Company Execs Could Face Individual Fines for Privacy Mishaps, FTC Commissioner Tells Congress
Federal Trade Commission officials told Congress members that executives could face individual fines for their companies' privacy violations to address concerns that massive fines are a drop in the bucket for larger corporations.
May 08, 2019 at 03:38 PM
3 minute read
Federal Trade Commission officials shared their privacy enforcement plans, including possible fines against company executives, with members of Congress on Wednesday at a hearing on enhancing data security protections.
In the wake of data mishaps at Facebook, Google and other U.S. tech companies last year, legislators have held a series of hearings in D.C. on privacy principles for a possible federal law. Some members of the House Committee on Energy and Commerce Subcommittee on Consumer Protection and Commerce said Wednesday that the FTC's current enforcement system isn't enough to deter big companies from engaging in harmful data privacy practices.
Rep. Kathy Castor, D-Florida, said the agency's $5.7 million fine against Musical.ly, also known as TikTok, over alleged Children's Online Privacy Protection Act violations wasn't large enough, less than 1% of parent company ByteDance's annual revenue.
“No CEO is going to blink an eye at a fine that inconsequential,” Castor said. “Companies will just see small FTC fines as the cost of doing business and will continue to elevate profits over privacy.”
Rep. Michael Burgess, R-Texas, also raised concerns that “for large companies, fines are simply a cost of doing business.” He added a consent decree for “a company the size of Facebook” is inconsequential. Last month, Facebook's quarter earnings report stated the company plans to face a $3 billion to $5 billion FTC penalty over privacy mishaps. Facebook reported more than $55 billion in revenue last year.
FTC commissioner Rohit Chopra acknowledged that fines—even seemingly massive ones—have a smaller effect on big companies. He said the FTC does have the authority to penalize individuals for their companies' privacy law violations and that it's something the agency is “looking into.”
“For some firms, fines are a parking ticket and a cost of doing business,” Chopra said. “And we cannot change behavior unless those penalties are painful, and often that means finding out who at the top called the shots.”
At the International Association of Privacy Professionals Global Summit last week, FTC chairman Joseph Simons, who also testified at Wednesday's hearing, said fining individual executives was “on the [FTC's] radar,” but that he isn't “expecting to do this in every case.”
FTC commissioner Rebecca Slaughter noted Wednesday that ”unlike counterparts in Europe” the U.S. agency can't independently assess fines. Simons has repeatedly said that a federal privacy law would require more resources and enforcement authority for the FTC.
The agency currently has 40 employees focused on privacy, compared to around 140 at the Irish Data Protection Commission, which oversees Facebook, Twitter and other tech companies' compliance with the General Data Protection Regulation, and 500 at the U.K.'s Information Commissioner's Office.
Read More:
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllAggressive FTC May Force Merging Companies to Bolster Legal Defenses
4 minute readBest Legal Departments: How Blackstone's Legal and Compliance Team Got the All-Clear to Grow Business
CEOs Want Data-Based Risk Management; GCs Lack the Tech to Do So.
InCloudCounsel Hires First GC to Continue Expansion in Asia
Trending Stories
- 1Infant Formula Judge Sanctions Kirkland's Jim Hurst: 'Overtly Crossed the Lines'
- 2Election 2024: Nationwide Judicial Races and Ballot Measures to Watch
- 3Guarantees Are Back, Whether Law Firms Want to Talk About Them or Not
- 4How I Made Practice Group Chair: 'If You Love What You Do and Put the Time and Effort Into It, You Will Excel,' Says Lisa Saul of Forde & O'Meara
- 5Abbott, Mead Johnson Win Defense Verdict Over Preemie Infant Formula
- 6How Much Does the Frequency of Retirement Withdrawals Matter?
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250