[BreachExchange] Don’t Gamble With The GDPR

[Destry Winant]

https://www.jdsupra.com/legalnews/don-t-gamble-with-the-gdpr-44911/

The European Union’s (EU) General Data Protection Regulation (GDPR)
goes into effect on May 25, and so do the significant fines against
businesses that are not in compliance. Failure to comply carries
penalties of up to 4 percent of global annual revenue per violation or
$20 million Euros – whichever is higher.

This regulatory rollout is notable for U.S.-based hospitality
businesses because the GDPR is not just limited to the EU. Rather, the
GDPR applies to any organization, no matter where it has operations,
if it offers goods or services to, or monitors the behavior of, EU
individuals. It also applies to organizations that process or hold the
personal data of EU individuals regardless of the company’s location.
In other words, if a hotel markets its goods or services to EU
individuals, beyond merely having a website, the GDPR applies.

The personal data at issue includes an individual’s name, address,
date of birth, identification number, billing information, and any
information that can be used alone or with other data to identify a
person.

The risks are particularly high for the U.S. hospitality industry,
including casino-resorts, because their businesses trigger
GDPR-compliance obligations on numerous fronts. Hotels collect
personal data from their guests to reserve rooms, coordinate event
tickets, and offer loyalty/reward programs and other targeted
incentives. Hotels with onsite casinos also collect and use financial
information to set up gaming accounts, to track player win/loss
activity, and to comply with federal anti-money laundering “know your
customer” regulations.

Privacy Law Lags in the U.S.

Before getting into the details of GDPR, it is important to understand
that the concept of privacy in the United States is vastly differently
from the concept of privacy in the rest of the world. For example,
while the United States does not even have a federal law standardizing
data breach notification across the country, the EU has had a
significant privacy directive, the Data Protection Directive, since
1995. The GDPR is replacing the Directive in an attempt to standardize
and improve data protection across the EU member states.

Where’s the Data?

Probably the most difficult part of the GDPR is understanding what
data a company has, where it got it, how it is getting it, where it is
stored, and with whom it is sharing that data. Depending on the size
and geographical sprawl of the company, the data identification and
audit process can be quite mind-boggling.

A proper data mapping process will take a micro-approach in
determining what information the company has, where the information is
located, who has access to the information, how the information is
used, and how the information is transferred to any third parties.
Once a company fully understands what information it has, why it has
it, and what it is doing with it, it can start preparing for the GDPR.

What Does the Compliance Requirement Look Like in Application?

One of the key issues for GDPR-compliance is data subject consent. The
concept is easy enough to understand: if a company takes a person’s
personal information, it has to fully inform the individual why it is
taking the information; what it may do with that information; and,
unless a legitimate basis exists, obtain express consent from the
individual to collect and use the information.

In terms of what a company has to do to get express consent under the
GDPR, it means that a company will have to review and revise (and
possibly implement) its internal policies, privacy notices, and vendor
contracts to do the following:

Inform individuals what data you are collecting and why;
Inform individuals how you may use their data;
Inform individuals how you may share their data and, in turn, what the
entities you shared the data with may do with it; and
Provide the individual a clear and concise mechanism to provide
express consent for allowing the collection, each use, and transfer of
information. At a functional level, this process entails modifying
some internal processes regarding data collection that will allow for
express consent. In other words, rather than language such as, “by
continuing to stay at this hotel, you consent to the terms of our
Privacy Policy,” or “by continuing to use this website, you consent to
the terms of our Privacy Policy,” individuals must be given an
opportunity not to consent to the collection of their information,
e.g., a click-box consent versus an automatically checked box.The more
difficult part regarding consent is that there is no grandfather
clause for personal information collected pre-GDPR. This means that
companies with personal data subject to the GDPR will no longer be
allowed to have or use that information unless the personal
information was obtained in line with the consent requirements of the
GDPR or the company obtains proper consent for use of the data prior
to the GDPR’s effective date of May 25, 2018.

What Are the Other “Lawful Basis” to Collect Data Other Than Consent?

Although consent will provide hotels the largest green light to
collect, process, and use personal data, there are other lawful basis
that may exist that will allow a hotel the right to collect data. This
may include when it is necessary to perform a contract, to comply with
legal obligations (such as AML compliance), or when necessary to serve
the hotel’s legitimate interests without overriding the interests of
the individual. This means that during the internal audit process of a
hotel’s personal information collection methods (e.g., online forms,
guest check-in forms, loyalty/rewards programs registration form,
etc.), each guest question asked should be reviewed to ensure the
information requested is either not personal information or that there
is a lawful reason for asking for the information. For example, a
guest’s arrival and departure date is relevant data for purposes of
scheduling; however, a guest’s birthday, other than ensuring the
person is of the legal age to consent, is more difficult to justify.

What Other Data Subject Rights Must Be Communicated?

Another significant requirement is the GDPR’s requirement that guests
be informed of various other rights they have and how they can
exercise them including:

- The right of access to their personal information;
- The right to rectify their personal information;
- The right to erase their personal information (the right to be forgotten);
- The right to restrict processing of their personal information;
- The right to object;
- The right of portability, i.e., to have their data transferred to
another entity; and
- The right not to be included in automated marketing initiatives or profiling.

Not only should these data subject rights be spelled out clearly in
all guest-facing privacy notices and consent forms, but those
notices/forms should include instructions and contact information
informing the individuals how to exercise their rights.

What Is Required with Vendor Contracts?

Third parties are given access to certain data for various reasons,
including to process credit card payments, implement loyalty/rewards
programs, etc. For a hotel to allow a third party to access personal
data, it must enter into a GDPR-compliance Data Processing Agreement
(DPA) or revise an existing one so that it is GDPR compliant. This is
because downstream processors of information protected by the GDPR
must also comply with the GDPR. These processor requirements combined
with the controller requirements, i.e., those of the hotel that
control the data, require that a controller and processor entered into
a written agreement that expressly provides:

- The subject matter and duration of processing;
- The nature and purpose of the processing;
- The type of personal data and categories of data subject;
- The obligations and rights of the controller;
- The processor will only act on the written instructions of the controller;
- The processor will ensure that people processing the data are
subject to duty of confidence;
- That the processor will take appropriate measures to ensure the
security of processing;
- The processor will only engage sub-processors with the prior consent
of the controller under a written contract;
- The processor will assist the controller in providing subject access
and allowing data subjects to exercise their rights under the GDPR;
- The processor will assist the controller in meeting its GDPR
obligations in relation to the security of processing, the
notification of personal data breaches, and data protection impact
assessments;
- The processor will delete or return all personal data to the
controller as required at the end of the contract; and that
- The processor will submit to audits and inspections to provide the
controller with whatever information it needs to ensure that they are
both meeting the Article 28 obligations and tell the controller
immediately if it is asked to do something infringing the GDPR or
other data protection law of the EU or a member state.

Other GDPR Concerns and Key Features

Consent and data portability are not the only thing that hotels and
gambling companies need to think about once GDPR becomes a reality.
They also need to think about the following issues:

- Demonstrating compliance. All companies will need to be able to
prove they are complying with the GDPR. This means keeping records of
issues such as consent.
- Data protection officer. Most companies that deal with large-scale
data processing will need to appoint a data protection officer.
- Breach reporting. Breaches of data must be reported to authorities
within 72 hours and to affected individuals “without undue delay.
”This means that hotels will need to have policies in procedures in
place to comply with this requirement and, where applicable, ensure
that any processors are contractually required to cooperate with the
breach-notification process.