FTC and Wyndham Present Arguments on Whether FTC has Declared Unreasonable Cybersecurity Practices Unfair

From: The National Law Review

Katherine R. H. Gasztonyi | Covington & Burling LLP

On Friday, March 27, 2015, the Federal Trade Commission and Wyndham Worldwide Corp. filed supplemental briefing in the Third Circuit regarding whether the FTC had made an adjudicative decision that the FTC Act prohibits unreasonable cybersecurity practices and, if not, whether a federal court could hear a case charging a violation of the FTC Act if the FTC has not yet made such an adjudicative decision.

Recall that, in FTC v. Wyndham Worldwide Corp. et al., the FTC has alleged that Wyndham violated the FTC Act’s prohibition against “unfair practices” by failing to reasonably secure its customers’ personal information. Unsurprisingly, the parties held diametrical opinions on the issue of whether the FTC had declared unreasonable cybersecurity practices unfair through the procedures of the FTC Act. The FTC began by arguing that it had done so through the issuance of an interlocutory decision in LabMD. Wyndham countered, noting that the interlocutory decision denying a motion to dismiss in LabMD was not final, and therefore could not amount to a formal declaration about the meaning of unfairness.

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