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There are only two types of companies: those that have been hacked, and those that will be. Unfortunately, the FTC is throwing American businesses who are victims of hacking under the bus by punishing them for not successfully preventing the hacks – in spite of the stark reality described by the FBI’s Robert Mueller. Take the FTC’s lawsuit against Wyndham Worldwide Corp., which was the victim of a global hacking scheme, as just one recent example of an FTC run amok. Over the last few years, the FTC has routinely punished businesses who are themselves hacking victims for allegedly failing to have “reasonable” data security measures in place – only there’s no way for a business to truly know beforehand what the FTC will consider “reasonable” measure until after it’s been hacked.
Because the FTC has never formally promulgated any data security standards, a business has no way of knowing whether it’s compliant until after it’s been hacked, had its data stolen, completed a costly FTC investigation, and an enforcement action has been filed against it. The FTC’s approach to data security is particularly damning for small businesses, who often are compelled to divert their time and precious resources on lawyers and litigation, rather than on growing their businesses – and creating jobs. Take the tale of LabMD, a Georgia-based cancer detection company, as just one example of how the mere allegation of inadequate data security can subject a business to years of expensive FTC investigations and reputational injury – which can derail a small business’s growth agenda, and cost jobs.

Of course, the initial FTC investigation (which in this case has already cost LabMD half a million dollars) is just the tip of the iceberg. If that’s the type of treatment and expenses that small businesses can expect to incur even when the FTC claims “there is no allegation that anybody has done anything wrong,” then there is certainly something wrong with how the FTC is conducting its business. Michael Daugherty is President & CEO of LabMD, an Atlanta-based clinical and anatomic medical laboratory with a national client base. Outside of LabMD, enjoys playing tennis, travel, and flying his Cirrus SR22 Turbo single engine aircraft. About MichaelMichael Daugherty is President & CEO of LabMD, an Atlanta-based clinical and anatomic medical laboratory with a national client base.
The Federal Trade Commission requires that I disclose any relationship I have between a product manufacturer or service provider when I write about a product or service.
Chamber of Commerce Publishes Article featuring LabMD and Michael J Daugherty on Cyber Security - Michael J.

Chamber continues to lead efforts to address the data security crisis, by actively engaging in discussions with Congress regarding federal data security and data breach legislation. Then the FTC strong-arms the business into entering into so-called “settlement” agreements (or “consent orders”) that often give the FTC roving and unchecked authority for the next 20 years to conduct audits and impose penalties on the business – again, for violating non-existent data security standards. Michael Daugherty receives a small commission for purchases made via affiliate links on this site such as from Amazon.

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