Data protection implications of sale of Tesco Clubcard company


News that Tesco is considering selling its loyalty card business Dunnhumby raises questions about what might happen to cardholders’ personal data

In 1995 the then Chairman of Tesco, Lord MacLaurin, reportedly said to the creators of the Tesco Clubcard scheme

What scares me about this is that you know more about my customers after three months than I know after 30 years.

Since then the sophistication and power of data analytics have increased exponentially and Dunnhumby claims it analyses data from 770 million-plus customers, about 16.5 million of whom are – it seems – Tesco Clubcard members. Dunnhumby, as a data processor for Tesco, processes the personal data of those millions of members, so what happens if the business is sold? Does the customer database also get sold? If so, what are the data protection implications?

Sales of customer databases can be effected lawfully and in compliance with the Data Protection Act 1998 (DPA), as the Information Commissioner’s Office explains in helpful guidance

When a database is sold, the seller must make sure that the buyer understands that they can only use the information for the purposes for which it was collected. Any use of this personal information should be within the reasonable expectations of the individuals concerned. So, when a database is sold, its use should stay the same or similar. For example, if the database contains information obtained for insurance, the database should only be sold to another insurance-based business providing similar insurance products. Selling it to a business for a different use is likely to be incompatible  with the original purpose and likely to go beyond the expectations of the individuals.

The operative words there are, I suggest “expectations of the individuals concerned”. “Reasonable expectations” are strongly linked to the first principle in Schedule One of the DPA, which requires that “personal data shall be processed fairly and lawfully…”. The interpretative provisions in Part II of Schedule One explain that broadly, for processing to be fair, data subjects should be told who is doing the processing, and why. These provisions are the genesis of the “privacy notices” and “privacy policies” which so few of us take the time to read. But their Clubcard privacy policy is where things might become problematic for Tesco in the event that they propose to sell Dunhumby and cardholders’ data. As twitter user @NoDPISigma points out, the Customer Charter says

We would like to reassure you that your personal details are safe with us and will never be released to companies outside the Tesco Group for their marketing purposes

and the separate Privacy and Cookies Policy also says

Your personal information is safe with us and will never be released to companies outside the Tesco Group for their marketing purposes

Although at first blush it is difficult to see that as anything other than an unequivocal promise that cardholders’ personal data will never be sold, the rub is in the phrase “for their marketing purposes”. If the sale of Dunnhumby and cardholders’ data is to another company in order that that other company can continue to operate the Clubcard scheme on behalf of Tesco then, as long as that was all that the data continued to be used for, I don’t think it would be a release of personal data to a company for that company’s marketing purposes. If, however, the purchasing company intended to use the data for its own marketing purposes, then the sale might be a breach of the charter promise – and, in that event, it would be strongly arguable that the sale could give rise to a serious contravention of Tesco’s obligation (at section 4(4) of the DPA) to comply with the fairness principle.

And among those 16.5 million Clubcard holders there are likely to be some awkward so-and-sos who might bring legal challenges in those circumstances.

[This post was edited because in its first draft it failed properly to consider the issue of data controller/processor. Thanks to Rich Greenhill for prompting me into a redraft]

The views in this post (and indeed all posts on this blog) are my personal ones, and do not represent the views of any organisation I am involved with.


Filed under Data Protection, marketing

2 responses to “Data protection implications of sale of Tesco Clubcard company

  1. May even be worse than that. If you take it literally, when sold to Company Z, then Company Z is only limited to not using it for ‘their’ own marketing purposes. As well as still doing it for Tesco they could, potentially, sell on to anyone else but Z, for anyone else but Z’s marketing purposes.

  2. I wonder if the word “released” is significant. There’s an implication of continuing control there. But unlike “sell” and “transfer”, which must have been fixed in meaning by the courts by now, can we be sure of how it will be read?

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