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Dechert Cyber Bits

 

Issue 70 - February 13, 2025


UK Data Regulator Expands Cookie Compliance Review Across the UK’s Top 1,000 Websites

The UK Information Commissioner's Office (“ICO”) has announced an expanded review of advertising cookie practices to encompass the UK’s top 1,000 websites – as well as apps and connected TVs. This initiative is part of the ICO’s 2025 online tracking strategy, which aims to provide users with “meaningful control” over how they are tracked online and promote privacy-preserving advertising practices. The strategy also indicates that the ICO will use automated monitoring to assess compliance.

In November 2023, the ICO renewed its focus on cookie compliance, issuing initial warnings to 53 of the UK’s top 100 websites (see Issue 46 and Issue 49 of Cyber Bits). Since then, the ICO has maintained its heightened scrutiny of websites’ cookie practices, expanding its review to include additional websites.

As part of the ICO’s 2025 online tracking strategy, new guidance was issued for organizations operating, or considering, a “consent or pay” business model. This model requires users to either consent to their personal information being used for personalized advertising or pay a fee to access products or services without such tracking. While the concept gets the green light from the ICO, the guidance emphasizes that user consent must be freely given and outlines factors organizations should consider to ensure compliance with data protection law.

Takeaway: The ICO's expanded review of cookies compliance and new guidance on “consent or pay” models demonstrate a strong commitment to investigating compliance with online tracking regulations. Given also the ICO’s intention to also use automated tools to assist with its review of websites’ use of cookies, organizations with UK-targeted websites attracting substantial numbers of UK visitors will want to check their compliance with cookie rules to avoid coming under the scrutiny of the ICO.


FTC Settles COPPA Allegations with Genshin Impact Developer for $20M

On January 17, 2025, the Federal Trade Commission (“FTC”) announced a proposed settlement with Singapore-based Cognosphere Pte. Ltd and its California-based subsidiary Cognosphere LLC (commercially known as “HoYoverse”) to resolve allegations that HoYoverse’s information collection practices violated the Children’s Online Privacy Protection Act (“COPPA”) and that its representations about its products and services relied on unfair and deceptive trade practices and violated the FTC Act. In its complaint, the FTC alleged that HoYoverse actively marketed its video game—Genshin Impact—to children and collected personal information from them in violation of COPPA, and deceived players about the odds of winning valuable “loot box” prizes. Specifically, the FTC alleged that HoYoverse used cartoon graphics, animated characters, and other features directed to children under the age of 13 and failed to provide adequate notice about the information they collected from children. The FTC also alleged that HoYoverse failed to provide notice about its information collection practices to parents and failed to obtain parental consent. With respect to the FTC Act, the FTC alleged that HoYoverse used unfair and deceptive tactics to market and promote the game; employing a gambling-like device to entice users to spend money on “loot boxes” that, when used in conjunction with HoYoverse’s complicated and confusing transaction procedures and exchange rates, increased the amount users paid; and overstated the odds of winning sought-after virtual items in “loot boxes” to further drive user spending.

Under the FTC’s proposed order, among other things, the company would be: (1) prohibited from allowing children (under 13) or early teen (under 16) users to make in-game purchases without a parent’s affirmative and express consent; (2) prohibited from selling loot boxes using virtual currency without providing an option to purchase them directly with real money; (3) banned from misrepresenting loot box odds; (4) required to disclose loot box odds and the exchange rates; (5) obligated to delete any personal information previously collected from children under 13 absent parental consent; (6) required to comply with COPPA and its notice and consent requirements; and (7) pay a $20 million penalty. In its press release, HoYoverse did not admit any wrongdoing in connection with the matter.

Commissioner Andrew N. Ferguson issued a separate concurrence with allegations that the HoYoverse violated COPPA and deceived customers about the odds of winning loot box prizes, but dissenting from the rest of the complaint, arguing, among other things, that the FTC’s distrust of loot-box schemes does not authorize the Commission to pursue “novel theories of liability advanced in the final hours of the Biden-Harris Administration.”

Takeaway: The proposed Order and the COPPA rules that come into effect this year (which we covered here) signal that COPPA compliance continues to be an area of focus and that game developers and companies with “online services directed to children” should take note. Companies will want to review COPPA compliance and take steps to comply with the new COPPA rules and will also want to be cognizant that their disclosures are full and accurate, and that opportunities for prizes, especially those directed to children, involve straightforward and clear rules. 


