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France : a new law authorizing online surveillance to detect tax fraud and customs offences

Online surveillance to detect tax fraud and customs offences introduced by French Finance Act for 2020 

On 28 December, 2019, the French Parliament adopted the Finance Act for 2020, empowering French tax and customs administrations to collect and use any freely accessible data that has been made public by the users of online platforms. The data collected can be used by the authorities to identify the commission of specific tax and custom offences. This controversial law raises a number of legal issues, in particular in relation to the protection of privacy and personal data, which we describe in more detail, below.

The online platforms covered by the law include social networks (Facebook, Twitter, Instagram etc.), market places (Amazon, eBay etc.) and content sharing platforms (Youtube, Dailymotion etc.). The list of offences is narrowly confined and includes notably illicit tobacco trade and false domiciliation claims. Only public-facing data is caught, i.e. no data from private profiles.

Although the collection of online information by public and judicial authorities to detect crime is not new, this practice has until now only been used by the French tax authorities to confirm suspicions of offences, rather than to uncover them in the first place.

Not even the US tax administration (Internal Revenue Service), although known to be one of the most stringent tax administrations of the world, has adopted this approach; it has instead limited its recourse to online information only to corroborate cases already identified as suspicious.

The law was proposed by the French government because it considers that online data is a major source of information in the fight against tax fraud, and that this data is under-exploited. The objective of the law, which took effect on 1 January, is to change the scale in the use of online data by tax and customs administrations by allowing collection of such information by automated means.

We don’t yet know how the collection will occur; no detail is provided in the law regarding the technology that will be employed to systematically aspirate vast amounts of data – although it seems likely that scraping techniques will be used.

The granting of these new powers is subject to a three-year trial period. Interestingly, the French Conseil Constitutionnel has approved the law but highlighted the fact that further examination of its compliance with the French Constitution may need to be conducted at the end of the trial period.

Data Protection Issues

The new law raises a number of issues, including regarding the lawfulness of the techniques which will be used to collect such data; how the collection of such data will conform with the various platforms’ online terms of service, and; the potential unauthorized use of content protected by intellectual property rights, namely copyright.

Deserving particular attention are the questions related to privacy and data protection. Indeed, the approach chosen by the French government appears to contradict certain essential provisions of the recently reinforced data protection legal framework (GDPR and the French data protection law). Three immediate problems we have identified are as follows:
  • First, this new scheme undermines the cornerstone principle of data minimisation (Article 4, 3° of the French data protection law). Indeed, the massive and widespread collection of data authorized by the new provisions will necessarily involve the collection of extra data having no link with the contemplated purposes, including third party data. 
  • Second, the scheme’s compliance with the principles of data accuracy and fairness is questionable (Article 4, 4° and 1° of the French data protection law). Based on the text of the law, there is uncertainty as to whether only data published by the person who is subject to investigation will be collected, or whether collection will also capture third party personal data insofar as it contains information relating to the subject of the investigation. Not only will this collection of third party data increase the risk of processing imprecise and inaccurate data of the person subject of the investigation (information published by a third party about you may be less accurate than information you publish about yourself), but it may also call into question the fairness principle: it is indeed unlikely that such unrelated-party will reasonably expect that his/her online data will be processed by French tax and customs administrations for someone else’s investigation. 
  • Finally, the new scheme is hard to reconcile with the legal framework applicable to the processing of sensitive, special category data, which may be collected as part of the global data collection. Under French data protection law, the processing of sensitive data by tax and custom administrations is permitted subject to satisfaction of the two following cumulative conditions: (i) absolute necessity, and (ii) if such data has been manifestly made public by the data subject him/herself (Article 88 of the French data protection law). However, not only will the data collected not necessarily be made public by the data subject him/herself but by a party unrelated to the case (as mentioned above), but also, no condition of « absolute necessity » is provided for in the new law. 

The French data protection authority (CNIL) was consulted on the text of the law and delivered a very reserved opinion. The regulator notably reminded the government that the publication of information by platform users does not constitute per se an implicit acceptance to use this data for other purposes. The CNIL also highlighted the fact that such general data collection raised issues as to its proportionality and underlined the importance for the concerned tax and customs administrations of having strong privacy by design processes as well as efficient deletion mechanisms in place.

The publication of an implementing decree is expected in May 2020. It should specify the scope of the data that may be collected and provide details regarding the collection and filter.

We will be following developments.

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