FTC/FCC Tag Teaming

I spent an inordinate amount of time as a kid watching professional wrestling. It looked like this:

In my defense, there were only three channels, and Bugs Bunny wasn’t always on. But one of the things I distinctly remember were the tag team matches. These involved teams of two wrestlers who took turns in the ring. They had to tag each other to switch.  Of course, this being pro wrestling, the rules inevitably got bent, and more often than not, two wrestlers wound up pile driving the hapless victim. Great sportsmanship? No.  Great television. Of course.

And those vintage memories of fat guys in Speedos were more prominent in my mind than normal today as I read this press release from the Federal Communications Commission. According to the FCC, it plans to fine TerraCom, Inc. and YourTel America, Inc. $10 million. Their sin? The companies failed to safeguard personally identifiable information they gathered from customers. The companies stored Social Security numbers, names, addresses, driver’s licenses and other sensitive customer information on “unprotected Internet servers that anyone in the world could access.”    

The companies stated in their privacy policies that they had in place “technology and security features to safeguard the privacy of… customer specific information from unauthorized access or improper use.” But those promises don’t jive with reality – specifically putting the information on servers available to the world.

In the FCC’s view, that conduct violates the companies’ statutory duty under the Federal Communications Act to safeguard the data, but also constitutes an “unjust and unreasonable practice.” And that’s where the tag teaming comes into the picture. The Federal Trade Commission has also gone after companies who don’t live up to privacy promises on the theory that the failure to do so constitutes and unfair and deceptive practice under the Federal Trade Commission Act. The FCC is apparently adopting a similar approach.

It is of course worth noting that Congress has issued no statutory authorization for the FTC or the FCC to be privacy police. And the Wyndham Hotel chain is  in federal court fighting the FTC’s ability to regulate in this area. Don’t be surprised if there is a similar challenge to the FCC’s jurisdiction.  After all, the tag team concept works both ways!