Federal Trade Commission finds cancer detection lab in violation of data security statute, despite no evidence of consumer harm


Washington, D.C. – In an unfortunate but somewhat anticipated decision, the Federal Trade Commission (FTC) today issued a finding that LabMD violated a data security statute, reversing an earlier decision by the agency’s own chief in-house administrative law judge (ALJ).  In the Initial Decision on November 13, 2015, Chief ALJ D. Michael Chappell held that the FTC failed to prove the commercial activities of LabMD were unfair to consumers under Section 5(n) of the FTC Act. 

This decision sets a dangerous precedent for every small business in America that deals with sensitive personal information. The FTC appears to have overlooked a significant body of evidence that had been presented before the agency’s chief ALJ. The FTC has imposed liability on LabMD, despite there being no evidence that a single consumer was harmed.

In reversing the Initial Decision, the FTC Commissioners disavowed and disregarded the witness credibility findings of Chief ALJ Chappell, which were based on his first-hand observations of the witnesses.

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