Profiling and Automated Decision-making under the GDPR

September 13, 2018

Profiling and automated decision-making (or ADM) are two
areas of the GDPR that have caused a fair degree of confusion for businesses,
often with perceived negativity and assumptions that the law significantly
restricts most forms of computer-led analysis of data subjects and their
activities. Not necessarily so.

As per the general flavour of the GDPR, the law has
undoubtedly tightened and places a greater burden and requirements on
businesses wishing to carry out profiling or ADM activities. However, there’s
still plenty of opportunity for those willing to understand the detail of the
law, and more generally align their business models to the core themes of the

What is Profiling?

Profiling is the automated processing of personal data to
evaluate certain things about an individual.

Typical applications of profiling include use of online
behavioural advertising (such as targeted online ads based on browsing
behaviour), credit scoring as part of a mortgage or finance application and the
use of artificial intelligence and machine-learning (eg for Internet of Things

Profiling is all about evaluation and not decisions. It is
an important distinction. Profiling could form part of an automated decision
making activity, but on its own culminates in intelligence and opportunity and
not computer-led decisions about an individual.

Profiling: key considerations

1. Comply with the transparency obligations of the GDPR

Profiling personal data is a processing activity and
therefore caught by the transparency obligations under the GDPR, and your
organisation’s privacy notice (or other means of notifying individuals) should
set this out.

2. Have a lawful basis for processing (and it’s not all
about consent!)

European Data Protection Board (EDPB) guidance suggests it’s
unlikely organisations will be able to rely on performance of a contract as the
lawful basis for processing, and therefore the two most common lawful bases

(a) consent – although you will need to show that the
individual knows what they are consenting to, so they can make an informed
choice, and more generally meet the consent requirements of the GDPR (which is
a relatively high bar).

(b) legitimate interest – very much an option for many
profiling activities. This will require a legitimate interests assessment to be
conducted beforehand and particular thought needs to be given to the detail and
comprehensiveness of the profile, the impact of the profiling and the
safeguards in place to ensure fairness and non-discrimination. Make sure that
your assessment is honest, and that the risk outcomes are realistic.

3. Take account of data subject rights

Individuals have the right to object to profiling under the
GDPR and therefore this needs to be brought to their attention clearly and
separately from other information. Your organisation should have a process in
place to handle such objections, particularly where the objection relates to
profiling for direct marketing, which is an absolute right.

What is automated decision-making?

You guessed it, a machine makes a decision about an
individual. To be more precise, it’s a decision which must:

• be conducted solely by automated means (ie no human
intervention); and

• have a legal or similarly significant effect on an

The first limb is fairly straightforward; if any human
intervention is involved (for example, considering the results of the automated
decision before applying it to an individual) then the activity will not
qualify as automated decision-making. However, if a human inputs the data but
the decision-making is automated, it still could be considered automated

The second limb of the test is a bit more complicated, as
although a ‘legal effect’ is fairly easy to define, ie something which affects
an individual’s legal status/rights (for example, housing or disability
benefits), what constitutes ‘similarly significant effect’ is more nebulous.

There are obvious examples of ‘similarly significant effect’,
such as automatic refusal of an online credit application or e-recruiting
practices with no human intervention (such as using psychometric testing to
filter-out candidates). Guidance points to significantly affecting circumstances,
behaviour or choices of individuals, having a prolonged or permanent impact and
at its most extreme leading to the exclusion or discrimination of individuals.

ADM: key considerations

If you are conducting ADM, in addition to the above key
considerations for profiling your organisation needs to:

1. Understand your grounds for processing

Current EDPB guidance says that organisations cannot conduct
ADM unless it is:

• necessary for entering into, or the performance of, a
contract between the individual and the data controller (for instance, a loan
application between a bank and a borrower which requires an automatically
generated credit score) – this is often an option and/or standard practice;

• authorised by EU or Member State law (for example, a bank
undertakes profiling to identify fraud to comply with its regulatory
obligations) – this is usually fairly sector or industry specific; or

• based on the individual’s explicit consent (freely given,
specific, informed and unambiguous affirmative indication of the individual’s
wishes, which must be an express form of consent such as sending an email) – this
ground is not always a business favourite, but is increasingly acceptable (by
both businesses and individuals) for ADM activities.

2. Carry out a Data Protection Impact Assessment (DPIA)

The ICO considers ADM as high-risk processing, so you need
to carry out a DPIA to assess the risks to individuals and ways to mitigate
those risks.

3. Tell individuals that you are conducting automated

This includes providing meaningful information about the
logic involved and what the likely consequences are for individuals. This is
usually done through an organisation’s privacy notice or just-in-time

4. Tell individuals about their rights for a review of the
automated decision

An individual who is unhappy with the outcome of an
automated decision can ask for it to be reviewed (you will need an appeals
process in place involving an employee with the authority to reverse the
decision if necessary). ICO guidance recommends that this is explained at the
point the decision is provided.

This includes providing an explanation of how and why the
decision was reached, being able to verify the results and explain the
rationale behind the decision, and delivering an audit trail showing key
decision points that formed the basis for the decision.

Individuals also have the right of access in respect of ADM,
including profiling.

5. Consider additional hurdles for special categories of

If your organisation conducts ADM in respect of special
categories of data (such as health records), there are additional requirements
to consider, being predominantly the need for explicit consent of the
individual or the ability to demonstrate that the processing is necessary for
reasons of substantial public interest as a lawful basis for processing.

Will Robertson is a Tech and Privacy Partner at Osborne

Elliott Prentiss is a Tech and Privacy Associate at Osborne