Stephen E Wieker and Liisa M. Thomas write:
In a strongly-worded motion filed in federal district court in Arizona, Wyndham Hotels & Resorts LLC recently asked the court to dismiss all charges filed by the Federal Trade Commission alleging Wyndham engaged in unfair and deceptive privacy practices. As we reported in June, according to the FTC, these practices allegedly led to a variety of data breaches. The FTC brought the case in late June, after a two-year investigation into multiple intrusions into computer systems operated by Wyndham’s franchised hotels that led to theft of payment card information of over 600,000 consumers.
Read more on Lexology. As the authors point out, this appears to be a very serious challenge to the FTC’s authority to enforce data security under the Act. As one of their filings state:
Nothing in Section 5 gives the FTC the power to set standards for the extremely complex computer software and hardware systems that businesses employ to ensure data security. And no court has ever held that the “unfairness” prong of Section 5 gives the Commission the authority to regulate a private company’s data-security practices. Indeed, it is inconceivable that Congress would have delegated a policy choice of such significant political and economic consequence to the FTC through a statute that does no more than forbid “unfair” trade practices—“[Congress] does not, one might say, hide elephants in mouseholes.” Whitman v. Am. Trucking Ass’ns, Inc., 531 U.S. 457, 468 (2001). Confirming that intuition, Congress has enacted no less than 10 federal statutes prescribing specific data-security standards for elements of the private sector. None grants the FTC the authority it claims here.
I’ve uploaded Wyndham’s Motion to Dismiss and related filings: