Third Circuit Upholds FTC's Authority To Prosecute Companies For Data Breaches

On August 24, the Third Circuit Court of Appeals affirmed the authority of the Federal Trade Commission to bring cases against companies that experience a data breach.

The Third Circuit Court of Appeals ruled the FTC could proceed with a lawsuit alleging that the hotel chain Wyndham Worldwide Corp. violated the unfairness and deception prong of Section 5 of the FTC Act by failing to maintain reasonable and appropriate security measures. According to the FTC, Wyndham's security failures allegedly led to at least three data breaches between April 2008 and January 2010, exposing more than 600,000 consumer payment card account numbers and leading to more than $10.6 million in fraud loss.