FTC Testifies on Data Security, Peer-to-Peer File Sharing

On May 5, the Federal Trade Commission testified on the Commission's efforts to promote better security for sensitive consumer information and to prevent the inadvertent sharing of consumers' personal or sensitive data over Peer-to-Peer Internet file-sharing networks. As part of these efforts, the agency also announced that it had reached an agreement with one of the largest privately held lenders in the United States to resolve charges that the company violated federal law by failing to provide reasonable security for consumers' sensitive information. In testimony before the House Energy and Commerce Committee Subcommittee on Commerce, Trade and Consumer Protection, Acting Director of the Bureau of Consumer Protection Eileen Harrington said the agency strongly supports the goals of H.R. 2221, the Data Accountability and Trust Act, which would require companies to put reasonable data security policies and procedures in place, and to notify consumers when there has been a data security breach that affects them. The legislation also would give the Commission the authority to obtain civil penalties for violations. The Commission made two further recommendations regarding the data security legislation: It suggested that the legislation be extended to cover data stored on paper, as well as electronic data. It also recommended that certain provisions imposing obligations on information brokers - companies whose business is to collect and sell information about individuals who are not their customers - be targeted specifically to address harms consumers may face when brokers sell information about them, to the extent that such harms are not already addressed by federal law. These provisions should not displace existing legal protections.