The Five Minute Guide To The FTC’s Red Flag Data Breach Rules


Small business must contend with an ever increasing array of digital and electronic issues that can lead to disastrous consequences if not proactively addressed. Key among those is a proactive approach to the breach of consumer data.

The world of identity theft and its legal consequences are not limited to big credit companies. Main street businesses, with online portals, or credit/payment card facilities of some kind are just as much at risk. And if the rhetoric doesn’t scare, then the numbers should as the Identity Theft Resource Center reports business sector data breaches increased by 41 percent in 2009. As a result, all small businesses need to face the real danger of data breaches, which are not limited to malicious third parties, but can also arise from employee error. And these businesses should understand that risk control policies must be undertaken to prevent data breaches and robustly address them should they occur.

Secondly, the problem isn’t simply a business issue anymore; it’s very much a legal issue with real consequences. Various states and the federal government are formalizing statutory penalty schemes for business that do not proactively address data breaches. That alone should be cause to examine one’s own data breach policy.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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