Privacy & Cybersecurity Law Blog

On August 5, 2020, the French Data Protection Authority (the “CNIL”) announced that it has levied a fine of €250,000 on French online shoe retailer, Spartoo, for various infringements of the EU General Data Protection Regulation (“GDPR”). This is the first penalty under the GDPR enforced by the CNIL as the lead supervisory authority (“Lead SA”) in cooperation with other EU supervisory authorities (“SAs”).

Background
Spartoo is a French-based company specializing in online shoe sales. As part of its activities, the company operates a website that is accessible in 13 EU countries. On May 31, 2018 (a few days after the application of the GDPR), the CNIL carried out an on-the-spot inspection of Spartoo to determine whether the company was complying with all the provisions of the GDPR. The CNIL’s investigation focused on the processing of personal data of Spartoo’s existing and prospective customers, and on the recording of telephone conversations between customers and Spartoo’s customer service. The investigation revealed several infringements of the GDPR, including (1) absence of a defined data retention period(s); (2) no regular erasure of existing and prospective customer personal data; and (3) improper acceptance of weak passwords for online customer accounts.

In accordance with Article 56 of the GDPR, the CNIL informed all other EU SAs that it was competent to act as Lead SA for the cross-border processing of existing and prospective customer personal data carried out by Spartoo. On February 16, 2020, the CNIL shared a draft of its sanction decision with the other SAs concerned. On March 13 and 17, 2020, the Italian and Portuguese SAs, as well as the German SA of Lower Saxony, expressed relevant and reasoned objections to the CNIL’s draft decision, and the CNIL revised its draft decision accordingly.

CNIL Decision
In its final decision, the CNIL held that Spartoo did not comply with the basic GDPR principles or requirements, in particular with the (1) data minimization principle; (2) storage limitation principle; (3) notice requirement; and (4) obligation to implement appropriate technical and organizational security measures.

Data Minimization: The CNIL found Spartoo’s full and permanent recording of telephone calls received by its customer service for employee training purposes to be excessive. The CNIL found that such recording was not justified, especially as the person in charge of employee training only listened to one call recording per week and per employee. The CNIL further found that, when orders were made by phone, the recording and storage of customers’ payment card details was not necessary for the purposes of the call recordings (i.e., employee training). Finally, the CNIL found that the collection of the customer’s health card in Italy to combat fraud was also excessive.

Storage Limitation: The CNIL’s investigation revealed that Spartoo kept a particularly large number of customer personal data, while some customers had not logged into their accounts for more than 10 years. The company also kept the personal data of more than 25 million prospective customers who did not have any activity for more than three years. During the investigation, Spartoo announced that they would now keep customer and prospect personal data for a period of five years after the date of last contact with the company (e.g., such as opening a newsletter). However, the CNIL found this retention period disproportionate in relation to prospect data, and reminded Spartoo that a prospect’s mere opening of a marketing email does not justify the retention of their data since the email could have been opened unintentionally. In addition, the CNIL found that the storage of customers’ email addresses and passwords after the five years retention period did not comply with the GDPR’s storage limitation principle.

Notice Requirement/Transparency: The CNIL found that the information included in the company’s customer privacy policy did not comply with the GDPR notice requirement. In particular, the privacy policy was not granular enough with respect to the legal basis for data processing. The policy referred to consent as the legal basis for all data processing activities, where in fact, some of these processing activities were based upon other legal bases. The CNIL further found that employees did not receive proper notice that their telephone conversations with customers were being recorded.

Data Security: The CNIL’s investigation revealed that Spartoo was allowing weak passwords for online customer accounts that were only six characters in length and contained one character type. The CNIL found that the company should have required users to use more robust passwords.

Given the number and seriousness of infringements, the CNIL decided to impose a fine of €250,000 on Spartoo and issued an injunction against the company to ensure its data processing activities came into compliance with the GDPR. The CNIL also ordered a periodic penalty payment of €250 for each day of delay in complying with the injunction, beginning three months following notification of the CNIL’s decision.