Quote from The Hill
“All Americans should be outraged by the FTC’s unchecked ability to pursue a claim that is not based on any legal standard,” said Michael Daugherty, the head of a cancer screening company, told the committee on Thursday.
Daugherty’s company, LabMD, allegedly allowed information about nearly 10,000 patients to be compromised.
But Republicans on the Oversight Committee and officials at LabMD say the FTC’s complaint was partly based on information given by cybersecurity firm Tiversa, which has previously offered services to LabMD but was refused. Plus, the lawmakers said, some of the information may be inaccurate.
“To me, it looks little a little bit of an extortion game from a company trying to make a few bucks off of you guys, fishing and them coming after you,” Rep. John Mica (R-Fla.) said.
Issa said the FTC was being manipulated by Tiversa “to punish firms who refuse to pay” for its services.
The FTC’s LabMD case is currently on pause while lawmakers on the Oversight Committee discuss immunity for a potential witness.
The authority to go after companies for data security has been questioned in court, but a judge in April sided with the FTC in a separate case about the Wyndham hotel and resort chain, which seemed to settle the issue for the commission’s defenders.
Critics of the FTC’s action say Tiversa found vulnerabilities in LabMD’s data security in 2008, brought evidence to the company and offered its services to fix the problem. When LabMD refused, Tiversa brought its data to the FTC.
Additional information from Wallace, however, might prove that the Tiversa information was not accurate.
“If the assertion that he made are true, the FTC has been misled and this committee has been misled on multiple occasions,” Issa said.