Data pro­tec­tion in e‑commerce: guest accounts required?

Cus­to­mers orde­ring mer­chan­di­se online will typi­cal­ly open a cus­to­mer account without thin­king twice. Asi­de from pro­vi­ding a means to easi­ly con­ta­ct the retailer, cus­to­mers fre­quent­ly use the­se accounts to check the sta­tus of their order or make chan­ges to their order. Accounts also give cus­to­mers an easy way to place addi­tio­nal orders without having to enter all of their infor­ma­ti­on again every time. Becau­se the­se accounts fos­ter cus­to­mer rela­ti­ons­hips in this way, some retailers actual­ly requi­re cus­to­mers to open an account befo­re pla­cing an order. But in accordance with a recent­ly publis­hed reso­lu­ti­on (PDF only in Ger­man) by the Con­fe­rence of Inde­pen­dent Federal and Sta­te Data Pro­tec­tion Aut­ho­ri­ties (the “Data Pro­tec­tion Con­fe­rence,” or “DSK”), this prac­ti­ce vio­la­tes data pro­tec­tion law.

The view of the Data Pro­tec­tion Conference

Given the legal basis for pro­ces­sing in this case, per­for­mance of a con­tract, as well as the princip­le of data mini­miz­a­ti­on, DSK con­clu­des in its reso­lu­ti­on that con­trol­lers which offer goods or ser­vices online are gene­ral­ly requi­red to allow cus­to­mers to place orders via guest access, inde­pendent­ly of the opti­on of crea­ting a regis­tered account. The reso­lu­ti­on notes that the pro­ces­sing of per­so­nal data in the form of a regis­tered cus­to­mer account, inclu­ding user names and pass­words, can only be based on per­for­mance of a con­tract if the cus­to­mer actual­ly intends to place recur­ring orders, which would requi­re a deli­be­ra­te state­ment of intent from the cus­to­mer, in the form of con­sent. Sin­ce con­sent must be vol­un­ta­ry in accordance with the GDPR, DSK takes the view that retailers are requi­red to offer an alter­na­ti­ve in the form of guest accounts, through which retailers collect only the per­so­nal data which is necessa­ry for per­for­mance of the con­tract and ful­fill­ment of their legal requirements. 

Is the DSK reso­lu­ti­on unconstitutional?

DSK’s ana­ly­sis, which is based sole­ly on data pro­tec­tion law, has encoun­te­red sub­stan­ti­al objec­tions from the view­point of con­sti­tu­tio­nal law. DSK’s reso­lu­ti­on can be view­ed as an encroach­ment on the con­sti­tu­tio­nal­ly gua­ran­te­ed free­dom of con­tract, a key pil­lar of the right of self-determination. As an indi­vi­du­al gua­ran­tee, the free­dom of con­tract gua­ran­tees all indi­vi­du­als the right to ful­ly arran­ge their own legal affairs through con­tracts, and also embo­dies a right to resist mea­su­res by the sta­te which limit their per­so­nal right of self-determination without con­sti­tu­tio­nal jus­ti­fi­ca­ti­on. Asi­de from the right to enter into con­tracts and the right to choo­se the terms of the agree­ment, free­dom of con­tract also gives indi­vi­du­als the right to make con­trac­tu­al arran­ge­ments inde­pendent­ly without regard for for­mal requi­re­ments, inclu­ding the right to pro­vi­de for for­mal requi­re­ments, such as the regis­tra­ti­on of a cus­to­mer account.

Even if a limi­ta­ti­on on the free­dom of con­tract may be jus­ti­fied in any indi­vi­du­al case based on con­si­de­ra­ti­ons of data pro­tec­tion law, such a deter­mi­na­ti­on would at the very least requi­re us to weigh all the cir­cum­s­tan­ces of the case. Given DSK’s very one-sided focus on the rights of the cus­to­mer, and in light of the free­dom to choo­se an occup­a­ti­on and the right to estab­lish and ope­ra­te a busi­ness, it appears doubt­ful that such an ana­ly­sis was per­for­med. Last but not least, the right to estab­lish and ope­ra­te a busi­ness pro­tects the company’s right to con­ti­nue its pre­vious acti­vi­ties undis­tur­bed based on the ope­ra­tio­nal pre­cau­ti­ons alrea­dy taken and the free­dom to choo­se an occup­a­ti­on in accordance with Arti­cle 12 of the Ger­man Constitution.

Con­clu­si­on

While DSK’s rea­so­ning may be under­stand­a­ble and defen­si­ble from the view­point of data pro­tec­tion law, the reso­lu­ti­on fails to weigh the­se con­si­de­ra­ti­ons against the rights and eco­no­mic inte­rests of retailers. It would have been bet­ter if the reso­lu­ti­on were to spe­ci­fy excep­ti­ons to the rule or exp­lain the con­di­ti­ons under which com­pa­nies may offer cus­to­mer accounts exclu­si­ve­ly. In our view, an assess­ment is requi­red in each indi­vi­du­al case in order to deter­mi­ne whe­ther com­pa­nies are requi­red to pro­vi­de guest accounts. In any case, DSK’s near-absolute requi­re­ment for com­pa­nies to set up guest accounts repres­ents a worri­so­me encroach­ment upon con­sti­tu­tio­nal­ly gua­ran­te­ed per­so­nal free­doms, in line with the ten­den­cy which has alrea­dy been detec­ted in the prac­ti­ces of cer­tain data pro­tec­tion aut­ho­ri­ties with regard to pro­duct warnings. We the­re­fo­re belie­ve that a prac­ti­ce which devia­tes from DSK’s reso­lu­ti­on would be defen­si­ble on the­se grounds.

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