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Jim Hoffer: Navigating Murky Waters of Government Overreach

Jim Hoffer: Navigating Murky Waters of Government Overreach
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By    |   Thursday, 16 November 2017 11:19 AM

When thinking of business risk, very few firms consider government overreach as a top risk.

However, the number of businesses winding down, as a result, is increasing by day prompting the need to take cover against the pointless dictates of the federal law.

For the record, overreach occurs when the government uses unclear laws to incriminate businesses leading to hefty fines or closure. LabMD, a company that closed shop in 2014 after falling into legal battles with the Federal Trade Commission (FTC) for a data breach, is a classic example of the risk government overreach poses to small businesses.

Trouble for the diagnostic testing company began when a spreadsheet with sensitive patient information was accidentally leaked in a security breach. The origin of the compromise was an employee using a workplace computer against the company’s policies to download LimeWire, a file sharing app that is notorious for creating loopholes for hackers. As a result, the spreadsheet was leaked marking the beginning of a saga that resulted in a legal battle that eventually led to the collapse of the business.

In pursuing the case, the FTC chose to ignore the fact that this was an accidental breach and instead focused on harassing LabMD. In an interview with Forbes, Michael Daugherty, the founder of LabMD, notes that in the case of his company, the FTC had never been interested in transparent law. Instead, the agency had been more interested in making LabMD accept wrongdoing and carry the burden. Daugherty has written a book about his experience with the FTC and how government overreach can harm young businesses.

LabMD is not an isolated case; in 2017 alone, three complaints have been filed with the Small Business Association regarding the FTC abusive and overreaching enforcement practices. The FTC is not alone in this - government agencies across the globe have always been in the limelight for harmful overreaching practices. This can only mean that as big data continues to take a position as the primary competitive advantage for businesses, many firms are likely to find themselves in the shoes of LabMD.

On the bright side, the same technology that is aiding government agencies such as the FTC to overreach small businesses has also provided a solution to avoid being on the wrong side of the law. Although blockchain cannot nullify overreaching laws, it can help individuals and businesses around the world to prove compliance.

The blockchain technology is all about moving authority from centralized bodies to the people, which is the only solution to eliminating government overreach. Through a new concept that combines Internet of Things (IoT) and blockchain, individuals and businesses can prove compliance with government policies remotely and therefore avoid the bitter consequences of a legal battle with the government.

Case in point, if LabMD had an open public ledger record showing that it complied with all the set data security statutory requirements, the FTC would have no ground to pursue. With blockchain, the data breach would not have occurred in the first place since the system would have raised a non-compliant alarm. Where the law is unclear on what constitutes an offense, the blockchain technology can help prove compliance and therefore avoid government overreach.

One company that is helping individuals and businesses avoid a data breach and prove compliance with the federal law using IoT and Blockchain is SelfKey. With it, firms and individuals can store sensitive data on their devices without having to worry about a data breach. The system applies blockchain to enable users to create a digital identity that cannot be hacked, copied or replicated therefore guaranteeing high-level data security.

Even better is the fact that the system can be integrated with bureaucratic government offices for the verification of compliance. The best thing about the blockchain technology is that it ensures high-level transparency on both sides while maintaining anonymity for the business.

With the exponential growth in the value of big data, cybersecurity threats are becoming sophisticated by day and therefore businesses have no option but to adopt the latest legal and technical protective measures.

With the introduction of systems such as SelfKey, blockchain is proving to be the most effective technology in protecting data and also proving compliance in instances where the law is unclear.

As the blockchain technology continues to expand across industries, we believe that systems such as SelfKey will be the top solution to cybersecurity for both individuals and corporations.

Jim Hoffer is founder and managing director at Hoffer Financial Consulting. Follow him on Twitter.

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When thinking of business risk, very few firms consider government overreach as a top risk. However, the number of businesses winding down, as a result, is increasing by day prompting the need to take cover against the pointless dictates of the federal law.
navigating, murky, waters, government, overreach
Thursday, 16 November 2017 11:19 AM
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