Bloomberg Law: Privacy & Data Security brings you single-source access to the expertise of Bloomberg Law’s privacy and data security editorial team, contributing practitioners,...
Nov. 13 — The Federal Trade Commission staff has closed an investigation into whether Verizon Communications Inc. engaged into deceptive acts or practices by failing to secure the routers it provided to high speed Internet and FiOs customers, according to a Nov. 12 FTC staff letter to Verizon's counsel.
The FTC staff found that Verizon shipped routers to customers with Wired Equivalent Privacy (WEP) as the default security setting. WEP, however, is an “outdated encryption standard” that the Institute of Electrical and Electronics Engineers replaced in 2004 with the Wi-Fi Protected Access (WPA) standard and later the Wi-Fi Protected Access 2 (WPA2) standard, according to the letter.
“As a result, many Verizon customers still have routers that are set to the outdated WEP standard, leaving them vulnerable to hackers,” Maneesha Mithal, associate director of the FTC's Division of Privacy and Identity Protection, said in the letter to Dana B. Rosenfeld, partner at Kelley Drye & Warren LLP in Washington.
“We continue to emphasize that data security is an ongoing process,” Mithal said in the letter. “As risks, technologies, and circumstances change over time, companies must adjust security practices accordingly.”
The FTC's authority to bring data security enforcement actions under Section 5 of the FTC Act, 15 U.S.C. § 45, is being challenged in legal actions involving hotelier Wyndham Hotels and Resorts LLC and former medical laboratory LabMD Inc.
In July, the U.S. Court of Appeals for the Third Circuit granted Wyndham's petition to appeal portions of a district court opinion refusing to dismiss an FTC enforcement action against the company.
LabMD has also appealed a federal district court's dismissal of its claims against the FTC.
Both appeals are pending.
Among the reasons cited by the FTC staff for closing the investigation were Verizon's “overall data security practices related to its routers” and its efforts to mitigate any risks to customer information.
According to the letter, Verizon has:
• pulled all routers with WEP as a default setting from its distribution centers and changed the default setting on those devices to WPA2;
• implemented an outreach campaign to customers who still have routers with WEP or no encryption; and
• provided customers who have older routers that aren't compatible with the newer encryption standard an opportunity to upgrade to devices that are compatible with WPA2.
The letter reminded organizations of the FTC's expectations concerning the security of encryption on consumer devices.
“As most all consumer devices on the market today are compatible with WPA2, it would likely be unreasonable for Internet Service Providers ('ISPs') or router manufacturers to continue to default consumer routers to WEP encryption,” Mithal said in the letter to Verizon. “We hope and expect that all companies that provide consumers with these products will ensure reasonable and appropriate default security settings.”
The letter cautioned that the closing of the investigation shouldn't be construed as a determination that there was a violation.
The FTC's closing letter is available at http://www.ftc.gov/system/files/documents/closing_letters/verizon-communications-inc./141112verizonclosingletter.pdf.
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)