Cause of Action Institute, a non-profit government accountability organization with a track record of fighting Federal Trade Commission enforcement actions, recently agreed to defend a company against FTC allegations of lax router data security. Cause of Action recently handed off representation of now defunct testing lab LabMD Inc. in what is now a federal appeals court fight over the FTC’s authority to enforce data security standards.
The commission filed a complaint against Taiwan-based D-Link Corp. and its U.S. subsidiary D-Link Systems Inc., alleging that D-Link falsely promoted the security of its routers as “easy to secure” and that they provided “advanced network security.” The complaint asserted that the company violated Section 5 of the FTC Act by unfairly treating consumers through lax data security and also by misrepresenting to consumers the security of its products. The company immediately denied the allegations, and D-Link Systems President William Brown told Bloomberg BNA that the security of D-Link’s products and the protection customers’ private data “is always our top priority.”
Cause of Action Institute announced Jan. 10 that it will represent D-Link Systems in the FTC’s lawsuit. “It sets a dangerous precedent for the federal government to go after a good company and put American jobs at risk without a single instance of actual or likely consumer harm,” Cause of Action Institute Assistant Vice President Patrick Massari said in a statement.
LabMD has challenged the FTC’s authority and enforcement standards in a federal appeals court, and according to Craig A. Newman, a partner with Patterson Belknap Webb & Tyler LLP in New York and chair of the firm’s privacy and data security group, “however decided by the Eleventh Circuit, the LabMD case will have sweeping implications for every organization under the FTC’s watch.”
Companies challenging the FTC’s authority, including LabMD and D-Link, are exceptions. Since the FTC first began enforcing privacy and data security, virtually all targeted companies have elected not to challenge the FTC's enforcement authority, instead entering no-fault consent orders with the commission.
There have been more than 50 data security settlements, according to the commission. LifeLock Inc., Oracle Corp. and Snapchat Inc. are among the companies that have settled with the agency.
Another exception is Hotelier Wyndham Worldwide Corp., which challenged the FTC's data security authority under the unfairness prong of Section 5 to take enforcement action against companies over allegedly lax data security practices. Wyndham ended up settling with the FTC in 2015 after the U.S. Court of Appeals for the Third Circuit ruled the agency didn't have to provide a specific reasonable data security standard.
To keep up with the constantly evolving world of privacy and security sign up for the Bloomberg BNA Privacy and Security Update.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)