Nearly 100 organizations have been notified by the Federal Trade Commission (“FTC”) that personal information, including sensitive employee and customer data, shared from the organizations’ computer networks is available on peer-to-peer (P2P) file-sharing networks. This, the FTC warned, could be used to commit identity theft or fraud. The notices went to both private and public entities, including schools and local governments. The entities ranged in size from those with as few as eight employees to public corporations employing tens of thousands. The notices come not long after the Congressional Ethics breach we discussed in October. 

With P2P file-sharing software, a user can share music, video, and documents. However, when not configured correctly, P2P file-sharing software may allow anyone on the P2P network to access files not intended for sharing.

To aid businesses in managing the security risks of file-sharing software, the FTC also has released education materials, including a new business education brochure – Peer-to-Peer File Sharing: A Guide for Business – designed to assist businesses and others as they consider whether to allow file-sharing technologies on their networks. The brochure also explains how to safeguard sensitive information on their systems, and provide other security recommendations. Additionally, the FTC published tips for consumers about computer security and P2P. 

In addition to the FTC notices, employers should consider the P2P Cyber Protection and Informed User Act, which was introduced in Congress shortly after the notices were sent. Under the Act, P2P file-sharing programs must clearly inform users when their files are made available to other P2P users, are prohibited from being installed without informed consent, and are prohibited from preventing a user from blocking/disabling/removing any sharing program. 

The FTC has urged entities to review their security practices and, if appropriate, the practices of their contractors and vendors, to ensure that the practices are reasonable, appropriate, and in compliance with the law.  FTC Chairman Jon Leibowitz also cautioned,  , “companies and institutions of all sizes are vulnerable to serious P2P-related breaches…” and “[companies] should take a hard look at their systems to ensure that there are no unauthorized P2P file-sharing programs and that authorized programs are properly configured and secure.” 

A company’s failure to prevent such information from being shared on a P2P network, may violate applicable law and subject the company to legal action.