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Technology development has allowed for the greater and more efficient spread of business’ and consumers’ data. Your business will likely use different kinds of technology to aid your daily activities, such as information storage and customer transmission. The law regulates these areas with privacy law and other kinds of data rights that will vary depending on:

  • the kind of information you work with;
  • what countries you operate in; and
  • who your customers are.

Consumer data rights are a developing legal area relating to your customers’ privacy rights online and their control over their information. As a result, the New Zealand government is considering whether they should become part of our law. Therefore, this article will explain consumer data rights and whether your New Zealand customers have them.

What Are Consumer Data Rights?

As the way we share and use online information changes, the law needs to keep up by regulating areas where consumers’ privacy and data control may be at risk. A consumer data right is a mechanism for consumers to control what data they give to companies and how they can use it.

The phrase ‘consumer data right’ (CDR) refers to a legal right that a consumer has to share the personal data a company or organisation has about them with a trusted third party. Subsequently, the consumer gives their consent for this data transfer. The relevant data is in a readily usable format so that the third party can use it to benefit the consumer as they wish. As a result, this allows:

  • greater data portability;
  • competition between providers;
  • future technological developments;
  • secure connectivity between financial businesses; and
  • the consumer more control over their personal data.

At the moment, consumer data rights exist mainly in the banking sector, but both the energy industry and the telecommunications sector may use them in the future.

For example, if you have a consumer data right, you can ask your bank to share the personal or financial data they hold about you with a third party fintech company, like a payment transfer service. Then, that payment transfer service can operate using your data with your consent.

Note that consumer can refer to both individuals and businesses.

Do My NZ Customers Have Consumer Data Rights?

Other countries have already implemented a legal framework for regulating consumer data rights, such as Australia and the United Kingdom. However, New Zealand does not have an official position on these rights at this current point. As a result, consumer data portability is limited.

Despite this, there is a consumer data right scheme within the banking industry, which is the API Centre that Payments NZ runs. This program allows for a common regulation standard for online payments and account sharing within the industry. Relevant businesses and organisations can voluntarily sign up to be a part of this scheme and give their customers or clients the ability to control their data rights in this fashion.

Future Developments

However, this does not mean that there may not be legal developments in the area in the future. The Ministry of Business, Innovation, and Employment (MBIE) have been considering how consumer data rights would work in New Zealand, asking for feedback from sectors likely to use this legal framework. The end result may be an industry standard for consumer data rights that your customers can take advantage of for greater control over their data. MBIE proposed four options for such a programme, either:

  • no government initiative, letting industries maintain their own standard;
  • an overarching legal standard that may only apply to specific sectors, similar to the Australian approach;
  • a general consumer data right across all industries, such as what the GDPR establishes; or
  • different consumer data rights per sector as is necessary.

This area is still developing, so if consumer data rights are likely to affect your business, you should keep up to date with MBIE’s decision-making.

Consumer Data Rights and Your Privacy Obligations

No matter what form they take, consumer data rights will invoke your privacy obligations if the data you are transferring includes personal information. These may include:

  • financial accounts;
  • customer names;
  • customer contact details; and
  • any other identifying or sensitive information.

Therefore, you need to ensure that any data transfer you make is:

  • secure;
  • done so with customer consent; and
  • with a trusted third party that will also uphold their obligations under the Privacy Act.

You should also make sure you have plans for preventing and dealing with data breaches in this manner.

Key Takeaways

Consumer data rights are a legal option that consumers can use to ask companies that hold their personal information to share it with a trusted third party. This framework gives your customers more control over their data and provides regulation for the parties that transfer sensitive data. New Zealand does not currently have a legal framework for this, but it may in the future. If you would like more information or further guidance around how consumer data rights may impact your business, contact LegalVision’s data, privacy, and IT lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What are consumer data rights?

They are a legal framework that gives consumers the ability to ask organisations that store their information to share it with a trusted third party, such as a financial service.

Do my NZ customers have consumer data rights?

Currently, they do not exist in New Zealand’s regulation system. However, this is area is developing, and they may exist in the future.

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