Until now, the primary federal agency regulating data security has been the Federal Trade Commission. Indeed, in August 2015, the Third Circuit in the Wyndham Worldwide case affirmed the FTC’s regulatory enforcement authority against companies failing to take appropriate action to protect consumer financial information. However, other federal regulatory agencies are now increasing asserting their authority with respect to data security issues, including in particular, the Consumer Financial Protection Bureau (CFPB), which recently brought its first data security enforcement action. These developments underscore the fact that companies face a growing regulatory exposure relating to cybersecurity issues. The specific recent developments also highlight the expectations regulators are asserting with respect to board responsibility for cybersecurity issues and establish that companies can face data security enforcement action even if the companies have not themselves experienced a data breach.
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