POPI and the defense of legitimate interest

However, given the wording of some of the sections of POPI, it seems unlikely that anyone can be fully prepared, since guidance and interpretation from the Information Regulator (Regulator) will be required to understand the extent of some of the sections. The term “legitimate interests” is referred to regularly in POPI and mainly relates to potential defenses available to persons and companies not complying with certain requirements set out in POPI, such as consent to process personal information.

POPI defines both “processing” and “personal information” in section 1, as well as providing eight conditions in section 4 that needs to be met in order for the processing of such information to be lawful. Read together, the processing of personal information relates to the obtaining, dissemination or merging of information relating to either a natural or a juristic person, where such information can be used to identify the person.

Sections relating to legitimate interest

POPI uses the term “legitimate interests” throughout the Act, but the most relevant provisions are those contained in sections 11, 12, 18 and 71.

Section 11 does not require consent to process personal information, provided that such processing either protects a legitimate interest of the data subject, or is “necessary for pursuing the legitimate interest of the responsible party or of a third party to whom it is supplied”. However, this defense against a lack of consent is obviated by the caveat in section 11(3), which allows a data subject to explicitly object to such processing.

Section 12 excuses the collection of personal information directly from the data subject under the same circumstances, but does not give the data subject the option to object, as in section 11(3).

Section 18 requires notification to a party whose information is being processed, but section 18(4)(b) specifies that compliance with this notification requirement is not necessary if “non-compliance would not prejudice the legitimate interests of the data subject as set out in terms of this Act”.

Section 71 relates to automated decision making regarding the use of personal information and restricts such automated decision making, unless provision is made for the legitimate interest of the data subject.

Interpretation of term “legitimate interest”

Relying on the “legitimate interests” defence of the data subject, the responsible party or a third party may thus find a way to get around some of the more restrictive provisions of POPI, when coming under scrutiny for seemingly not adhering to certain sections. It will be up to the Regulator to determine the interpretation and scope of the term “legitimate interests” and it seems likely that it will seek guidance from the European Unions’ General Data Protection Regulation 2016/679 (GDPR), The GDPR is a regulation in EU law on data protection and privacy, but unlike POPI, it is limited to the protection of natural persons and does not extend to juristic persons.

Section 233 of the Constitution of the Republic of South Africa, 1996 provides for the consideration of relevant international law in interpreting areas of uncertainty in South African law. Such guidance will be essential, especially since the term “legitimate interest” is not defined in POPI and, as the relevant provision will only commence on 1 July 2020, no case law on this POPI related issue exists.

Although there has been much speculation regarding the issue of “legitimate interests”, the South African Law Society has noted that much of this is based on an interpretation in favour of the data processor, rather than the data subject and have put forward the view that this approach is contrary to the provisions of the GDPR and is unlikely to find favour with the Regulator.

In its guidelines issued during 2018, the Law Society submitted that when considering the legitimate interests of a responsible- or third party, the data subject’s constitutional right to privacy must be balanced with the rights of the processor. The fact that the right to privacy is expressly protected in the South African Bill of Rights is an important consideration when undertaking this balancing of rights.

The GDPR has established a three-pronged test in interpreting “legitimate interests”, which is derived from Article 6(1)(f) of the GDPR and it is likely that the Regulator will, at least in the beginning, follow a similar approach. This test, which makes provision for three key elements of legitimate interests has been developed and confirmed by the Court of Justice in the European Union in the Rigas case C-13/16, 4 May 2017. The test looks at purpose, necessity and balance. It first asks, “Is there a legitimate reason or purpose for the processions?”, secondly “Is processing the information necessary for that purpose” and thirdly “Is the legitimate interest overridden by the interests of the data subject?” Only once all three these questions have been answered, will a determination be made on “legitimate interest”.

In addition to seeking guidance from the GDPR, the Regulator might also start looking to industry specific code, such as those developed by companies in line with the Consumer Protection Act 68 of 2008. If such industry code is subsequently accepted by the Regulator, it may become part of POPI.

Practical consequences

The approach to interpreting “legitimate interest” laid out above is admittedly quite a technical one and each case will likely have to be dealt with on its own merits. There are however, certain examples where it seems likely that the Regulator will find the defense of legitimate interests to prevail.

One such example would be where parties enter into a credit agreement and the one party defaults on its payments. Using the defaulting party’s personal information, without their consent, to track them and collect the debt owed would likely be justified by a “legitimate interest” defense. Another example would be where a user has requested deletion of their data, or to unsubscribe from a website or mailing list. In order to ensure that such a user remains unsubscribed, or that their email address is not used by another person, a data processor may retain only the details necessary for furthering those legitimate interests of the person.

A less clear cut example is a situation where a company uses a customer’s data to personalise their websites content by giving them more suitable recommendations. They could potentially argue that this will improve the customer experience and is thus in the legitimate interest of the customer.

Conclusion

Given the uncertainty regarding the way in which the Regulator will approach the interpretation of “legitimate interests”, we recommend that companies rather err on the side of caution. Instead of relying on the possible defense, it would be prudent to first attempt to comply with the provisions of POPI, especially those relating to consent and notification of the data subject. As companies have been given a period of one year to ensure that they comply with the provisions of POPI, there might be some guidance published by the Regulator during the course of this one year period. However, when in doubt it is always advisable to consult a legal practitioner to ensure compliance with the new act.