A Challenge to the FTC is Defining Data Security Principles

In the first case to challenge the Federal Trade Commission’s (“FTC”) authority to regulate cybersecurity practices, the agency won a big victory recently when a judge gave a huge boost to the scope of the agency’s enforcement power. In the last few years, the FTC has brought numerous enforcement actions stemming from companies involved in data breach investigations. Although most companies have opted to settle charges, two companies, Wyndham Worldwide Corp. and LabMD, Inc., chose to challenge the FTC’s authority to regulate their data security practices. On April 7, the United States District Court in New Jersey reaffirmed the FTC’s authority to investigate and enforce violations of cybersecurity practices in its refusal of Wyndham’s request for dismissal of the FTC action against the hotel chain.