federal trade commission cybersecurity

The following is taken from the FCC document titled above. Click on the title to see the entire document.  Sections 241-243 address reasonableness.

  1. By clarifying that our standard is one of “reasonableness” rather than strict liability, we address one of the major concerns that providers—including small providers and their associations—raise in this proceeding. WTA, for instance, argues that a strict liability standard “is particularly inappropriate for small providers that lack the resources to install the expensive and constantly evolving safeguards necessary to comply with a strict liability regime.”686 We agree with these parties, and others such as the Federal Trade Commission staff,687 that our rules should focus on the reasonableness of the providers’ practices and not hold providers, including smaller providers, to a standard of strict liability. 
  2. We also agree with those commenters that argue that the reasonableness of a provider’s data security practices will depend significantly on context.688 The rule therefore identifies four factors that a provider must take into account when implementing data security measures: the nature and scope of its activities; the sensitivity of the data it collects; its size; and technical feasibility.  Taken together, these factors give considerable flexibility to all providers.  No one factor, taken independently, is determinative.
  3. We include “size” in part based on the understanding in the record that smaller providers employ more limited data operations in comparison to their larger provider counterparts.  While the other contextual factors already account considerably for the varying data collection and usage practices of providers of different sizes, we agree with commenters that size is an independent factor in what practices are reasonable for smaller providers, particularly to the extent that the smaller providers engage in limited data usage practices.689 For instance, WTA explains that “its members do not currently, and have no plans to, retain customer Internet browsing histories and related information on an individual subscriber basis because the cost . . . would significantly outweigh any potential monetary benefit derived from data relating to the small subscriber bases of [rural carriers].”690  Several small provider commenters also point out that many such providers have few employees and limited resources.691  Accordingly, certain security measures that may be appropriate for larger providers, such as having a dedicated official to oversee data security implementation, are likely beyond the needs and resources of the smallest providers.692  Our inclusion of “size” as a factor makes clear that small providers are permitted to adopt reasonable security practices that are appropriate for their businesses.693  At the same time, we emphasize that all providers must adopt practices that take into account all four contextual factors.  For instance, a small provider with very expansive data collection and usage practices could not point to its size as a defense for not implementing security measures appropriate for the “nature and scope” of its operations.694

686 WTA Reply at 12; see also U.S. Small Business Administration Reply at 3 (“The record in this proceeding would support any effort by the FCC to mitigate the disproportionate compliance burden its proposal would have on small BIAS providers.”).

687 See FTC Staff Comments at 27-28.

688 See, e.g., CenturyLink Comments at 32 (“[A]ll providers should adopt reasonable data security safeguards based [on contextual factors proposed in the NPRM].”).

689 See, e.g., WTA Aug. 22, 2016 Ex Parte at 3 (“WTA also argued that size should be a factor for consideration when assessing the implementation of reasonable security measures in order to avoid unreasonably holding small carriers with only a handful or two of employees to the same standard as providers that employ armies of technical and security professionals and drive industry best-practices.”). 

690 WTA Aug. 22, 2016 Ex Parte at 2-3; see also RWA Reply at 2 (“[U]nlike large or nationwide BIAS providers, [our] members do not generally collect, store, analyze, and exploit [CPNI]”); WTA Comments at 19 (“Small BIAS providers also do not engage in the collection and retention of sensitive consumer information to the extent that other industry participants that are subject to the FTC enforcement do.”); CCA Comments at 33 (“[M]any CCA carrier members that fall under CCA’s proposed definition of small provider do not share customer information with third parties for advertising purposes.”); NTCA Comments at 1 (“As a general matter . . . NTCA members do not broker their customers’ information.”); ACA Comments at 5 (explaining that “ACA members generally do not use their customers’ information for purposes requiring opt-in consent—often because they lack the incentive or resources to do so”).

691 See ACA Comments at 8 (“Most ACA members have few employees: half of ACA’s members have ten or fewer employees.”); Education and Research Consortium et al. Comments at 10; RWA Comments at 10-12; WISPA Comments at 26-27; WTA Aug. 22, 2016 Ex Parte at 3.

692 See RWA Comments at 12 (“Saddling small carrier employees with qualification requirements in rural markets (where workforce demands are often already difficult to meet) is counterproductive and may force small rural carriers into unnecessary additional hires, solely for the purpose of meeting such requirements.”).  ACA Oct. 18, 2016 Ex Parte at 2 (urging the Commission to “[r]ecognize the limited financial resources of smaller ISPs in determining whether their data security practices are ‘reasonable.’”) (internal formatting omitted). Our decision not to adopt minimum required security practices should further allay concerns about the impact of the rule on small providers.  See, e.g., WTA Aug. 22, 2016 Ex Parte at 3 (“Because risk management requires tough decisions regarding which risks are reasonably acceptable in light of an organization’s activities, size and resources, WTA urged the Commission to provide flexibility for small carriers and refrain from imposing specific security requirements beyond a generalized duty to employ reasonable security measures.”); RWA Reply at 11 (citing WTA Comments at 21) (“[A]llow each BIAS provider to determine the particulars of and design its own risk management program, taking into account the probability and criticality of threats and vulnerabilities, as well as the nature and scope of a provider’s business activities and the sensitivity of the underlying data.”); ACA Reply at 44 (“[E]xempt small providers from the specific minimum data security requirements . . . .”); CTIA Reply at 10.

693 See ACA Comments at 23; CCA Comments at 42; WTA Comments at 18-25; U.S. Small Business Administration Reply at 3-4; Letter From Joshua Seidemann, Vice President of Policy, NTCA, to Marlene Dortch, Secretary, FCC at 2-3 (filed Sept. 16, 2016) (NTCA Sept. 16, 2016 Ex Parte).

694 See National Consumers League Reply at 21 (“[P]rotecting consumers’ data is a part of running a modern company.”).  But see ACA Oct. 18, 2016 Ex Parte at 2 (“[The Order] should explicitly state that a higher relative cost for a smaller ISP to implement a practice on a per customer basis compared to a larger ISP is a factor in determining whether an ISP’s implementation of a practices is reasonable.”).