Companies Who Fail to Patch Log4j Vulnerability Could Face FTC Enforcement

The FTC is advising companies to work quickly to remediate the Log4j security vulnerability...

The Federal Trade Commission (FTC) is advising companies to work quickly to remediate the Log4j security vulnerability. Failure to act could result in an FTC enforcement action under applicable laws such as the Federal Trade Commission Act and the Gramm Leach Bliley Act. 

Cyber Risks Posed by Log4j Vulnerability

Log4j is very broadly used in a variety of consumer and enterprise services, websites, and applications—as well as in operational technology products—to log security and performance information. In December, a critical security flaw was discovered, which could be exploited by an unauthenticated remote actor to take control of an affected system. 

On January 3, 2022, Microsoft warned that the vulnerabilities in Apache Log4j 2, referred to as “Log4Shell”, remain a “complex and high-risk” situation for companies. It further advised that due to the “many software and services that are impacted and given the pace of updates, this is expected to have a long tail for remediation, requiring ongoing, sustainable vigilance.”

In light of the severity of the vulnerabilities and the likelihood of exploitation by sophisticated cyber threat actors, the U.S. Cybersecurity and Infrastructure Security Agency (CISA) urges vendors and users to immediately identify, mitigate, and update affected products using Log4j to the latest version. It also recommends that companies conduct a security review to determine if there is a security concern or compromise.

FTC Warning

On January 4, 2022, the FTC issued an alert regarding the Log4j security vulnerability, noting that it poses a severe risk to millions of consumer products to enterprise software and web applications. The FTC encouraged companies to update their Log4j software package to the most current version found and follow guidance issued by CISA.

The FTC also advised companies to ensure remedial steps are taken to avoid legal repercussions, emphasizing that the failure to identify and patch instances of the software may violate the Federal Trade Commission Act (FTC Act). 

“When vulnerabilities are discovered and exploited, it risks a loss or breach of personal information, financial loss and other irreversible harms,” the agency wrote. “The duty to take reasonable steps to mitigate known software vulnerabilities implicates laws including, among others, the Federal Trade Commission Act and the Gramm Leach Bliley Act. It is critical that companies and their vendors relying on Log4j act now, in order to reduce the likelihood of harm to consumers, and to avoid FTC legal action.”

The FTC alert also cited its enforcement action against Equifax, which involved the  company’s failure to patch a known vulnerability and the disclosure of the personal information of 147 million consumers. Equifax agreed to pay $700 million to settle actions by the FTC, the Consumer Financial Protection Bureau, and all fifty states. According to the FTC, it intends to use its “full legal authority” to pursue companies that fail to take reasonable steps to protect consumer data from exposure as a result of Log4j, or similar known vulnerabilities in the future. 

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Maryam Meseha, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.