FTC can sue companies over data breaches, court rules

Apr 11th, 2014 / Category: Managed File Transfer

Secure file sharing practices are imperative for organizations that handle sensitive customer information or maintain repositories of confidential data. Data breaches carry heavy costs in lost revenue, eroded consumer trust, PR management and other expenses. Recently, the Federal Trade Commission won a court case confirming its right to sue organizations that experience data breaches because they lack the appropriate security measures. This development only solidifies the legal responsibility companies have to implement best practices for data management and represents another way that failure to do so can impact an organization's bottom line.

FTC enjoys 'major victory' for data breach charges 
According to Computerworld, a federal court in New Jersey ruled in favor of the FTC's stance that it can charge businesses for failing to maintain "reasonable security practices." The case resulted from a 2012 FTC lawsuit against Wyndham Worldwide Corp., which had experienced an incident exposing hundreds of thousands of credit and debit cards, amounting to over $10 million in fraud costs. Challenging the lawsuit, the corporation resisted accusations that it had used unfair trade practices and tricked its patrons into a false sense of security regarding their personal data, the source added.

In winning the case, the FTC achieved a "major victory" confirming its right to hold companies responsible for maintaining security best practices according to regulatory guidelines, such as acts prohibiting "unfair" and "deceptive" trade practices, Computerworld explained.

"The main takeaway is that the FTC is here to stay," Scott Vernick, a Fox Rothschild attorney who specializes in online privacy and rights issues, told the source. "If the decision holds the FTC will become more aggressive in enforcement action."

Implementing stronger security 
Referring to a recent Symantec report, CRB Online noted that data breaches involving identity information rose by 62 percent last year, exposing more than 552 million parties. With high-profile breaches making national headlines and agencies like the FTC increasing their oversight and regulatory vigilance, it's more pressing than ever for enterprises to guard against the growing prevalence of security threats. Data breaches can result from a number of factors, from cyber crime to losing a hard drive or laptop.

As part of a comprehensive security program that upholds industry standards and regulatory controls, companies need to empower their workers with the training and tools to act as partners in keeping resources safe. This can include systems such as Wide Area File Services (WAFS), which give workers convenient ways to access corporate data, even remotely, while keeping the information safe in a protected environment.