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May 19 — States are readily taking on organizations and companies for privacy violations, with attorneys general cooperating on multistate enforcement actions and working with the Federal Trade Commission on privacy and security issues, panelists at privacy conference said May 18.
Attorneys general can use their authority under state and federal law to protect the public from breaches that cross state lines and involve consumers throughout the country, representatives from attorneys general offices said at the Practising Law Institute's privacy and data security law seminar in San Francisco.
Privacy concerns in Texas over RadioShack Corp.'s proposed sale of customer data “led us back to Bankruptcy Court in Delaware where we filed an objection,” D. Esther Chavez, senior assistant Texas attorney general and deputy chief in the office's Consumer Protection and Public Health Division, said.
Texas was the first state to object to the sale of RadioShack customer information, asserting in a filing that the sale is impermissible because it violates applicable non-bankruptcy law, namely, the Texas Deceptive Trade Practices Act and consumer protection laws in other jurisdictions.
“And the reason we took that position because at time it filed for bankruptcy it had privacy policies in place both at the website and the store that had very specific representations to consumers that their personal information would not be sold or shared,” Chavez said.
Chavez's remarks came the same day the FTC Bureau of Consumer Protection said transferring information on 117 million consumers would contravene the company's express promise not to sell or rent such information.
Before acting, states consider who is being harmed, whether it involves a particularly vulnerable population, such as children or the elderly, and what effect deterrence would have, panelists said.
Harm to consumers is an important factor in the consideration. “The more sensitive the information, the higher scrutiny we're going to give to our analysis,” Yen TiTi Nguyen, deputy California attorney general in the office's Privacy Enforcement & Protection Unit, said.
Consumers often are unaware they've been harmed or their information may be compromised “because it occurs behind closed doors,” Paula Selis, senior counsel in the Washington attorney general office's Consumer Protection Division, said.
Laura Berger, an attorney with FTC's Division of Privacy & Identity Protection said “invisibility” is a real problem.
Regulators constantly get complaints and referrals and media inquiries about privacy and security consumer protection issues, Chavez said. But a company has “to do something most of the time that's pretty outstanding to get our attention.”
Selis said she wished that companies would understand that an innovative entrepreneurial spirit “needs to be tempered with the adult in the room” when it comes to privacy compliance.
Attorneys providing legal advice to application developers and start-ups “need to go in and say what could happen here. It's almost like products liability because if you have a data breach, a privacy issue comes up, and it keeps going on and on,” she said.
Internet-connected devices that are the Internet of things affect more people than just the devices' owners or users, the FTC's Berger said.
There may be a need for state and federal regulators facing Internet of things challenges to carefully analyze what enforcement tools to use, to examine what statutes can be used, Berger said.
She noted that FTC's first Internet of things enforcement action in September 2013 involved the alleged lax data security practices of home video surveillance video camera company TRENDnet Inc.
In December 2014, FTC Consumer Protection Director Jessica Rich said the commission was expecting to bring more cases targeting Internet of things issues.
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