United States: FCC's Growing Privacy And Data Security Enforcement

The Federal Communications Commission (FCC) has had a busy 2015, and its presence in the data security regulatory enforcement space will likely continue to grow. Last year, the FCC named Travis LeBlanc as chief of the Enforcement Bureau. Since then, the FCC has brought three separate enforcement actions against companies for allegedly not safeguarding consumers' personal information, collecting roughly $30 million in fines. Last month, the FCC hired Jonathan Mayer to serve as its technical lead for investigations, signaling that it is likely to continue aggressive enforcement in the privacy and data security spaces.

Companies that fall under the FCC's purview can look to those enforcement actions for guidance on how to avoid running afoul of the Enforcement Bureau:

  • Conduct privacy risk assessments. Identify internal and external risks to the security, confidentiality, and integrity of personal information (PI) and customer proprietary network information (CPNI) collected or maintained that could result in unauthorized access, disclosure, misuse, destruction, or compromise of such information. Evaluate the likelihood and potential impact of these threats and the sufficiency of existing policies, procedures, and other safeguards in place to control risks.
  • Using a risk-based approach, implement and maintain a written information security program to protect the security, confidentiality, and integrity of PI and CPNI collected and/or maintained. The written information security program should consider:
    • Administrative, technical, and physical safeguards that are reasonable in light of the company's size and complexity, the nature and scope of the company's activities, the sensitivity of the PI/CPNI collected or maintained by or on behalf of the company, and the risks identified through risk assessments, including the use of multiple-factor authentication or equivalent control(s) for employee access to PI/CPNI.
    • Reasonable measures to protect PI/CPNI collected or maintained by third parties, including exercising due diligence in selecting third parties; where reasonably feasible, requiring third parties by contract to implement and maintain reasonable and comprehensive safeguards of both the physical and electronic protection of PI/CPNI equivalent to the safeguards used by employees (e.g., with regard to multiple-factor access/authentication or equivalent control[s] of the company's data systems/customer information); engaging in appropriate verification of third parties' compliance with their security obligations; and implementing appropriate measures to sanction third parties that fail to comply with their security obligations (including, where appropriate, terminating the company's relationship with such third parties).
    • Policies and procedures to properly identify the nature and extent of CPNI and PI collected or maintained by the company and third parties, minimize the number of employees who have access to PI and CPNI and restrict their access to a strictly need-to-know basis tied to job functions, collect the minimum amount of PI necessary to provision and provide services, and collect and maintain PI in a manner that is secure.
  • Implement and maintain an incident response plan that it is reasonable and comprehensive and enables the company to detect, respond to, and provide timely notification to all relevant customers and relevant governmental authorities of data breaches involving PI and CPNI. The incident response plan should contain processes to (i) identify, (ii) investigate, (iii) mitigate, (iv) remediate, and (v) review information security incidents to identify root causes and to develop improved responses to security threats. The plan should be tested at least annually. Ensure that your incident response plan requires the prompt reporting of CPNI breaches via the FCC's portal within seven business days after reasonable determination of a breach to facilitate the investigations of the FBI and the Secret Service.1
  • Implement and maintain a compliance training program that includes reasonable and comprehensive privacy and security awareness training for all employees. The program should include instruction on the company's obligations, policies, and procedures for protecting PI and CPNI, including identifying and collecting PI from customers, recognizing security threats and suspicious activity that may indicate that PI has been compromised, the timely reporting of data breaches, and other reasonable and appropriate training regarding the protection of PI and CPNI. The training program should be conducted at least annually. For those third parties with access to the company's PI/CPNI, the company should require those third parties to conduct annual compliance training.
  • Implement multiple-factor authentication for remote access for employees as well as third parties that have access to the company's PI/CPNI.
  • Conduct a policy and statement review to ensure that policies and statements on the company's website(s) regarding the security of customers' PI and CPNI accurately reflect the company's data security practices.
  • Monitor critical points within the company's infrastructure that contain PI and CPNI for security events, including taking information feeds from industry sources and internal defection tools and correlating these information sources to alert the company's security monitoring center when a potential event occurs.
  • Conduct annual penetration testing of systems and processes related to payment cards and collection and storage of PI/CPNI.
  • Develop procedures for internal threat monitoring that include detection of anomalous conduct by employees.

Do not wait until you are in the crosshairs of the FCC during an investigation to consider and implement these measures.


1 47 C.F.R. § 64.2011(b)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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