FTC v. Wyndham Worldwide Corporation
United States Court of Appeals for the Third Circuit
799 F.3d 236 (2015)
- Written by Sean Carroll, JD
Facts
On three occasions, hackers stole the personal information of customers of Wyndham Worldwide Corporation (Wyndham) (defendant) by hacking into Wyndham’s computer systems. The breaches led to over $10 million in unauthorized charges to the customers. The Federal Trade Commission (FTC) (plaintiff) sued Wyndham, alleging that Wyndham’s cybersecurity practices constituted an unfair business practice and that Wyndham’s privacy policy was deceptive, both of which were in violation of § 5 of the Federal Trade Commission Act (the FTC Act). Among other things, the FTC alleged that Wyndham (1) maintained unencrypted credit-card information, (2) permitted the use of routine, easily guessable passwords in its computer systems, including in some cases default passwords ascertainable on the internet, (3) did not use easily accessible cybersecurity protections such as firewalls, (4) did not adequately restrict third-party vendors’ access to its computer systems, and (5) failed to adequately monitor its network after the first breach. Wyndham argued that given other recently enacted privacy laws that granted the FTC cybersecurity authority, the FTC did not have such authority under § 5 of the FTC Act. The district court denied Wyndham’s motion to dismiss. Wyndham appealed.
Rule of Law
Issue
Holding and Reasoning (Ambro, J.)
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