per cent of the sites surveyed collected significant personal data without disclosing their privacy policies.

      The study examined 259 leading Web sites based in or targeting Canada. The Personal Information Protection and Electronic Documents Act will require data collects to provide transparent privacy policies. The primary objective is to obligate Internet sites to disclose where they are getting their data, why it is being collected, and how it is being used.

      The legislation is intended to address the fact that personal and financial data can be easily collected over the Internet without disclosure, specifically without disclosing the collector's identity or intent. In the study mentioned above, 41 percent of the sites surveyed failed to disclose their privacy policies. An even greater percentage of Canadian sites failed to provide this information.

      The new law will apply initially to the federally regulated private sector, including transportation, telecommunications and some financial institutions, and interprovincial trade. Any commercial activity that uses information about an identifiable individual will be covered under the law. It will require an individual's consent before information is collected, used or disclosed to a third party. The law is specifically focused on the business-to-consumer relationship and does provide a limited exception for business-to-business information. It is expected this will result in more business efficiencies through better information handling practices.

      Part of the reason the legislation is being put into effect, besides the obvious need for accountability with regard to data collection, is the troubling fact that Canadian sites are famous for egregious non-disclosure policies.

      For instance, while 33 percent of dual-origin (primarily originating from the U.S.) sites failed to provide privacy contact information, 66 percent of Canadian-based sites failed to do so. Even more alarming is the fact that only 14 percent of dual origin sites failed to disclose whether they share information with third parties, while 49 percent of Canadian-based sites fail to do so.

      Although the law will apply only to federally regulated businesses such as banks and broadcasters as of Jan. 1, many non-regulated e-businesses will be have to provide data collection and dissemination information.

      Provinces have three years to pass their own substantially similar legislation or the federal law will apply within their province. Quebec already has a privacy law governing the private sector.

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