Insights
Publications

Is There Fire Where There’s Smoke? The FTC Says Yes

5/3/2017 Articles

In January of this year, the Federal Trade Commission (FTC) brought suit against Taiwan-based D-Link Corp. and its U.S. subsidiary, D-Link Systems Inc, in Los Angeles Federal Court, for failing to properly secure its consumer routers and computer cameras. According to the FTC, the devices were billed as containing “advanced network security” but actually left thousands of devices vulnerable to hacking and compromise. The results of this FTC suit could create a de facto security compliance regime for all purveyors in the ever-growing “internet of things.”

The FTC brought the action under Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” The FTC Complaint, however, never actually alleged that any of D-Link’s devices were hacked or compromised. In other words, the FTC seeks to hold D-Link responsible for exposing consumers to hacking, not because consumers were in fact hacked.

The FTC has brought similar complaints against other “internet of things” manufacturers, namely TRENDnet and ASUSTek, who both settled their claims with the agency. D-Link, however, has decided to fight. The company has moved to dismiss the Complaint, saying the FTC “can point to no case” wherein a court has found unfairness under the FTC Act absent actual harm to consumers. That argument met with little sympathy from the presiding judge, who told D-Link’s counsel at oral argument, “You don’t have to wait for the house to burn down for the FTC to run in and say the fire alarms don’t work.”

A finding of liability in this case could set a baseline for what security measures are “reasonable” for manufacturers of internet-connected devices. Creating mechanisms to match or exceed that baseline and to conduct routine reviews of public statements about security will be key to avoiding FTC scrutiny, state Attorney General enforcement actions, and large class action suits.

Firm Highlights

News

Farella’s Aviva Gilbert Honored With WWCDA Catherine M. O’Neil Mentoring Award

Read More
Publication

FCC Designates Huawei as National Security Threat

In the ongoing confrontation between the U.S. government and Chinese telecom giant Huawei, the U.S. has dealt another major blow. The Federal Communications Commission issued an order on June 30, effective immediately, declaring that...

Read More
News

Farella Braun + Martel Shortlisted for Three 2021 Benchmark Litigation Awards

Northern California legal powerhouse Farella Braun + Martel has been shortlisted for three 2021 Benchmark Litigation awards. The firm was shortlisted for “San Francisco Firm of the Year” and in the California White-Collar Crime...

Read More
News

Farella Braun + Martel Elevates Five to Partner

Read More
Event

The Advocates’ Society Spring Symposium: The Advocate Making a Difference

Douglas Young is the keynote speaker at The Advocates’ Society Spring Symposium: The Advocate Making a Difference on April 28. The Advocates' Society and the American College of Trial Lawyers invite you to attend the...

Read More
Publication

Jurors, Justice and Technology

Douglas Young, Farella partner and president of the American College of Trial Lawyers, spoke with podcast host Howard Miller about requirements in jury selection and technology for jury and non-jury trials. Listen to the...

Read More
News

Farella Braun + Martel Ranked Among “Best Law Firms” by U.S. News & World Report and Best Lawyers

SAN FRANCISCO, November 5, 2020: Farella Braun + Martel earned national and regional rankings across a number of practice areas in the U.S. News & World Report and Best Lawyers® release of the “Best...

Read More
News

Sarah Good Appointed to California State Bar's Ad Hoc Commission on the Discipline System

Read More
Publication

Recommended Practices for Conducting Internal Investigations

William Keane served as the chair of the American College of Trial Lawyers’ Federal Criminal Procedure Committee, which drafted the white paper “ Recommended Practices for Conducting Internal Investigations ” published by the ACTL...

Read More