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How DPDP Act will impact the e-commerce businesses
In the second episode of ‘Gateway to data privacy and protection' podcast series, we delve into the impact of the Digital Personal Data Protection Act, 2023 on the e-commerce sector with Mini Gupta, EY India Cybersecurity Consulting Partner. Discover how data fiduciaries, including e-commerce platforms and retailers can, navigate through intricate data protection dynamics and what could be the possible consequences of non-compliance.
Data fiduciaries in e-commerce such as technology platform providers and retailers play a crucial role in safeguarding and managing consumers’ personal data.
Employing data masking and encryption and allowing limited access are some of the ways to mitigate the risks associated with data.
The Digital Personal Data Protection Act, 2023 also carries provisions for penalties in case of non-compliance and suggests setting up of a central authority to monitor compliance and address misuse of data effectively.
The podcast was recorded before the Bill became an Act of Parliament on 11 August 2023.
Data protection is a shared responsibility in the e-commerce space, where platforms and retailers play vital roles.
Mini Gupta
EY India Cybersecurity Consulting Partner
For your convenience, a full text transcript of this podcast is available on the link below:
Pallavi: Welcome to an exciting new episode of ‘Gateway to data privacy and protection’ special series, presented by EY India Insights Podcast. I am your host Pallavi and today we have a captivating topic in store for you – the impact of the data privacy Act on e-commerce. Joining us is our esteemed guest, Mini Gupta. As a Cybersecurity Consulting Partner at EY India, with an impressive two decade-long career in risk management across diverse sectors, Mini brings valuable insights to the table. Over the past 10 years, she has worked on data privacy in India and globally. Mini, we are thrilled to have you back in our podcast.
Mini: Thank you, Pallavi.
Pallavi: In e-commerce, we have platforms and retailers in various permutations and combinations. Who will be the data fiduciary in this case – the platform or the seller? After all, both would be collecting data from the data principal.
Mini: Data fiduciary is the one who decides the means and purpose of the personal data that is being collected. In the case of an e-commerce environment, the platform provider in e-commerce will definitely be one of the data controllers, because they collect personal data at the time of registration and process it for purposes such as marketing, analytics, or targeting. The e-commerce platform will be considered as a data fiduciary unless it is a pure technology play where the platform is only providing a technology layer and everything else on top of that is being decided by the retailers or the entity that has engaged with the e-commerce platform provider. But if you look at the regular e-commerce platforms, they typically act in the capacity of a data fiduciary.
Similarly, if you look at the retailers or the sellers on the platform, there are larger retailers and sellers who decide what is the kind of data that they collect – for processing or fulfilling orders. They may also be considered as data fiduciaries unless these are retailers that the platform or the e-commerce organization is engaging purely to collect goods and then deliver to customers without revealing who the end-customer is or providing any personal data. If the platform providers are not passing on personal information to the retailer, and the retailer is just there to provide goods and services, they (retailer) would be the processors.
However, if these are retailers who are deciding what could be the various parameters or details required for an end consumer to fulfill the orders, then they would also be considered as data fiduciaries.
While there are various permutations and combinations when it comes to platforms and retailers, their role as a data fiduciary may be similar. Both could be data fiduciaries or there could be combinations where each one of them is a processor more than a fiduciary, depending on the role that they play. But the principle to follow is that any entity which is determining the means and purpose of collecting and processing the customer's personal data would act as a data fiduciary.
Pallavi: In online businesses, often the person or the organization fulfilling the order of the data principal is a small business or an individual. For example, an Uber or Ola driver has a platform. Uber or Ola is accessing the data of the person as well as the driver partner. Similarly, for businesses like Urban Company (earlier Urban Clap), how can the data principal’s data be safeguarded?
Mini: In such scenarios, an Uber or an Ola are the data fiduciary themselves and they have to ensure that adequate data protection measures are put in place prior to sharing personal data with the small businesses or individuals. In some cases, there is obfuscation of personal data such that while they can reach out to an individual, personal details such as mobile numbers are not available. However, some necessary data such as name and address will be provided. While controls such as data masking and data obfuscation can be used, there will still be some limited data that may need to be shared. Hence, it is the duty of the data fiduciary to ensure that smaller businesses, set-ups or individuals are sensitized about the matter, the confidentiality of such data being shared, and the need to keep this data protected as well.
Right now, there are measures such as non-disclosure agreements or confidentiality agreements, along with consequence management, that could be signed with smaller businesses or individuals to act as a deterrent and to ensure that they protect the data principal’s personal data and avoid any misuse.
In all cases, it is the responsibility of the data fiduciary, and more so when they are dealing with smaller setups, to sensitize and also put data protection measures in place.
