Boardroom Briefing | July 2021

Boardroom Brief

In a world first, the Australian Competition and Consumer Commission (ACCC) successfully argued misleading and false representation around the collection of consumer data by Google which could well result in pecuniary penalties and orders against the technology giant. Privacy is front and centre for the regulator and for any entity dealing with consumers on a digital platform. Prosecutions by regulators are precipitated by investigations and the important question of whether your insurance policy responds.
The Federal Court: found that Google had misled Android customers into believing that by turning off their location history setting, Google could not trace their locations. Another setting however enabled Google to collect, store and use personal data about the users’ locations. Google’s conduct assessed as a whole, said the Court, “was misleading or deceptive or likely to mislead or deceive reasonable members of the class of consumers likely to be affected by the conduct”.
The Regulator: sees the win against Google as an “important victory for consumers” or indeed anyone interested in their online privacy. Further, “companies that collect information must explain their settings clearly and transparently, so consumers are not misled. Consumers should not be kept in the dark when it comes to the collection of their personal location data.”
The Government: is reviewing the Federal Privacy Act 1988 arising from the ACCC’s Digital Platforms Inquiry. The Attorney General’s Department is conducting a review of the Act to make sure consumers are empowered by their privacy settings and these Terms of Reference raise some potentially interesting coverage questions. For example, whether individuals should have direct rights of action to enforce privacy obligations under the Act and whether a statutory tort for serious invasions of privacy should be introduced into Australian law.
The Tech Giant: pointed out that the Federal Court had rejected many of the ACCC’s ‘broad claims’ and that it is now considering an appeal. The Court is yet to determine the penalty for Google, although each breach could potentially attract a fine of $1.1 million.
The Broker: sees one of the many lessons learnt from the Royal Commission into Misconduct in Banking and other recent investigations into corporate practice being the increase in regulator investigations, prosecutions, and penalties. Your PROFIN policies potentially respond to investigations by regulators against the business and individuals within it. For example, your professional indemnity policy might extend to the cost of enquiries by a regulator arising from the professional business. Or your D&O policy might cover investigation expenses arising from an inquiry into the affairs of a manager or director for which the individual must prepare for and attend. Civil penalties are contentious but potentially covered.
In Brief: the Google case is a direct warning to business on their transparency with data collection practices. Representations in your privacy policy could lead to liability under Australian Consumer Law. As part of a wider story, regulatory investigations are the new normal bolstered by the recent royal commissions. Your PROFIN policies might respond to those investigations. Preparing for a formal investigation is time consuming and expensive – always talk to your PROFIN broker if a notice to produce documents or give evidence comes your way.

Australian Competition and Consumer Commission v Google LLC (No 2) [2021] FCA 367

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