The Federal Court of Australia recently ordered Google to pay $60million for misleading consumers about the collection and use of personal location data. The decision can be found here.
The penalty decision follows proceedings brought by the Australian Competition and Consumer Commission (ACCC) against Google last year, alleging that Google’s settings misled users about whether Google would obtain, retain and use their personal data.
The Court’s decision signals a willingness from the ACCC and Australian Courts to enforce privacy and data laws and impose hefty fines against companies who fail to keep consumers’ concerns about data privacy and use “front of mind”. It is also likely to encourage regulator activity in New Zealand.
The misleading and deceptive conduct
In April 2021, the Federal Court found that Google was guilty of misleading and deceptive conduct, breaching Australian Consumer Law (ACL). The conduct arose from representations made about two settings on Android devices – “Location History” and “Web & App Activity”. The Federal Court of Australia separated the type of ACL contravention into three categories:
- “Setup Contraventions”: Concerning representations made to users about personal data collection and use when setting up a Google account.
- “LH Contraventions”: Concerning representations made to users that by turning the Location History setting “off”, Google would not be able to obtain, retain or use personal location data.
- “WAA Contraventions”: Concerning representations made to users that turning the Web & App Activity setting “on” would not allow Google to obtain, retain or use personal location data.
We explain the 2021 decision in more detail here.
The appropriate penalty
The ACCC and Google jointly submitted, and the Court agreed, that Google should pay pecuniary penalties of $60m, which was determined by reference to Google’s annual turnover. As it was estimated that more than 1.3 million Google users may have been misled, it was agreed that calculating a penalty by reference to the number of contraventions would result in a disproportionately large penalty.
The Court observed that consumers are justifiably and properly concerned about privacy and the storage and use of personal information. Accordingly, consumer concerns about data collection should be front of mind to commercial entities, such as Google, who profit from the use of such information. It is not acceptable that consumers be exposed to be misled on matters concerning their personal data, even by conduct which is not deliberate.
Our view
Businesses that collect or use consumer data should take note of the ACCC v Google penalty decision. The case:
- Highlights the importance of ensuring that representations made to consumers about how and when data will be collected, and what it will be used for, reflects what is happening in practice. This not only includes representations made in a business’ privacy policy but any other representations that may be made in customer interactions with the business. In the Google case, the court considered that by giving customers the option to turn off Location History customers would have been led into thinking that Google would not obtain, retain and use personal data about a user’s location when, in reality, location data was still being collected unless the user also turned off the “Web and App Activity” setting.
- Signifies a shift in the ACCC’s focus to consumer privacy and data collection. The New Zealand Commerce Commission may follow this trend. This is significant because penalties under the Fair Trading Act 1986 are far greater than penalties under the Privacy Act 2020.
- Demonstrates that companies found guilty of misleading consumers about the collection and use of their personal data will not get off lightly. While in New Zealand the maximum penalties for breach of the Fair Trading Act are lower than the penalties available in Australia under the ACL, there is still scope for significant penalties.
- Highlights the importance for businesses who profit from the use of consumer data to keep consumer concerns about personal data privacy and storage “front of mind”.
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We have assisted many of our clients with reviews of their privacy policies and data collection practices, and ensuring compliance with their obligations under the Fair Trading Act. Please contact our experts if you would like further information.
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