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FTC's Wyndham Ruling Raises Data Security and Privacy Issues for Franchisors

July 22, 2014
David F. Katz , Daniel C. Lumm , Mark S. VanderBroek

With permission from Law Journal Newsletters Franchising Business & Law Alert

In a ruling delivered April 7, a federal judge in New Jersey handed the Federal Trade Commission (FTC) a resounding victory in the first round of an ongoing court battle regarding its authority as the primary regulator of issues related to consumer data security and privacy in the United States. The court denied Wyndham's motion to dismiss the FTC's complaint, which challenged the FTC's authority to bring enforcement actions related to data security issues, and the sufficiency of the allegations in the complaint. See, The Federal Trade Commission vs. Wyndham Worldwide Corporation, 2:13-cv-01887-ES-JAD.

While this case is far from over, for now this ruling provides judicial validation of the FTC's authority to pursue breaches or potential breaches of consumer privacy as deceptive and unfair trade practices subject to the jurisdiction of its regulation under Section 5 of the Federal Trade Commission Act.

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