FTC Scores Key Victory in Challenge to its Authority to Enforce Data Security
April 09, 2014
By BEHNAM DAYANIM & MARY-ELIZABETH M. HADLEY
In a much-anticipated decision earlier this week, the U.S. District Court for the District of New Jersey declined to dismiss the Federal Trade Commission’s (“FTC”) case against hospitality industry defendant Wyndham Worldwide Corporation. The court’s decision is significant in its treatment of the “unfairness” prong of Section 5 of the FTC Act, establishing the agency’s authority to pursue data security concerns as unfair trade practices even in the absence of regulations setting out substantive security requirements. The rarity of challenges to the FTC’s authority in this area render the decision even more important and likely herald increased agency activity moving forward.