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Credit Card Information Security Issues in Franchising

By Craig R. Tractenberg and Keri McWilliams
November 30, 2014

Data breaches at Target, Home Depot, Neiman Marcus and P.F. Chang's are front-page reminders of the vulnerability of customer payment information in the retail sector. Verizon estimated that “74% of attacks on retail, accommodation, and food services companies target payment card information.” In Federal Trade Commission v. Wyndham Worldwide, Case No. 13-cv-01887 (D. N.J. 2014), the Federal Trade Commission (FTC) brought suit claiming that a franchisor's alleged failures to maintain reasonable security measures constituted unfair and deceptive practices under Section 5 of the FTC Act. Although the FTC is clear about what the franchisor allegedly did wrong (failed to employ commonly used methods of data protection, such as complex passwords, network inventories and firewalls), little guidance exists from the FTC to help franchisors determine what standards are reasonable.

What We Can Learn From'Credit Card Companies

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