Changes in EU online data rules may impact HK traders

Hong Kong companies selling to consumers in one or more EU Member States will recall that, on 25 January 2012, the European Commission had proposed a reform to the existing data protection framework, based on the 1995 data protection Directive.

A broad legislative package with the intention of safeguarding personal data across the EU, as well as harmonising the existing regime and imposing a single law to make it easier for businesses operating under multiple jurisdictions, was proposed. The proposed package consisted of a general draft Regulation on data protection directly applicable in all Member States, and a specific draft Directive on data protection in the areas of police and justice to be transposed into national law.

Some of the changes that have been suggested may be known to Hong Kong traders. These include the requirement for explicit consent, involving affirmative action by the subject, where implied consent by way of inaction by the data subject will no longer be considered valid. The proposals also seek to change the scope of the law and make the future Regulation applicable to any controller established outside the EU, collecting and processing personal data of EU residents.

Also, companies processing the personal data of more than a certain number of data subjects will be obliged to appoint a Data Protection Officer. These and other proposed changes will have a significant impact on businesses that trade within the EU, and can increase liability for organisations in some cases. The two proposals have been discussed in the relevant committees of the European Parliament and are undergoing further consideration.

The issues surrounding the reform touch on many industry areas, and views of a wide variety of stakeholders and involved consumer groups have to be seriously considered by those leading the legislative process. The survey by the European Multi-channel and Online Trade Association (EMOTA), Europe’s largest e-commerce association, representing 80% of EU online traders, shows that more than two-thirds of online retailers feel that the proposed changes will negatively affect business to a significant extent.

In this connection, 90 companies from 8 EU countries were asked to assess the impact of the regulatory changes on their business. According to the survey, it was found that the companies feared that the new rules would result in increased costs and badly affect marketing and consumers’ experience of buying goods and services online.