LabMD CEO Michael Daugherty fights ‘The Devil Inside the Beltway’
You might think that LabMD is fighting a lonely battle against the Federal Trade Commission — most businesses accused by the agency of failing to “reasonably protect” the security of its customers’ data settle their cases. But LabMD not only is challenging the FTC’s complaint, its CEO also is using this case to make a point about out-of-control regulators. He’s written a book, “The Devil Inside the Beltway,” and he’s found allies in Washington, D.C. On Thursday he was the star panelist at a briefing held by Tech Freedom and Cause of Action, two organizations that question the FTC’s approach to data security.
Business owner: Michael Daugherty, president and founder of LabMD, a 25-employee medical testing lab in Atlanta.
FTC complaint: The agency last month filed a complaint accusing LabMD of failing to “take reasonable and appropriate measures to prevent unauthorized disclosure of sensitive consumer data.” Billing data, including Social Security numbers, for more than 9,000 patients of LabMD were found on a peer-to-peer file-sharing network, and LabMd documents containing sensitive personal information were found in the hands of identity thieves in 2012.
How the breach occurred: Daugherty said he learned of the problem when a cybersecurity firm contacted him in 2008 and said it saw one of LabMD’s billing files on a peer-to-peer network. LabMD had firewalls and servers to protect customers’ data, but one of its employees violated company policy and installed Limewire, a peer-to-peer file-sharing network, on her computer in order to listen to music. This made the billing information on her computer available to outsiders. Daugherty said LabMD immediately corrected this vulnerability when it discovered it.
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