The Federal Trade Commission (FTC) will continue in oversight and enforcement in areas critical to trading companies- namely data security- according to a hearing in the Senate Commerce Committee.
The FTC was first created in 1914 and is the longest serving regulator where the Senate Commerce Committee has an oversight role.
Its mandate to protect consumers from unfair and deceptive business practices and anti-competitive business practices normally make headlines in areas separate from trading: harassing debt collectors, do not call lists and protection of children from internet predators, but its broad mandate means the agency has plenty of regulatory authority over trading companies.
In 1999, the FTC in conjunction with the Commodities Futures Trading Commission (CFTC) targeted Ken Roberts Institute which the two regulators alleged sold get rich schemes in commodities and other securities trading, Timothy Cho settled with the FTC in 2002 for making unsubstantiated claims about his day trading scheme, and more recently, in June 2016, settled with Discount Gold Brokers when that company failed to deliver on the commodities it bought for its clients.
While scammers- both in trading companies and beyond- will always be a target of the FTC, the hearing chaired by Republican South Dakota Senator John Thune placed special emphasis on data security.
Thune said protecting consumers’ data must be balanced with undue burden of overregulation: “We have heard concerns, for instance, about the Commission’s application of its unfairness authority to bring cases against private companies for lax data security practices.” Thune said. “But for some time now, a key element in any unfairness case has been whether or not a practice causes substantial – that is, monetary but not subjective – injury to consumers.”
Data security is at the forefront again with the recent revelation of a massive data breach at the internet giant Yahoo. With trading companies holding onto some of the most personal information including birth dates, social security numbers and often even bank account information, data protection is critical to the business and the hearing made clear that trading companies, like all companies which store customer data, must protect it or face the wrath of the regulator.
“If a company makes materially misleading statements or omissions about a product or service, including its privacy or data security features, and such statements or omissions are likely to mislead reasonable consumers, such statements or omissions can be found to be deceptive and in violation of Section 5,” said Edith Ramirez, FTC chair.
“The new frontier of consumer protection which is privacy.” Said the ranking member Democratic Connecticut Senator Richard Blumenthal. “The internet of things (is) almost the wild, wild west of data security.”
Blumenthal used the hearing to tout a bill he is co-sponsoring with Democratic Florida Senator Bill Nelson, the Data Security and Breach Notification Act.
The act would give the FTC even more power requiring it “to promulgate regulations requiring commercial entities, nonprofit and for-profit corporations, estates, trusts, cooperatives, and other specified entities that own or possess data containing personal information (covered entities), or that contract to have a third-party maintain or process such data for the entity, to implement information security policies and procedures for the treatment and protection of personal information.”
Not surprising, when Blumenthal asked, Ramirez said she supported a bill which gave her organization more power in the area of data security.
After spending a decade in finance, Michael Volpe has been a freelance investigative journalist since 2009. His work has been published locally in the Chicago Reader, Chicago Crusader, Chicago Heights Patch, and New City. Nationally, Volpe’s work has appeared in a wide variety of publications including the Washingt
on Examiner, the Daily Caller, Crime Magazine, the Southern Christian Leadership Conference Newsletter, and Counter Punch. Volpe has been recognized by whistleblowers as leading the charge in getting their stories out. His first book Prosecutors Gone Wild was published in October 2012, his second book The Definitive Dossier of PTSD in Whistleblowers was published in February 2013 and his third book Bullied to Death was published in August 2015.