Brazil will change data privacy laws. Photo: Jantine Doornbos
data privacy brazil legislation gdpr

Brazil will change data privacy laws. Photo: Jantine Doornbos

Congress in Brazil is operating at a very slow pace. Politicians are eager to start their recess in time for the 2018 World Cup – and then the campaign season begins, leaving both the House and the Senate empty for weeks. Controversial bills will not go to vote prior to Election Day, or even before the next legislature begins. But Congress has been diligent in pushing forward a bill that is advertised as a means of lowering interest rates. However, it will virtually end data privacy for consumers.

In essence, the bill will create a database of “good payers” – that is, people who pay their debts without delays. Today, databases exist only for “bad payers.” Former Finance Minister Henrique Meirelles is one of the bill’s strongest advocates, and has said that this list of good payers will “make it possible for companies and individuals who don’t skip a due date to have access to cheaper and better credit.”

The logic behind the argument is that the list will lower banks’ risks when lending money to consumers. And lower risks will lead to lower interest rates. That logic, however, has proven faulty in the past. In 2017, for example, the government began to allow carriers to charge for checking luggage. The argument was that doing so would lead to cheaper tickets – yet prices remained stable, and the Federal Accounts Court opened an investigation on the matter.

Many believe that instead of lowering overall interest rates, the “good payers” list will only lead to an increase of the interest rates for clients who have raised red flags. This reasoning also ignores that interest rates are not the result of a single variable, but are rather calculated in a complex way.

Yet that is not the project’s most problematic aspect.

Data privacy

If approved and signed into law by President Michel Temer, the bill in question will expose consumers’ personal data without their consent or ability to prevent such an event from occurring. Data will automatically feed this list.

It is striking that Brazil is willing to hand over data to private companies at a time when world trends are heading in the opposite direction. Other governments currently are trying to rethink ways of ensuring their citizens’ data privacy.

Europe is starting to enforce its new framework for data privacy protection, known as GDPR (General Data Protection Regulation). The new European legislation states that user content on the use of his or her data must be an active action, as opposed to the passive acceptance under some current models that allow for pre-ticked boxes or opt-outs.

In Brazil, though, data protection has been slow. Between 2015 and 2017, the number of complaints regarding the inappropriate use of personal data rose by 1,134 percent, according to the Brazilian Consumer Institute (Idec).

Data, the new currency

In a 2016 book titled L’Homme Nu (literally “The naked man”), French authors Marc Dugain and Christophe Labbé discuss how tech giants own our data – and essentially our lives. Being able to sell our private data to the highest bidder is, in the authors’ opinion, the real danger of the century. Not ISIS.

It is surprising how many companies with fiduciary obligations towards their clients are willing to hand over information to data brokers, some of which have no direct relationship with customers.

The bill states that “institutions serving as data sources are forbidden to limit access to their database.” That includes companies providing basic services to people – like water, sewage or power companies.

That will lead to the creation of a handful of companies with access to massive amounts of private data. Such a concentration will put consumers in an even more disadvantageous position in relation to banks and services providers. Time and time again we have seen that when data is centralized, it becomes more vulnerable to attacks and breaches. Just one year ago, the data of 148 million Americans was illegally leaked from servers belonging to Equifax, one of the country’s top credit reporting agencies.

As Columbia University professor Ronaldo Lemons has said: “Privacy should be a pillar of a country’s development. Without data privacy, there is no digital government, no smart cities, no Internet of Things.”

Read the full story NOW!

MoneyMay 14, 2018

Tags: - -

BY The Brazilian Report

We are an in-depth content platform about Brazil, made by Brazilians and destined to foreign audiences.