EU-U.S. Data Privacy Framework for Transfers Faces Political Challenges

The Privacy and Civil Liberties Oversight Board (“PCLOB“) is a bipartisan five-member Board appointed by the President and confirmed by the Senate which plays an important role in ensuring privacy and civil liberties are protected, in particular in relation to the activities of U.S. security agencies. President Trump recently fired all three Democratic-selected members of the PCLOB. These firings threaten the EU-U.S. Data Privacy Framework (“DPF”), which relies on the PCLOB’s oversight to permit data flows between the EU and the U.S. The DPF is a mechanism approved by the European Commission that is designed to facilitate the transfer of personal data to certified organizations in compliance with the GDPR (see our Dechert OnPoint here). 

The PCLOB was already one member down with an open Republican seat; it is now sub-quorum with only one active member. The PCLOB’s compromised independence, and operational capacity could undermine the DPF although the European Commission’s approval of the DPF remains in force for now.

Takeaway: The European Commission is required to continuously monitor the effectiveness of the DPF and can suspend, amend or repeal the validity of the DPF. In addition, privacy activists can challenge the validity of the DPF through litigation (which sealed the fate of the DPF’s predecessor frameworks, in particular the fall of the Privacy Shield). Here we go again? For the time being, the DPF remains valid, but organizations should be aware that they may need to implement alternative data transfer mechanisms should the European Commission or the courts decide that the DPF cannot operate effectively in light of the issues affecting the PCLOB. Organizations relying on alternatives such as standard contractual clauses for their transfers of personal data to the U.S. may also want to consider the current ineffectiveness of the PCLOB in their transfer impact assessments.


CPPA Keeps Up Pressure on Data Brokers with Key Marketing Advantage LLC Settlement

The California Privacy Protection Agency (“Agency”) announced its latest settlement in connection with a data broker’s failure to register as required by California’s Delete Act. Specifically, Key Marketing Advantage LLC (“Key Marketing”), a Connecticut-based data broker, has agreed to pay a $55,800 penalty and comply with certain injunctive terms to resolve allegations that it failed to: (i) register with the Agency; and (ii) pay an annual fee as required by California’s Delete Act.

The Delete Act requires data brokers—i.e., businesses that collect and sell personal information belonging to consumers with whom they don't have a direct relationship—to register with the Agency by January 31 of each year and to pay an annual fee of $6,600. The fees fund the Data Broker Requests and Opt-Out Platform (“DROP”), a novel deletion mechanism that will allow a consumer to direct all data brokers to delete their personal information in a single request. Data brokers who fail to comply with registration and fee requirements face fines of $200 a day.

The settlement agreement with Key Marketing was announced days before this year’s January 31 registration deadline. The deal marks the resolution of the Agency’s fifth enforcement action since it first began enforcing the Delete Act in November 2024 and is the largest monetary penalty to date. (Our coverage of the first set of enforcement actions is available here).

Takeaway: The Agency’s latest enforcement action against Key Marketing is its most aggressive to date, signaling that the Agency has no intention of scaling back its efforts to enforce the Delete Act. As the Agency continues to pursue enforcement actions, companies that purchase and license or sell in-scope data will want to make sure they have conducted an applicability analysis and, where needed, appropriately comply with the Agency’s requirements.


English High Court Decision Clarifies Scope of "Personal Data" and Access Requests

The English High Court ruled against the UK’s tax authority, HMRC, in a case involving a subject access request (“SAR”) by the well-known British retail tycoon, Mike Ashley. The Court found that HMRC had adopted an overly narrow definition of “personal data” when evaluating Mr. Ashley’s request for data processed by HMRC in the context of a tax dispute. HMRC had also improperly applied an exemption relating to tax investigations.

The judge ruled that data related to HMRC’s tax investigation into Mr. Ashley was not his personal data simply because the investigation concerned him, rejecting Mr. Ashley’s argument to that effect. The key question was not whether the purpose of the processing activities related to him, but rather whether any given piece of information related to him. The Court considered that the “related to” requirement would be satisfied where information is linked to a particular person by reason of its “content, purpose, or effect.”

The Court required HMRC to re-assess the information it held adopting the correct approach as set out by the Court. In particular, the Court advised that valuation figures of Mr. Ashley’s properties would be his personal data, as they were directly relevant to HMRC’s assessment of his tax liability, but that valuations of comparable third-party properties were very unlikely to be his personal data even though they were used to benchmark the valuation of his own properties.

