Voluntarily Provided Personal Data under the DPDP Act, 2023: Legal Pitfalls and Compliance Obligations

Executive Summary

The Digital Personal Data Protection Act, 2023 (DPDP Act) introduces India’s first dedicated statutory regime for digital personal data. Among its various lawful bases of processing, the Act recognises the category of “voluntarily provided personal data.” This reflects the reality that individuals routinely provide information while availing services such as phone numbers for one-time passwords, addresses for deliveries, or email IDs for receipts without always going through a formal consent process.

While pragmatic, this category creates legal uncertainties. Businesses may be tempted to stretch “voluntary provision” to justify extensive data collection and secondary use. Individuals may not understand how their data is being processed beyond the immediate transaction. Regulators may view such practices as exploitative.

Introduction: Why Voluntary Data Matters

India’s digital economy thrives on frictionless consumer engagement. Every click, search, and input involves disclosure of personal information. Not every interaction can be preceded by detailed consent forms. Recognising this, the DPDP Act allows processing of personal data voluntarily provided by individuals as a legitimate use, provided the processing is reasonably connected to the purpose for which the data was furnished.

This avoids over-regulation of routine interactions but also opens the door to ambiguity. When is provision truly voluntary? How far can fiduciaries stretch the connection between data provided and purposes served? These questions will define the compliance landscape.

Statutory Basis in the DPDP Act

The Act classifies voluntarily provided personal data under legitimate uses, which are exceptions to the general consent requirement.

Key Elements

1. Provision by the Data Principal: Data must be actively given by the individual. Information inferred, purchased, or scraped does not qualify.
2. Voluntary Nature: Provision must be conscious and willing. The data supplied under compulsion, coercion, or deceptive design would not qualify.
3. Contextual Limitation: Processing is allowed only for purposes “reasonably connected” with the context of provision.

Examples

• Entering an email address to receive a bill → processing allowed for billing.
• Sharing a phone number to receive an OTP → processing allowed for authentication.

Pitfalls in Interpretation

1. What Counts as “Voluntary”?

• If a website makes phone number entry “mandatory” for access, can that still be called voluntary?
• If individuals are nudged through dark patterns, is provision free and voluntary?

 2. Scope of Use

• An email given for a receipt may be used for promotional campaigns.
• A postal code given for delivery may later be used for demographic profiling.

3. Information Asymmetry

• Most consumers do not know how much processing is triggered by simple disclosures.
• Lack of explicit consent does not mean a blank cheque for fiduciaries.

4. Secondary Use Risk

• Voluntary provision often creates large datasets of incidental information, which can be tempting for analytics or monetisation.

Compliance Obligations for Fiduciaries

• Purpose Limitation: Data must be used only for the purpose connected to its provision. Example: A customer provides an address for delivery. The fiduciary may share it with logistics providers but cannot use it to target unrelated advertisements.
• Transparency: Notices must clearly state how voluntarily provided data will be processed. Ambiguity or silence will be interpreted against the fiduciary.
• Fairness in Collection: Data must not be extracted through misleading forms, pre-ticked boxes, or manipulative nudges.
• Minimisation: Fiduciaries should not demand more information than required. For instance, asking for Aadhaar when only an email ID suffices may be viewed as excessive.
• Security Safeguards: Voluntarily provided data must be protected with the same degree of technical and organisational safeguards as consent-based data.
• Retention Control: Data must be erased once the purpose for which it was provided is complete, unless retention is legally mandated.

Practical Pitfalls: Sectoral Illustrations

E-Commerce:

• Legitimate Use: Customer provides an address for delivery.
• Pitfall: Platform sells location data to advertisers or uses it for unrelated profiling.

Fintech

• Legitimate Use: Aadhaar details entered for KYC compliance.
• Pitfall: Fintech extrapolates spending capacity or income level without explicit consent.

Healthcare

• Legitimate Use: Patient provides health records to doctor for treatment.
• Pitfall: Hospital uses same records for unrelated commercial partnerships.

Social Media

• Legitimate Use: User shares profile information to create an account.
• Pitfall: Platform mines voluntarily shared posts to sell predictive analytics to third parties.

Reputational and Legal Risks

• Regulatory Action: Misuse can attract penalties up to ₹250 crore.
• Consumer Trust Deficit: Users may feel exploited if their incidental disclosures are over-used.
• Litigation: Individuals may approach High Courts under Article 226 alleging violation of privacy rights.
• Commercial Risk: Foreign partners may cut ties with entities that exploit voluntary data without safeguards.

Compliance Strategies

• Clear Drafting of Notices: Notices should specify: “Your phone number will be used only for authentication and not for marketing.”
• Internal Data Classification: Segregate voluntarily provided data from consent-based datasets and apply stricter purpose filters.
• Staff Training: Ensure frontline staff and marketing teams understand limits of voluntary provision.
• Role of DPOs: For Significant Data Fiduciaries, the Data Protection Officer should review all voluntary data use cases.
• Technology Controls: Deploy consent-management systems that prevent secondary use of voluntarily provided data without fresh consent.

Anticipated Evolution under Indian Law

•  Government Rules will clarify what constitutes voluntary provision and purpose limitation.
• Sectoral Regulators (RBI, IRDAI, TRAI) may tighten rules where sensitive personal data is involved.
• Judicial Interpretation may adopt a restrictive view, reading “voluntary” narrowly to avoid dilution of privacy rights.

Conclusion & Key Takeaways

The concept of voluntarily provided personal data under the DPDP Act is both practical and risky. While it enables routine business operations without excessive consent burdens, it is prone to misuse through over-collection and secondary exploitation.

Key takeaways:

• Voluntary provision does not equal blanket consent.
• Fiduciaries must honour purpose limitation, transparency, minimisation, and retention control.
• Misuse risks high penalties, reputational damage, and judicial scrutiny.
• Responsible businesses will treat voluntary data with the same care as explicitly consented data.

Handled with restraint and clarity, voluntary provision can support frictionless services. Mishandled, it can become the Achilles’ heel of India’s new privacy regime.

Co–Authored by :- Aurelia Menezes