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FTC Deputy Director Provides Data Breach Litigation Update

FTC must react to Eleventh Circuit’s LabMD ruling

On December 17, 2018, the Consumer Protection Committee of the American Bar Association’s Antitrust Law Section held a Fireside Chat with Dr. James Cooper of the Federal Trade Commission.  Since July, Dr. Cooper has been the FTC’s Deputy Director for Economic Analysis. The chat was held less than a week after the FTC held data security hearings.

While the FTC is generally averse to identifying specific security measures that companies should employ in order to preserve customer data, a recent decision in the Eleventh Circuit Court of Appeals seems to be forcing the FTC’s hand towards a new approach.

According to Dr. Cooper, the FTC intends to address the June 6, 2018 ruling by the Eleventh Circuit Court of Appeals in LabMd. v. FTC.  In that case, the Eleventh Circuit vacated an FTC order as unenforceable because the order did not direct LabMd to do anything specific, other than to implement a “reasonably designed” data-security program.

Dr. Cooper said in the wake of that ruling, the FTC is now looking into ways to update the way it’s data-breach consent decrees are structured.

The fireside chat also revealed that the FTC is working on defining and measuring non-tangible harms that consumers suffer from data security breaches, a move that may expand the calculation of consumer injuries that companies are charged with in data-breach litigation.

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