A federal judge ruled this week the U.S. Federal Trade Commission can sue hotel group Wyndham Worldwide (WYN) over alleged poor data security, potentially opening companies up to greater legal risk on the increasingly-costly cyber front.
U.S. District Judge Esther Salas in New Jersey denied Wyndham’s motion to dismiss the FTC’s lawsuit, which alleges the company’s “failure to maintain reasonable and appropriate data security” led to hacking and over $10.6 million in fraud loss.
The case is being closely watched in security and legal circles as a test of the FTC’s power to regulate corporate cybersecurity practices.
While the judge made no comments on the merits of the FTC’s arguments, she did not adopt Wyndham’s initial argument that the agency lacks authority in this area.
“We continue to believe the FTC lacks the authority to pursue this type of case against American businesses and has failed to publish any regulations that would give such businesses fair notice of any proposed standards for data security,” Wyndham said in a statement, adding it plans to “defend our position vigorously.”