If 2021 is any indication, the Federal Trade Commission (FTC) shows no signs of slowing down in its pursuit of enforcement actions to address a wide variety of alleged privacy and cybersecurity issues. Under the leadership of new chair, Lina Khan, the past year has seen the FTC engage is a variety of new and expanding enforcement actions exhibiting an increasing interest in regulating data privacy and security, as well as other consumer protection areas.

While the FTC has become the de facto regulator for entities that are not subject to other sector-specific regulations, the Commission’s assertion of authority over privacy and cybersecurity matters is limited by its statutory powers under section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices” that injure consumers. The FTC’s expansion of that authority to cover privacy and cybersecurity matters has only grown more aggressive in recent years but has also become the subject of close judicial review. Notably, in 2018, the Eleventh Circuit ruled, in LabMD, Inc. v. FTC, that the FTC did not have unlimited authority to dictate the details of companies’ privacy and cybersecurity protections. Earlier this year, the Supreme Court, in AMG Capital Mgmt., LLC v. FTC, held that Section 13(b) of the FTC Act does not allow the FTC to obtain monetary relief in federal court. The FTC has asked Congress to use its authority to remedy this ability, and claims that this constitutes a loss of its “best and most efficient tool for returning money to consumers who suffered losses as a result of deceptive, unfair, or anticompetitive conduct.”

The FTC has pushed for a more expansive view of its authority for several years, and this has only intensified over the last year. Even before the AMG decision, the FTC had been advocating for Congress to address the gap in Section 13(b), which only explicitly provides for the FTC’s ability to order injunctive relief and is silent on monetary relief. While waiting on Congress to address the issue, we expect for the FTC to continue to bring enforcement actions and order restitution and disgorgement via their Section 19 authority, which provides for these types of relief, but only after a final cease-and-desist order, which can be challenged and is subject to review of appellate courts.


Continue Reading FTC Signals Increased Focus on Privacy and Data Misuse

CCPA

On August 14, 2020, California Attorney General Xavier Becerra announced the California Office of Administrative Law’s approval of the final California Consumer Privacy Act (CCPA) regulations, and filed them with the California Secretary of State. The AG’s office stated that the regulations are effective immediately.

The OAL made additional revisions to the March 11, 2020 regulations, summarized here, which itself comprised of revised regulations followed several rounds of public forums, hearings, and comment periods. At a high level, the final texts’ noteworthy substantive revisions from the March submission (noted in the OAG’s Addendum to the Final Statement of Reasons) include the following:
Continue Reading CCPA Regulations Approved

LockOn July 22, 2020, New York’s Department of Financial Services (NYDFS) filed its first cybersecurity enforcement action against First American Title Insurance Company (First American), seeking civil monetary penalties for several violations of its cybersecurity regulation, 23 NYCRR §500.  Entities subject to New York’s Financial Services Law, such as First American, may be subject to a civil penalty up to $1,000 per violation or up to $5,000 per intentional violation, and according to NYDFS, each instance of unauthorized disclosure of NPI constitutes a separate violation. Therefore, an enforcement action under 23 NYCRR §500 may result in a hefty fine, particularly in the even of a large-scale data breach.
Continue Reading NYDFS Brings its First Cybersecurity Enforcement Action

Even with states easing COVID-19 related restrictions, suggestions that social distancing could last through the summer (or even longer) have led many companies that traditionally rely on in-person promotional visits to consider other options. One obvious alternative is telephone or text marketing, but companies that are new to the practice should be aware of the numerous federal and state laws and regulations governing telemarketing, which impose significant fines or statutory damages for violations. In one notable example, Dish Network was assessed $280 million in penalties in an action brought by the FTC and state attorneys general for alleged violations of the Telemarketing Sales Rule (TSR) and related state laws, and in a separate class action, plaintiffs were awarded $61 million in statutory damages.

Both the federal government and all 50 states plus the District of Columbia have laws applicable to the use of telephones for marketing purposes. Some of the restrictions may also apply to non-marketing communications. This post provides a high-level overview of the rules applicable to the space; but before engaging in telemarketing activities, companies should be sure to review both federal and state laws to ensure their practices are fully compliant.


Continue Reading Companies Newly Engaged in Telemarketing Should Be Aware of Substantial Body of Federal and State Telemarketing Laws

BillThis article appeared in Law360 on May 14, 2020.  A group of Republican senators have introduced a new privacy bill that would impose strict privacy obligations on contact tracing apps operated by entities not subject to the Health Insurance Portability and Accountability Act.

Most notably, the COVID-19 Consumer Data Protection Act would obligate such entities to obtain express affirmative consent from individual consumers before using their geolocation, proximity or personal health data.
Continue Reading Pandemic-Related Privacy Bill May Be Unconstitutional

Cyber SecurityWe reported last summer on two new legislative enactments in New York putting new demands on how companies handle the personal data of New York residents: the Identity Theft Protection and Mitigation Services Act (ITPMS Act), and the Stop Hacks and Improve Electronic Data Security Act (SHIELD Act). Both were signed into law on July 25, 2019, and as described below, both have since then come gradually into full effect. This includes their most significant feature: as of March 21, 2020, “any business that owns or licenses computerized data which includes private information of a resident of New York” now faces the prospect of an enforcement action by the New York Attorney General’s (AG) Office for the assessment of penalties if the company fails to develop, implement and maintain “reasonable safeguards” for the protection of that information.
Continue Reading “Reasonable Safeguards Requirement” For Personal Information of New York Residents Now Kicks In (with even broader Privacy/Security Legislation Still in the Offing)

CCPAThe California Consumer Privacy Act (CCPA) went into effect on January 1, 2020. Despite requests made by multiple trade associations for delay in the enforcement of CCPA due to COVID-19, the California Attorney General’s office has declined to delay enforcement, which is set to begin July 1, despite the AG’s failure to release final regulations.

The AG’s office first released proposed regulations in October 2019, our summary of the draft regulations can be found here. After the new year, the AG released two sets of modifications to the draft regulations on February 10 and March 11. At a privacy and data security conference last week, a staff member from the California state legislature commented that, due to the pressures and working circumstances created by COVID-19, the most recent version of the regulations, published March 11, are likely to be the version used for enforcement beginning in July. Significantly, the office rejected suggestions that the regulations be delayed because corporations are experiencing these same COVID-19 pressures.
Continue Reading CCPA Regulations Are Likely Final