Legitimate interest is one of the six lawful bases for processing personal data under GDPR. It provides businesses and organizations with the flexibility to process data without consent in certain scenarios, but it must be applied carefully. Let’s explore what legitimate interest means, when it applies, and how to balance it with individuals’ rights.

What is Legitimate Interest?

Under GDPR, legitimate interest allows organizations to process personal data when it is necessary for their purposes and doesn’t override the rights and freedoms of the individual (Article 6(1)(f)).

As one of the six lawful bases for processing, legitimate interest is particularly useful in scenarios where obtaining consent is impractical, such as fraud prevention or direct marketing. However, organizations must ensure transparency and accountability when using legitimate interest.

Examples of Legitimate Interest include using customer data to improve security and prevent fraud; and sending promotional emails to existing customers.

When Can You Use Legitimate Interest?

Legitimate interest is appropriate when:

1. The data processing serves a lawful and necessary purpose.
2. The purpose cannot be achieved in a less intrusive way.
3. The processing doesn’t override the individual’s rights, especially if the individual is a child (Recital 47).

For example, analyzing customer data to detect and prevent fraudulent transactions may qualify as legitimate interest, provided the processing is proportional and transparent.

The Three-Part Test for Legitimate Interest

Organizations must conduct a three-part test to ensure compliance when relying on legitimate interest:

1. Purpose Test
   • Is there a legitimate reason for processing the data?
   • Example: Fraud prevention is a legitimate reason.
2. Necessity Test
   • Is the processing necessary to achieve the purpose?
   • Example: Collecting minimal customer details to verify identity.
3. Balancing Test
   • Do the organization’s interests outweigh the individual’s rights?
   • Example: Avoid processing sensitive data unless absolutely necessary.

If the test confirms that legitimate interest applies, organizations must document their reasoning.

Transparency and Accountability

GDPR requires organizations to:

• Clearly communicate legitimate interest as the lawful basis in their privacy notices (Articles 13, 14).
• Allow individuals to exercise their right to object to processing (Article 21).

For example, privacy notices should state: “We process your personal data for fraud detection under our legitimate interest to protect your account.”

Benefits and Risks of Using Legitimate Interest

Benefits:

• Flexibility: Allows processing without explicit consent.
• Efficiency: Suitable for ongoing business needs like marketing or fraud prevention.

Risks:

• Misjudging the balancing test can lead to regulatory scrutiny.
• Individuals may challenge the use of legitimate interest if they feel their rights are violated.

A usual Case Study on Legitimate Interest is Direct Marketing: GDPR recognizes direct marketing as a potential legitimate interest (Recital 47). For instance, a retailer may send promotional emails to previous customers, provided they include an easy opt-out option. Failure to provide opt-out mechanisms or improperly using this basis can result in complaints or fines.

In conclusion, legitimate interest is a powerful tool for data processing under GDPR, but it must be used responsibly. By conducting the three-part test, documenting decisions, and ensuring transparency, organizations can balance their interests with individuals’ rights while maintaining compliance.

References

1. GDPR Article 6.
2. GDPR Article 13.
3. GDPR Article 14.
4. GDPR Article 21.
5. Recital 47: Legitimate Interest.
6. ICO Guidance on Legitimate Interest.