Preparing for the CIPPE exam means mastering practical scenarios that test your knowledge of data protection law, especially the GDPR. One critical topic is understanding when legitimate interests can lawfully justify processing personal data. This question will help you get comfortable with this common, yet complex, area of data protection compliance.
Below, you’ll find a real CIPPE-style practice question on legitimate interests, followed by a detailed explanation and key takeaways. For a quick summary, check out our video explanation on YouTube.
CIPPE Practice Question:
A multinational e-commerce company, SwiftBuy Ltd., processes personal data to recommend products based on users’ browsing history. The company argues that obtaining consent for every recommendation would disrupt user experience and lead to unnecessary consent fatigue. Instead, it relies on its legitimate interest in providing a more personalized shopping experience. Some customers have complained, stating they were not aware their data was being used this way.
Which of the following best determines whether legitimate interests can lawfully justify this processing under the GDPR?
A) SwiftBuy Ltd. must conduct a legitimate interests assessment (LIA) to balance its interests against the rights and freedoms of data subjects.
B) Since SwiftBuy Ltd. processes data for a commercial purpose, consent is always required under the GDPR.
C) The company is automatically compliant because online tracking for personalization is standard industry practice.
D) Legitimate interests can never be used for marketing-related processing of personal data.
Correct Answer Explained:
The correct answer is A. Under Article 6(1)(f) of the GDPR, processing personal data is lawful if it is necessary for the controller’s legitimate interests — provided these interests do not override the rights and freedoms of the data subjects.
SwiftBuy Ltd. must perform a Legitimate Interests Assessment (LIA) before relying on this lawful basis. The LIA is a three-part test:
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Purpose Test: Is the interest pursued by the company legitimate and lawful? For SwiftBuy, providing personalized recommendations is a legitimate business interest.
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Necessity Test: Is processing the personal data necessary to achieve this purpose? The company must confirm that personalization cannot be done with less intrusive means.
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Balancing Test: Do the individual data subjects’ rights and freedoms outweigh the company’s interests? This involves considering how the processing impacts user privacy and expectations.
If SwiftBuy fails the balancing test or does not conduct a proper LIA, it cannot lawfully rely on legitimate interests. Transparency is also essential — customers must be informed clearly in privacy policies about how their data is processed.
GDPR Key Points to Remember:
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Legitimate interests are a flexible lawful basis under GDPR but require careful assessment.
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Conducting a Legitimate Interests Assessment (LIA) is mandatory before relying on this basis.
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The LIA involves testing purpose, necessity, and balancing of interests versus rights.
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Consent is not always required for commercial processing, but transparency and fairness are critical.
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Following industry practice alone does not guarantee GDPR compliance.
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Direct marketing can be done on legitimate interests grounds if individuals’ rights are respected.
This question is typical of what you’ll encounter in the CIPPE exam — practical, real-world scenarios requiring detailed knowledge of GDPR principles. If you want more practice questions like this, check out our full CIPPE course and test bank.
Explanation of Incorrect Answers
B) Since SwiftBuy Ltd. processes data for a commercial purpose, consent is always required under the GDPR.
This statement is incorrect because the GDPR does not mandate consent for every type of commercial data processing. While consent is one lawful basis under Article 6 GDPR, it is not the only one. Legitimate interests (Article 6(1)(f)) is a valid lawful basis for processing personal data when the processing is necessary for the controller’s legitimate interests and does not override the rights and freedoms of data subjects.
Consent can sometimes be impractical or lead to “consent fatigue,” especially in large-scale personalized marketing scenarios. However, this does not mean that all commercial processing requires explicit consent. Instead, companies can rely on legitimate interests, provided they properly conduct and document a Legitimate Interests Assessment (LIA).
Thus, the blanket claim that consent is always required for commercial purposes is misleading and incorrect.
C) The company is automatically compliant because online tracking for personalization is standard industry practice.
This option is incorrect because following industry practice or standards does not guarantee GDPR compliance. The GDPR requires organizations to individually assess their processing activities against its legal requirements, including lawfulness, fairness, transparency, data minimization, and purpose limitation.
Even if many companies track user data for personalization, each company must ensure it meets GDPR’s conditions independently. Relying solely on common industry behavior exposes the company to risks of non-compliance, especially since supervisory authorities may interpret practices differently or update guidance over time.
Therefore, the assumption that “everyone does it, so it must be compliant” is a risky and legally unsound position.
D) Legitimate interests can never be used for marketing-related processing of personal data.
This statement is false because the GDPR explicitly allows certain marketing activities to be carried out under legitimate interests, provided the controller meets the necessary tests and respects individuals’ rights.
The European Data Protection Board (EDPB) and many data protection authorities recognize legitimate interests as a lawful basis for direct marketing communications, particularly when the data subjects have a reasonable expectation that their data will be used in this way.
However, controllers must conduct a thorough balancing test to ensure the marketing does not unfairly impact the individual’s privacy and must always provide clear opt-out mechanisms.
Thus, it is incorrect to state that legitimate interests are categorically prohibited for marketing purposes.
General Explanation under the GDPR
Under the GDPR, organizations must identify a lawful basis for processing personal data before they collect, use, or share it. One of the most commonly used bases is legitimate interests (Article 6(1)(f)), which allows processing if it is necessary for the organization’s legitimate goals without overriding the rights and freedoms of individuals. However, this basis requires careful consideration and documentation through a Legitimate Interests Assessment (LIA). The LIA evaluates whether the company’s interests are lawful and necessary, and whether the individuals’ rights are adequately protected. Transparency is key — organizations must clearly inform users how their data is used and offer options to manage their preferences. Businesses that fail to comply risk penalties and loss of trust.
Q&A: Common Questions About Legitimate Interests and GDPR
Q: Can companies use legitimate interests to process data for marketing?
A: Yes, but only if they conduct a thorough Legitimate Interests Assessment and ensure their processing does not unfairly impact data subjects. They must also provide clear ways for users to opt out.
Q: Is consent always required for commercial data processing?
A: No. Consent is one lawful basis, but legitimate interests can be used instead if justified properly. Consent is not always practical or necessary.
Q: Does industry practice guarantee GDPR compliance?
A: No. Compliance depends on meeting GDPR’s specific requirements individually, not on what others in the industry do.
Q: What if customers complain about data use for personalization?
A: Companies should be transparent in privacy notices and provide easy-to-understand options to control data use. Properly conducted LIAs and respecting rights help address these concerns.
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