Pallavi: Thank you for those insights, Mini. If a data principal chooses to stop using a platform and withdraws consent, the platform may have the capability to extinguish the data. But will it not still remain with intermediaries?
Mini: There is a chance that personal data may be available with the intermediaries and individuals who may come to service the data principal. However, limiting the exposure of personal data to these individuals is one measure. It could be (through) data masking or data obfuscation, which limits what gets exposed to them and is purely what they need for providing the services. That's one measure that can prevent the misuse of such personal data.
Additionally, once the customer withdraws consent, it is the data fiduciary’s responsibility to inform these individuals of the same and to ensure that such personal data is not referred to at all.
In fact, irrespective of whether the consent is withdrawn or not, ideally, the data fiduciary should ensure that these individuals or smaller businesses purge or delete the data when it is no longer required. Once the service has been provided, there is no need to retain the data. Irrespective of whether the consent has been withdrawn or not, the data fiduciary should take measures to ensure that the smaller businesses or individuals, once they no longer need the data, delete it or that they understand that it should not be used anymore. But in case it (data) is being used, then once the withdrawal of consent takes place, the data fiduciary has to ensure that all such entities are immediately informed about deleting this data or are not using the data going further.
A measure of strong consequence management is also required here to act as a deterrent in case the individual still chooses to misuse the data even after withdrawal of consent.
Pallavi: We often see that in digital businesses there is constant churning of product or service providers who fulfill orders through the platform. If these providers leave for another platform, how will the data fiduciary ensure that they do not retain any sensitive data?
Mini: The exposure to personal data should be limited. That is really the crux of these matters – how do I minimize data; how can I adopt data minimization as a principle that is implemented across digital businesses, such that only the required sensitive personal data which is necessary for processing is collected and shared further?
Wherever possible, data should be masked, encrypted prior to sharing so that it remains protected. Rather than sharing personal data, we have enough and more maturity in technology products such that the data can be made available on a real-time basis on the digital business provider platform and not really shared. The data is not really moving environments, it is only made available within the window that the business provider needs it for and then it is not available. In some cases, data is completely masked, and it is tech to tech that takes care of provisioning without really divulging any personal data.
These are various measures that can be put in place to ensure that the service provider does not really come in contact with personal data. And even if they do, it is limited to what they really need and the time window for which they need it and not beyond. Technology plays a key role here to ensure that you are not just leaving it on an individual to delete, but you are actually narrowing the window and narrowing the possibility of misuse by obfuscating it and using the right protection measures.
Pallavi: Although there are provisions for fines for data fiduciaries if they misuse data, how does that help the data principal or those whose data has been misused?
Mini: While there is no provision in the Act that mentions how to help someone whose data is being misused in case of a compromise or misuse, it does mention that the data fiduciary has to pay the penalty. There is no measure or means provided for compensation to a data principal, but this still acts as a deterrent. The penalties and fines imposed on a data fiduciary or the provision for fines act as a means of ensuring that the data fiduciary is putting the right controls in place, is taking privacy seriously, has the right intent and framework such that the data at the first hand itself does not get compromised or misused.
However, if it does get misused, it is left to the data protection authorities to decide on a case-by-case basis if they shall impose any penalty on the data fiduciary for them to compensate the data principals. But there is no monetary compensation that has been defined and the objective is not to make money, but to see how the data can be protected in the first place.
Pallavi: What institutional capacity is being built to ensure careful monitoring of these laws? In case of a data breach that harms a data principal, will there be a separate agency to handle it?
Mini: According to the Act, a data protection authority or a body will be formulated to take care of matters related to data breach or harm that may be caused to data principals. As is in other global privacy regulations, India shall also follow the same approach of setting up an authority that would act as a central body to monitor the non-compliances.
In fact, this is the body that would also come into play in case any data principal’s grievance to the data fiduciary is not being fulfilled or addressed adequately. In addition to that, there is also a mention of having periodic independent audits based on the type of data fiduciary, which will again help monitor the framework and the practices in place that organizations have put in to ensure compliance with the law. All of these put together act as both preventive and detective measures and ways of monitoring compliance with data privacy.
We will have an authority that will look at such specific cases.
Pallavi: Thank you for joining us and sharing your valuable insights on the impact of the Digital Personal Data Protection Act, 2023 on the e-commerce sector.
Mini: Thank you for having me here.
Pallavi: On that note, we come to the end of this episode. If you would like us to explore other such topics on data security and privacy, please do leave us some suggestions that you would like us to deep dive into. Thanks for listening in. Until next time, this is Pallavi, signing off.
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