A U.S. House committee in March approved a data-security bill that could prove problematic to the financial services industry because the bill gives the Federal Trade Commission oversight of how companies respond to data security breaches, says Gilbert Schwartz, a partner in the Washington, D.C.-based law firm of Schwartz & Ballen LLP who has been closely following congressional deliberations on data-security issues. Banks would prefer that oversight be left in the hands of financial regulators. The House Energy and Commerce Committee unanimously passed HR 4127, which includes the FTC oversight provision and gives added enforcement powers to state attorneys general when security breaches occur. The FTC said previously that it would consider suing small businesses that do not properly protect payment card and client data. The House Financial Services Committee passed another bill in March, HR 3997, with different provisions regarding the handling of data-security breaches. The full House is unlikely to consider the bills before June, Schwartz says. Other measures on data security are working their way through the Senate. But Richard C. Shelby, chairman of the Senate Banking Committee, has yet to state his position on the matter, so what the Senate will do is uncertain, Schwartz says.
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