Federal Trade Commission Chairwoman Edith Ramirez this morning announced the next step in the FTC’s efforts to craft data security guidelines for businesses. As part of its “Start with Security” program, originally unveiled in March, the Commission will hold an initiative at the University of California on September 9. This follows on the heels of the February 13 Summit on Cybersecurity and Consumer Protection at Stanford University.
NCL has long advocated for the FTC to take a leadership role in the federal government on data security and is very pleased about this announcement. We applaud the FTC for taking this step to improve data security and help businesses protect consumers.
While details of the September meeting aren’t yet fully known, we do know a few things about the Commission’s “Start with Security” program. At the IAPP summit in March, FTC Bureau of Consumer Protection Director said that the program’s goal is to provide businesses with resources, education and guidance on data security. Chairwoman Ramirez (who NCL will be honoring in October, incidentally) elaborated on this theme, stating that the initiative will be aimed at bringing together experts on data security to share best practices, particularly for small and medium-sized businesses.
The focus on data security at small-to-medium sized businesses is a logical choice for the agency. Its ongoing legal tussle with Atlanta-based LabMD illustrates challenges the Commission faces as it seeks to enforce data security obligations on small businesses. Such entities are often ill-equipped to adequately protect the growing amounts of sensitive personal information they are collecting. This is an incredibly important issue. As NCL’s #DataInsecurity Report found, nearly 6 in 10 data breach victims indicated that their trust in retailers decreased following a breach. For a small business struggling to stay afloat, losing the confidence of customers due to a data breach can mean the difference between keeping the lights on and a “closed” sign on the front door.
So what can the Commission hope to accomplish at its September meeting? In the interests of promoting consumer data security, we propose that the meeting agenda cover some basic data security policy topics, such as:
- Is there a sufficient flow of information and best practices on breach trends, emerging threats from hackers, etc. being shared by the FTC with business that are entrusted to store consumer data? If not, how can this improve?
- The Online Trust Alliance estimated that 90% of data breaches in 2014 could have been prevented if basic security measures had been taken. With this in mind, how can businesses be incentivized to make sure they are taking the basic steps to protect their data?
- Small and medium-sized businesses often lack the budget and/or expertise to craft robust data security protections, yet they are increasingly collecting large amounts of sensitive data about their customers. What requirements should be placed on a pizza parlor, for example, when it comes to data security?
- We often hear that it’s not “if,” it’s “when” when it comes to data breaches at businesses. However, it seems that businesses, particularly small-to-medium sized businesses, aren’t prepared to protest against the data breach threat. Is this accurate? If so, what can the FTC do to change that mindset?
- Government data security mandates can only do so much to create a climate where data security is taken seriously by business. What flexible, market-based incentives exist to promote data security? Is cyber-insurance the answer?
- There is no shortage of cybersecurity firms offering high-priced solutions to small-to-medium sized businesses. Are there free or low-cost solutions that businesses can take today that will measurably reduce their data security risks (e.g. enable multi-factor authentication, create stronger passwords, encrypt sensitive data)?
The “Start With Security” initiative is a good opportunity for the FTC to promote solutions that businesses can take to reduce their data security risk. However, absent reforms in Congress to tackle tough issues like data breach notification and a comprehensive data security standard, education can only do so much. We hope that the Commission will use the September 9 forum to highlight the impact that breaches continue to have on consumers and businesses and to push Congress to pass real data security reforms.