Legitimate interest under GDPR: Balancing business needs with data subject rights
Legitimate interest is one of the six legal bases for processing personal data under the General Data Protection Regulation (GDPR). It allows controllers to process data if it is necessary for their legitimate interests, as long as those interests do not override the fundamental rights and freedoms of the data subject.
Unlike other legal bases, it requires a careful balancing test to ensure that data processing is justified, necessary, and does not cause harm to individuals.
When can organizations rely on legitimate interest as a legal basis?
A controller can use this legal basis if:
- The processing is necessary for a genuine business, security, or operational interest.
- The interest does not override the rights and freedoms of the data subject.
- A three-step test (Legitimate Interest Assessment) is conducted to document compliance.
Examples of legitimate interest as a GDPR legal ground
- Fraud prevention – Analyzing customer transactions to detect fraud.
- Network security – Monitoring IT systems to prevent cyberattacks.
- Direct marketing – Sending promotional emails to existing customers (within legal limits).
- Internal analytics – Using customer data to improve products and services.
Unlike consent, which requires explicit permission, legitimate interest can be used without direct user approval—as long as it passes the balancing test.
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How to conduct a balancing test under GDPR
To comply with GDPR, organizations must perform a three-step test before relying on legitimate interest as a legal basis.
1. Purpose test – Identifying the legitimate interest
- Define why processing is necessary (e.g., security, fraud detection, or business operations).
- Ensure the interest is lawful, clearly defined, and not misleading.
2. Necessity test – Ensuring no alternative exists
- Assess if the processing is strictly necessary to achieve the purpose.
- Check if there are less intrusive alternatives that could achieve the same goal.
3. Balancing test – Weighing against data subject rights
- Consider whether the processing negatively impacts individuals.
- Implement safeguards (e.g., data minimization, opt-outs, encryption) to reduce risks.
- Ensure transparency by informing data subjects about legitimate interest in the privacy policy.
If the test concludes that data subject rights override the business interest, legitimate interest cannot be used as a legal basis.
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Why legitimate interest requires careful application under GDPR
Using legitimate interest correctly helps organizations:
- Ensure GDPR compliance by proving that data processing is justified.
- Reduce legal risks by conducting a structured balancing test.
- Improve transparency by informing users about data usage.
- Enhance data security with appropriate safeguards.
By applying this legal basis responsibly, businesses can balance operational needs with privacy rights, ensuring ethical and lawful data processing.
