Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC offers testimony before House subcommittee on protecting consumer data, (Feb 5, 2014)

At a hearing today of the House Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing, and Trade addressing a series of recent data breaches at national retailers, FTC Chairwoman Edith Ramirez said “it’s time for Congress to act.” She noted that there was no perfect solution to the data breach issue, but congressional action was necessary.

Testifying at the hearing entitled “Protecting Consumer Information: Can Data Breaches Be Prevented?” Ramirez emphasized the FTC’s ongoing efforts to promote data security, and reiterating its support for enactment of a strong federal data security and breach notification law.

The FTC’s testimony outlined the agency’s efforts to promote data security through civil law enforcement, education, and policy initiatives. The testimony noted that businesses are collecting more personal information about consumers than ever before, and that rising reports of data breaches show that these systems are susceptible to being compromised.

“Never has the need for legislation been greater. With reports of data breaches on the rise, and with a significant number of Americans suffering from identity theft, Congress needs to act,” the testimony stated.

Data security is of critical importance to consumers. The testimony pointed out that, according to estimates by the Bureau of Justice Statistics, 16.6 million persons – or 7 percent of all U.S. residents ages 16 and older – were victims of identity theft in 2012. The FTC has undertaken substantial efforts to promote data security in the private sector through civil law enforcement, education, policy initiatives, and recommendations to Congress to enact legislation in this area.

The testimony explained that, to promote data security, the FTC enforces several statutes and rules that impose obligations upon businesses that collect and maintain consumer data. These include the Gramm-Leach-Bliley Act; the Fair Credit Reporting Act (FCRA); the Children’s Online Privacy Protection Act (COPPA); and the prohibition against unfair or deceptive acts or practices in Section 5 of the FTC Act.

The testimony stressed the Commission’s bipartisan support for data security legislation that would enhance existing laws and strengthen the agency’s existing authority. The Commission supports legislation, for example, that would give the FTC the ability to seek civil penalties to help ensure FTC enforcement actions have an appropriate deterrent effect. Under current laws, the FTC only has the authority to seek civil penalties for data security violations involving companies that fail to protect children’s information provided online in violation of the COPPA Rule or credit report information in violation of the FCRA. The Commission recommended data security legislation that would provide the agency with jurisdiction over non-profits, which have been the source of a substantial number of breaches.

The FTC also recommended that Congress enact a federal law that would require companies, in appropriate circumstances, to notify consumers when there is a security breach, the testimony stated. This would help consumers mitigate likely harm from the misuse of their data. Although most states have breach notification laws, a strong and consistent, national requirement would ensure that all consumers are protected.

In addition, the Commission promotes better data security practices through consumer education and business guidance, the testimony noted. On the consumer education front, the Commission recently posted information for consumers who may have been affected by the recent breaches at retail companies, providing steps they should take to protect themselves. It also widely disseminates a business guide on data security, along with an online tutorial, that are designed to provide diverse businesses – and especially small businesses – with practical, concrete advice as they develop data security programs and plans for their companies.

As the nation’s leading private enforcement agency, the FTC is committed to protecting consumer privacy and promoting reasonable data security in the private sector, the testimony concluded.

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