FTC Says Failure To Protect Private Info Is An Unfair Business Practice
from the out-come-the-fines dept
Earlier this week, we noted that the issue of companies leaking or exposing all sorts of private data was nothing new -- and wondered why it wasn't considered negligence. Apparently, that might be changing. The FTC today said that they had fined BJ's Wholesale Club for revealing private data and said very clearly that "inadequate data security can be an unfair business practice." It seems like they might have a lot of fines to give out these days, if the last few months of headlines concerning has been any indication. Of course, while the statement today says this is the "first time" inadequate data protection is being viewed as a potential unfair business practice by the FTC, that's not true. Last year, we wrote about the FTC fining Tower Records over a nearly identical issue. In that case, Tower's computer system had been hacked. Of course, this raises the inevitable question: at what point is the company liable? A determined hacker will find a way to break in to almost any system. Does it always make sense to blame the company for inadequately protecting the data? It seems like the FTC may face a very fine line here. There are some cases where companies are clearly negligent in protecting data, but in cases where the company is hacked, how does anyone determine if the company made a reasonable effort to protect the data or not?
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Reader Comments
Subscribe: RSS
View by: Time | Thread
Economic consequences
I think the FDA, uh, FTC is attempting to assign consequences to that.
This could result in companies taking the easily implemented steps in securing the data (such as encrypted backups). Also, they may reconsider whether collecting your data is worth it: there is profit but the potential liabilities can wipe that out...
I think this is what Wired meant by "Require businesses to secure data and levy fines against those who don't."
Personally, I would of gone with a HIPPA-style law. Calling it an "unfair" business practice is an odd way of doing it.
-cmh
[ link to this | view in thread ]
Re: Economic consequences
Either way, they need to own up to the fact that it was lost/stolen, and pay the price of the loss.
If you don't have the clout to back the loss, don't get in the business. That's the chance you take by starting a company that handles such sensitive material.
[ link to this | view in thread ]