“Don’t make promises that you don’t intend to keep” is an admonishment received by every child and delivered by every parent. This pithy maxim is equally applicable to consent orders entered into with regulatory authorities. Indeed, Upromise’s failure to abide by it is costing the company $500,000 in the form of a civil penalty from the Federal Trade Commission (FTC). Continue Reading More Broken Privacy Promises from Upromise: Key Takeaways From Upromise’s Latest Settlement with the FTC
What does your TV-watching history say about you? According to a recent lawsuit against VIZIO, Inc., it might be more than you think! One of the world’s largest sellers of “smart” televisions has recently paid a $2.2 million settlement following charges by the Federal Trade Commission and the Office of the New Jersey Attorney General that it was unlawfully tracking and selling 11 million consumers’ viewing data. The resulting court order has important repercussions for both consumers and smart TV producers. Continue Reading Who is Watching you Watch TV? If You Have VIZIO … Your TV Might Be Watching You
The U.S. Federal Trade Commission (“FTC”) has filed a lawsuit against device manufacturer D-Link for allegedly deceiving the marketplace about the security of its products and, in turn, unfairly placing customer privacy at risk.
Taiwan-based manufacturers D-Link Corporation and D-Link Systems, Inc. (collectively, “D-Link”) design a variety of home network devices, such as routers, IP cameras, and baby monitors. Devices such as these are susceptible to hacking when they are connected to each other and to the internet (in what is often referred to as the “Internet of Things” or “IoT”), and weak security measures therefore pose a significant security concern. Judging from D-Link’s advertisements for its products, the company is certainly aware of these risks. D-Link boasted that its routers are safe locked from hackers thanks to “Advanced Network Security,” its baby monitors and cameras assure a “Secure Connection” to protect the livestream view of a sleeping child, and promises of an “easy” and “safe” network appear repeatedly during the set up process for a D-Link device with an online interface. As the FTC explains in its lawsuit, claims like those made by D-Link are not only misleading but also dangerous.
Despite an apparent awareness of consumers’ cybersecurity concerns, the FTC alleges that D-Link neglected to build common security measures into the devices it sells. The allegations are startling: mobile app credentials were stored unsecured in plain text on consumer devices; a private company key code was accidentally made viewable online for six months; hard-coded login credentials in camera software left video feeds vulnerable to unauthorized viewers. And that’s just the beginning. More details are listed in the FTC’s complaint filed in a U.S. District Court in California on January 5, 2017. These lapses, and D-Link’s deceptive advertising, prompted the FTC to charge the company with a violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. §45.
As of January 10th, D-Link has denied the allegations outlined in the complaint and has retained the Cause of Action Institute as counsel to defend against the action.
The growing IoT problem
In recent years, the FTC has tried to keep pace with mounting concerns over the IoT industry by filing a handful of complaints focused on consumer protection. For example, it went after the company TRENDnet after the firm’s faulty software allowed hundreds of personal security cameras to be hacked. It also filed an action against computer parts manufacturer ASUS after its cloud services were compromised and the personal information of thousands of consumers was posted online. These isolated mistakes add up; when millions of unsecured and seemingly innocuous Wi-Fi-enabled devices join the global network, they can serve as a massive launchpad for crippling cyber-attacks like the one that overwhelmed internet traffic operator Dyn and shut down several major websites in October 2016. The efforts of the FTC are aimed at mitigating such attacks and encouraging technology developers to invest effort and resources in order to secure their IoT devices before they hit the marketplace.
Search for solutions
Both the FTC and the National Institute of Standards and Technology (NIST) have released reports offering guidelines and technical standards for building reliable security into the framework of new systems and devices. As we wrote about recently, the Obama administration had also left the Trump administration an extensive report on cybersecurity recommendations. Achieving these standards will require a combination of regular agency enforcement and greater market demand for safe, secure devices. In the meantime, some digital vigilantes are working to stop cyber-attacks before they start. Netgear, for instance, has launched a “bug bounty program” offering cash rewards of $150-$15,000 for eager hackers to track and report security gaps in its devices, applications, and APIS. Indeed, incentivizing solutions rather than quietly overlooking mistakes, and searching for loopholes in our laws, will make a substantial difference in safeguarding the IoT landscape.
