10/29/21

FTC Announces Changes to its Standards for Safeguarding Consumer Information

Related Practices

Attorneys & Professionals

In a 3-2 decision, the Federal Trade Commission (FTC) announced on Wednesday important updates to its Standards for Safeguarding Customer Information. The updates outline specific practices that the FTC believes will better protect consumer data from ever-increasing cyberattacks and other threats.  Notable changes include:

The FTC amended its Standards for Safeguarding Customer Information pursuant to its authority under the 1999 Gramm-Leach-Bailey Act, which mandates that the FTC and other federal agencies establish standards for administrative, technical, and physical safeguards for certain information. Acknowledging that its new Standards may pose unique challenges for smaller entities, the FTC exempted financial institutions that collect information on fewer than 5,000 consumers from its new requirements of a written risk assessment, incident response plan, and annual reporting to governing bodies.  

In a dissenting opinion, Commissioners Noah Joshua Phillips and Christine S. Wilson wrote that the new Standards are “intrusive corporate governance obligations” that will force financial institutions to “divert[] finite resources towards a check-the-box compliance exercise and away from risk management tailored to address individual [institutions’] unique financial needs.” Chair Lina M. Khan and Commissioner Rebecca Kelly Slaughter, responding in a joint statement, maintained that the amendments are “sorely needed” and asserted that “[t]here is no support for the dissent’s notion that the amendments eliminate financial institutions’ flexibility in a way that will hurt smaller businesses.”

For further information about complying with the FTC’s new Standards, or about the law surrounding consumer data protection generally, please contact John L. Landolfi, Christopher L. Ingram, Maxwell H. King, or your Vorys attorney.