Takeaway: The decision clarifies that “personal data” is not limited to information that is “biographical in a significant sense” or has the data subject as its “focus” – notions which had been suggested by previous UK case law. The Court adopted an approach aligned with EU guidance, that information could be sufficiently linked to an individual because of (i) its content, (ii) the purposes for which it is likely to be processed, or (iii) the impact of the data processing on the individual. While the purpose is a relevant factor, the assessment depends on the particular information under consideration rather than the overall purpose of the processing activities. Organizations dealing with access requests will want to be mindful of the Court’s guidance in assessing the data to be provided in response to a request.


Dechert Tidbits

Italian Data Protection Authority Investigates DeepSeek

The Garante, the Italian Data Protection Authority, ordered DeepSeek, the Chinese AI challenger, to limit the processing of data of Italian users and requested it to disclose details on how it collects, stores, and uses Italians’ data. The Garante launched an investigation, giving DeepSeek 20 days to provide the requested information. Other European data protection authorities have reportedly also launched, or are considering, investigations into DeepSeek’s compliance with the GDPR.

EDPB Publishes Draft Guidelines on Pseudonymization

Last month, the European Data Protection Board published its Guidelines 01/2025 on Pseudonymization to clarify the use and benefits of pseudonymization—a process designed to control attribution of personal data to specific individuals. To promote the pseudonymization of personal data, the Guidelines require that: (i) it must not be possible for pseudonymized data to be attributed to an identified or identifiable natural person absent the use of additional information; and (ii) such additional information must be kept separately and subject to measures to ensure confidentiality and prevent unauthorized use.

President Trump Rolls Back Biden's AI Executive Order with New One

On January 23, 2025, President Donald Trump signed an executive order directing government agencies to “suspend, revise, or rescind” safeguards on artificial intelligence implemented by the Biden Administration. The executive order states those safeguards hampered private sector innovation and the Trump administration’s efforts to solidify the United States as “the global leader in AI.”

FTC Issues Surveillance Pricing Findings, Issues Request for Information

The Federal Trade Commission ("FTC") released its initial findings from its Surveillance Pricing study. According to the study, companies use personal data not only to target consumers, but also to dictate the products presented to them and the prices they pay. Through its study, the FTC hopes to “remain vigilant and ensure that the rules are not stacked in favor of profit at the expense of consumers and fair competition.” The Commission issued a request for information on surveillance pricing that is open through April 17, 2025.


We are honored to have been recognized in The Legal 500, Chambers USA, nominated by The American Lawyer for the Best Client-Law Firm Team award with our client Flo Health, Inc., and named Law360 Cybersecurity & Privacy Practice Group of the year! Thank you to our clients for entrusting us with the types of matters that led to these recognitions.


Recent News and Publications


Content Editors

Dylan Balbirnie, Connor Flannery, Anita Hodea, Allie Ozurovich and James Smith

Production Editors

Hilary Bonaccorsi and Madeleine White

Partner Committee Editors

Timothy Blank and Paul Kavanagh


Dechert Cyber Bits Partner Committee


"Dechert has assembled a truly global team of privacy and data security lawyers. The cross-practice specialization ensures that clients have access to lawyers dedicated to solving a range of client’s legal issues both proactively and reactively during a data security related crisis or a litigation."

"The privacy and security team collaborates seamlessly across the globe when advising clients."
- Quotes from The Legal 500

 

Dechert’s global Cyber, Privacy and AI practice provides a multidisciplinary, integrated approach to clients’ privacy and cybersecurity needs. Our practice is top ranked by The Legal 500 and our partners are well-known thought leaders and sought after advisors in the space with unparalleled expertise and experience. Our litigation team provides pre-breach counseling and handles all aspects of data breach investigations as well as the defense of government regulatory enforcement actions and class action litigation for clients across a broad spectrum of industries. We have handled over a thousand data breach investigations of all types including nation states, ransom/cyber extortion, vendor/supply chain, DDoS, brought by threat actors of all types, from nation-state threat actors to organized crime to insiders. We also represent clients holistically through the entire life cycle of issues, providing sophisticated, solution oriented advice to clients and counseling on cutting edge data-driven products and services including for trend forecasting, personalized content and targeted advertising across sectors on such key laws as the CCPA, CPRA and state consumer privacy laws, Section 5 of the FTC Act; the EU/UK GDPR, e-Privacy Directive, and cross-border data transfers. We also conduct privacy and cybersecurity diligence for mergers and acquisitions, financings, corporate transactions, and securities offerings.

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