Appeals court upholds FTC authority over data breaches

Any organization that’s been the victim of a cyber attack has a host of stakeholders to deal with, not the least of which is the applicable regulatory authority, either state or federal. Any businesses hoping that the Federal Trade Commission (FTC) would lose some of its authority in pursuing companies following cyber breaches have been sent a clear signal by an appeals court. It’s not going to happen—at least for now.

In a recent ruling on FTC v. Wyndham Worldwide Corp., the U.S. Court of Appeals for the Third Circuit also has given the go-ahead on a lawsuit against Wyndham.

Lisa Sotto, an attorney at Hunton & Williams who also chairs the U.S. Department of Homeland Security’s Data Privacy and Integrity Advisory Committee explained that “Companies need to have “reasonable safeguards in place.” Since the series of high-profile breaches starting with the Target breach in 2013, companies have to be ready and prepared for breaches, she said. “Companies really have awakened from their slumber.”

“While the FTC has been active in seeking to address data security issues, this is the first major ruling confirming that it has the authority to do so,” said Michael Hindelang, head of the data security/privacy litigation and e-discovery/information management practice groups at Honigman Miller Schwartz and Cohn.

Hindelang predicted that the FTC will likely “look to increase its regulatory activity in this area now that its authority has been upheld. Accordingly, companies that don’t adequately protect their customers’ data run the risk of having their behavior deemed an unfair trade practice by the FTC,” he said.

One interesting point Hindelang raised is that this case doesn’t lay out standards for data security. “Determining what the requirements are of appropriate security measures will likely take some time,” he added.

Read the full story from Legaltech News at: Legal Experts Weigh In On Court Ruling in Favor of FTC Authority Over Data Breaches