#229: LabMD Court Decision Ushers in a New Era for the FTC

Tech Policy Podcast

TechFreedom

Technology

4.8 • 45 Ratings

🗓️ 8 June 2018

⏱️ 31 minutes

🔗️ Recording | iTunes | RSS

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Summary

Since the Federal Trade Commission began bringing data security enforcement actions in 2002, no court had ruled on the substantive merits of the FTC’s approach. A panel of three Eleventh Circuit judges decisively rejected the FTC’s use of broad, vague consent decrees, in the LabMD v Federal Trade Commission ruling that the Commission may only bar specific practices, and cannot require a company “to overhaul and replace its data-security program to meet an indeterminable standard of reasonableness.” We are joined by TechFreedom’s President Berin Szóka and Legal Fellow Graham Owens. They explain why this case is so crucial, what’s next for the FTC and what policy changes can be on the horizon.

Transcript

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0:00.0	Welcome to the tech policy podcast. I'm Ashkin Kazarian. Today we're going to dive into
0:11.1	a landmark case for the internet, the lab MD case. At the issue is how much leeway the
0:16.1	FTC will have in regulating the internet from data security to product design to any number of
0:21.3	other emerging issues. Joining me is Tech Freedom's president, Baron Soka. Berrin, thank you for coming.
0:28.1	Thanks for having me. And our legal fellow, Graham Owens, Graham, thank you for joining the show.
0:32.4	Thank you for having me. All right, gentlemen. So why don't you tell our listeners what this case is
0:37.1	about? What's the background?
0:39.2	So essentially since 2002, absent any sort of statutory framework of any comprehensive nature over data security and privacy practices at companies, the FTC has taken over policing companies practices in that area.
0:54.1	And since that time, the FTC's brought about 60 to 70 enforcement actions against companies
1:00.3	for unfair or deceptive data security and privacy practices.
1:05.6	Yet only two of those have actually ever made it to court.
1:09.5	It's 60 to 70 data security plus a bunch of other privacy cases and then some mixed cases.
1:14.6	The two that actually made to court, the first one was Wendom Worldwide, incorporated,
1:18.6	a hotel chain, a Fortune 500 company, the Mints resources.
1:23.6	They're not exactly what we call a sympathetic defendant.
1:26.6	And in that case, you know, they failed to take really even the most basic precautions to
1:31.5	protecting the consumer's data.
1:33.5	And so that case went through and ultimately the Wyndham as unsympathetic, ultimately
1:40.7	decided to settle.
1:42.8	So essentially that leaves us with only the case before us,
1:45.6	which was LabmD, which... And critically, Wyndham settled very early on in their appellate litigation.
1:52.2	Wyndham had spent $5 million just responding to the FTC's discovery request. That gives you a sense
	...

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