Target Data Breach Has Congress Eying Data-Security Alternatives

Congress will consider new approaches to data security in the wake of major data thefts at Target and other retailers, a key House Republican said Wednesday.

Rep. Fred Upton—the top Republican on the powerful House Energy and Commerce Committee—suggested that Congress may need to tackle customer data security "differently" than the current system, where data protection is dictated by a patchwork of federal and state regulations.

"Breaches, identity theft, and financial fraud continue, affecting every sector from the federal government to merchants, banks, universities, and hospitals," Upton said in his opening remarks. "We must consider whether the current multilayer approach to data security—federal, state, and industry self-regulation—can be more effective, or whether we need to approach the issue differently."

Upton didn't specify what legislative approach he might favor, but his endorsement of any bill creating a national reporting standard that would require retailers to notify customers when their data is at risk could go a long way toward convincing his fellow House Republicans that such a measure is needed.

Upton never acted on a previous measure backed by former Rep. Mary Bono back in 2011 that would have created a national standard. The bill never gained any momentum in Upton's committee after it cleared the Commerce, Manufacturing, and Trade Subcommittee, which Bono chaired at the time. Bono, a California Republican who now works as a data-security adviser with FaegreBD Consulting, told National Journal last month that Upton was supportive at the time but that the issue failed to climb unto the panel's docket.

Democrats, meanwhile, worry that Congress could pass a paper-tiger standard that could potentially undermine stronger state protections. And they additionally are clamoring for legislation that would boost the Federal Trade Commission's power to punish companies that provide inadequate security. At a hearing earlier in the week, Democratic Sen. Elizabeth Warren declared, "Data-security problems aren't going to go away on their own, so Congress seriously needs to consider whether to strengthen the FTC's hand."

Retailers have been quick to tell Congress they need one national reporting standard for data breaches in the wake of alarming thefts uncovered at Target, Neiman Marcus, Michaels Stores, and White Lodging. But calls for federal regulation from such businesses have largely fallen on deaf ears within the Republican caucus, where many lawmakers are leery of encroaching on the private sector.

That sentiment was on display at Wednesday's congressional hearing, the third in as many days convened to review data security. Republican Lee Terry, chairman of the Commerce, Manufacturing and Trade Subcommittee, said he is "working on legislation that would foster quicker notification by replacing the multiple—and sometimes conflicting—state notification regimes with a single, uniform notification regime."

But Terry also reiterated that "cumbersome statutory mandates can be ill-equipped to deal with evolving threats." FTC Chairwoman Edith Ramirez again countered that assumption, testifying as she did earlier this week that congressional action is "necessary."

This article appears in the February 6, 2014, edition of NJ Daily.