The FTC/CafePress Settlement as Guidance for Businesses | New York Law Journal – Law.com

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data breach phishingOn March 15, 2022, the Federal Trade Commission (FTC) announced a proposed settlement with online sales platform, CafePress, concerning its handling and “cover-up” of a 2019 data breach incident. As part of the process, the FTC evaluated CafePress’ data security and privacy policies and practices, which the FTC criticized as inadequate and misleading. FTC Takes Action Against CafePress for Data Breach Cover Up (March 15, 2022) (Settlement). The Settlement, which imposes a litany of security and privacy requirements on CafePress, provides guidance to all businesses about data security and privacy best practices and how to respond when, despite those efforts, a data breach incident occurs. See, e.g., Lesley Fair, Data breach prevention and response: Lessons from the CafePress case (March 15, 2022). It serves as an important reminder that any business that overstates or inaccurately describes its security and privacy practices, fails to update its technology, or does not provide prompt notice when a data breach occurs may be charged with an “unfair or deceptive” act in violation of §5(a) of the Federal Trade Commission Act (15 U.S.C. 45).

The FTC Complaint and Settlement

It is alleged that in February 2019 hackers exploited multiple security failures by CafePress’ to obtain sensitive consumer information, including millions of names, physical and email addresses, and security questions, 180,000 unencrypted Social Security numbers, and tens of thousands unencrypted payment cards’ last four digits and expiration dates. The stolen information was later found for sale on the dark web. The Complaint alleged that a month after receiving notice about the hack, CafePress patched the vulnerability the hackers exploited, but did not notify affected consumers. Instead, CafePress recommended that its customers reset their passwords as part of an alleged update to its password policy. It was not until September 2019 that CafePress notified the affected consumers. Even then, CafePress’ security practices did not reduce consumers’ risks, such as by allowing their customers to reset their passwords by answering security questions associated with the customer’s email address—the same information that the hackers stole.

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