Home Data FTC Sets Ambitious Precedent On Cybersecurity Standards

FTC Sets Ambitious Precedent On Cybersecurity Standards

SHARE:

wyndhamWyndham Hotels has lost a motion to dismiss an FTC case alleging the hotel chain exposed consumer personal data to potential theft.

While the case, which will be sent back to a federal trial court following Monday’s ruling by a three-judge appeals panel, doesn’t directly affect advertisers, it affirms the FTC’s power to penalize companies for insufficient cybersecurity practices.

Andrew Lustigman, a partner at Olshan Frome Wolosky who represents marketers on data security issues, said that regardless of how the court case shakes out, this “establishes a standard” for the FTC to bring cases against businesses.

The FTC is putting a new burden on businesses, holding them accountable for failing to keep up with the market. Alysa Hutnik, a partner at Kelley Drye and a legal expert on consumer privacy and data security, said this case is “the first in a long time that I’ve seen where the target of the FTC isn’t a fraudster, but a well-known, big-name brand.”

Hutnik said this case, coming after a period of public awareness around data, from Edward Snowden to the Ashley Madison leak, indicates to big business that the government intends to start enforcing data practices.

While this is an “ambiguous” field, Lustigman said the FTC can potentially use Wyndham’s failed motion to dismiss as precedent to address broader cybersecurity protocols.

Wyndham found itself in the FTC’s crosshairs because it was repeatedly breached by hackers using the same strategy over a two-year period. Hutnik said the FTC is setting a standard where businesses must keep up with internal issues and market norms.

Is it fair that the FTC is suddenly cracking down? Lustigman says not, since the FTC is acting retroactively and has not issued guidance for data security standards – in stark contrast to its “painstaking detail for other industries.”

Hutnik said it’s an onerous task, as a company like Wyndham has a sprawling network of hotels, franchisees, time shares and independent property managers it must account for.

But for big brands or any digital company that manages sensitive consumer data, the appeals decision is clear about where the burden of responsibility lies for keeping pace with fraudsters and security technology.

“Wyndham cannot argue it was entitled to know with ascertainable certainty the cybersecurity standards by which the FTC expected it to conform,” Judge Thomas Ambro wrote for the appeals court.

Must Read

Comic: Header Bidding Rapper (Wrapper!)

Microsoft To Stop Caching Prebid Video Files, Leaving Publishers With A Major Ad Serving Problem

Most publishers have no idea that a major part of their video ad delivery will stop working on April 30, shortly after Microsoft shuts down the Xandr DSP.

AdExchanger's Big Story podcast with journalistic insights on advertising, marketing and ad tech

Guess Its AdsGPT Now?

Ads were going to be a “last resort” for ChatGPT, OpenAI CEO Sam Altman promised two years ago. Now, they’re finally here. Omnicom Digital CEO Jonathan Nelson joins the AdExchanger editorial team to talk through what comes next.

Comic: Marketer Resolutions

Hershey’s Undergoes A Brand Update As It Rethinks Paid, Earned And Owned Media

This Wednesday marks the beginning of Hershey’s first major brand marketing campaign since 2018

Privacy! Commerce! Connected TV! Read all about it. Subscribe to AdExchanger Newsletters
Comic: Header Bidding Rapper (Wrapper!)

A Win For Open Standards: Amazon’s Prebid Adapter Goes Live

Amazon looks to support a more collaborative programmatic ecosystem now that the APS Prebid adapter is available for open beta testing.

Gamera Raises $1.6 Million To Protect The Open Web’s Media Quality

Gamera, a media quality measurement startup for publishers, announced on Tuesday it raised $1.6 million to promote its service that combines data about a site’s ad experience with data about how its ads perform.

Jamie Seltzer, global chief data and technology officer, Havas Media Network, speaks to AdExchanger at CES 2026.

CES 2026: What’s Real – And What’s BS – When It Comes To AI

Ad industry experts call out trends to watch in 2026 and separate the real AI use cases having an impact today from the AI hype they heard at CES.