Even president-elect Donald Trump has been the victim of a data breach. Several times actually. The payment card system for his Trump Hotel Collection was infected by malware in May 2014 and 70,000 credit card numbers were compromised by the time the hack was discovered several months later. The hotel chain paid a penalty to the State of New York for its handling of that incident. The hotel chain also experienced at least two additional breaches during this past year affecting various properties. From a business perspective, Mr. Trump certainly understands the high costs of cybersecurity in dollars and distraction. But from the Oval Office, it is far less clear what the Trump Administration might do to secure our country’s digital infrastructure and prosecute cybercriminals. Equally uncertain are Mr. Trump’s views on privacy rights and how his presidency might affect federal protections for personal information and cross-border transfers of data. We do not have a crystal ball, but offer some thoughts. Continue Reading The Cyber President? What To Expect From the Trump Administration On Cybersecurity And Privacy
On Friday, the heads of the Federal Trade Commission overruled the decision of the Administrative Law Judge (“ALJ”) in In the Matter of LabMd., Inc. The FTC concluded that the ALJ had erred in dismissing the Commission’s case against a lab testing company LabMD and misapplied the unfairness standard. The key determination by the FTC was that the mere disclosure of sensitive medical information is cognizable harm under Section 5(c) of the FTC Act, 15 U.S.C. § 45(a), irrespective of whether there is further economic or physical harm. What does this mean for privacy enforcement? Read on. Continue Reading FTC Plants A Flag With LabMD Ruling: What This Means for Enforcement
Last week, the Federal Trade Commission (FTC) announced (press release) that Practice Fusion, the largest cloud-based electronic health company in the United States, has agreed to settle FTC charges over deceptive practices involving the public disclosure of healthcare provider review information collected from consumers that included sensitive personal and medical information. Below is our review of the circumstances of the basis of the FTC complaint, a summary of the terms of the settlement, and a few pointers on how to avoid a similar situation. There are many lessons to be learned from this FTC complaint for all online providers, not only EHR providers. Read on ….. Continue Reading Practice Fusion and FTC Settle Complaint Over Deceptive Statements About the Privacy of Consumer-Generated Online Content
FCC Chairman Tom Wheeler has announced that a proposed rulemaking is being circulated among the Commissioners that would establish privacy and data security requirements applicable to providers of broadband Internet access service (BIAS). The Notice of Proposed Rulemaking (NPRM) itself will not be released to the public until the end of March when it is scheduled for a vote, but Chairman Wheeler released a summary of his proposal on Thursday.
In adopting the Open Internet Order, which reclassified BIAS as a telecommunications service subject to Title II of the Communications Act, the FCC determined that the privacy provisions of Section 222 of the Communications Act that govern how call detail and call record information are used and protected by providers of telecommunications services also would apply to BIAS providers. The Commission concluded, however, that its rules implementing the privacy provisions of that Title were ill-suited for broadband privacy, and opted to forbear from applying those rules to BIAS providers. Instead, the Commission stated that it would establish a new privacy framework applicable to BIAS providers, and last week’s announcement represents the start of that process. Continue Reading FCC Announces Broadband Privacy Proposal
The amended Judicial Redress Act has passed the House and is on its way to the president to be signed into law. The Act, which we covered in an earlier blog post, gives citizens of foreign countries the same rights as US citizens in connection with the use by the US government of their personal data, subject to a determination by the Attorney General that the country in question cooperates with the US in sharing law enforcement information, doesn’t impede the flow of personal data to the US for commercial purposes, and meets certain other requirements. Essentially, the Judicial Redress Act helps assuage the EU’s concerns about government uses of personal data. The Judicial Redress Act is vital for the EU’s acceptance of the Umbrella Agreement for sharing of data by law enforcement agencies. It should be helpful for the proposed new “Privacy Shield,” which is currently under review by representatives of Europe’s national data protection agencies.
If you would like to learn more about the politics and law behind the current Safe Harbor 2.0 negotiations, download the podcast of Running Aground in the Surveillance Safe Harbor, a teleforum hosted by the Federalist Society. The podcast features moderator Matthew R.A. Heiman, Vice President, Chief Compliance & Audit Officer, Tyco International; Stewart A. Baker, Partner, Steptoe & Johnson LLP and former Assistant Secretary for Policy at the Department of Homeland Security; and Susan Foster, a solicitor in England & Wales whose practice bridges the UK and US perspectives on data protection matters. Podcast made available through kind permission of the Federalist Society.