[Federal Register Volume 73, Number 65 (Thursday, April 3, 2008)]
[Notices]
[Pages 18281-18283]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-6950]
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 072 3055]
The TJX Companies, Inc.; Analysis of Proposed Consent Order to
Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
-----------------------------------------------------------------------
SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent order--embodied in the consent
agreement--that would settle these allegations.
DATES: Comments must be received on or before April 28, 2008.
ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``TJX, File No. 072 3055,'' to facilitate the
organization of comments. A comment filed in paper form should include
this reference both in the text and on the envelope, and should be
mailed or delivered to the following address: Federal Trade Commission/
Office of the Secretary, Room 135-H, 600 Pennsylvania Avenue, N.W.,
Washington, D.C. 20580. Comments containing confidential material must
be filed in paper form, must be clearly labeled ``Confidential,'' and
must comply with Commission Rule 4.9(c). 16 CFR 4.9(c) (2005).\1\ The
FTC is requesting that any comment filed in paper form be sent by
courier or overnight service, if possible, because U.S. postal mail in
the Washington area and at the Commission is subject to delay due to
heightened security precautions. Comments that do not contain any
nonpublic information may instead be filed in electronic form by
following the instructions on the web-based form at http://
secure.commentworks.com/ftc-TJX. To ensure that the Commission
considers an electronic comment, you must file it on that web-based
form.
---------------------------------------------------------------------------
\1\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See Commission Rule 4.9(c),
16 CFR 4.9(c).
---------------------------------------------------------------------------
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC website, to the extent
practicable, at www.ftc.gov. As a matter of discretion, the FTC makes
every effort to remove home contact information for individuals from
the public comments it receives before placing those comments on the
FTC website. More information, including routine uses permitted by the
Privacy Act, may be found in the FTC's privacy policy, at http://
www.ftc.gov/ftc/privacy.shtm.
FOR FURTHER INFORMATION CONTACT: Alain Sheer or Molly Crawford, FTC
Bureau of Consumer Protection, 600 Pennsylvania Avenue, NW, Washington,
D.C. 20580, (202) 326-2252.
[[Page 18282]]
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec. 2.34 of
the Commission Rules of Practice, 16 CFR 2.34, notice is hereby given
that the above-captioned consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of thirty (30) days. The following Analysis to Aid Public
Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for March 27, 2008), on the World Wide Web, at http://www.ftc.gov/os/
2008/03/index.htm. A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, Washington,
D.C. 20580, either in person or by calling (202) 326-2222.
Public comments are invited, and may be filed with the Commission
in either paper or electronic form. All comments should be filed as
prescribed in the ADDRESSES section above, and must be received on or
before the date specified in the DATES section.
Analysis of Agreement Containing Consent Order to Aid Public Comment
The Federal Trade Commission has accepted, subject to final
approval, a consent agreement from The TJX Companies, Inc. (``TJX'').
The proposed consent order has been placed on the public record for
thirty (30) days for receipt of comments by interested persons.
Comments received during this period will become part of the public
record. After thirty (30) days, the Commission will again review the
agreement and the comments received, and will decide whether it should
withdraw from the agreement and take appropriate action or make final
the agreement's proposed order.
According to the Commission's complaint, TJX is an off-price
retailer selling apparel and home fashions in over 2,500 stores
worldwide. Consumers may pay for purchases at these stores with credit
and debit cards (collectively, ``payment cards''), cash, or personal
checks. In selling its products, TJX routinely uses its computer
networks to collect personal information from consumers to obtain
authorization for payment card purchases, verify personal checks, and
process merchandise returned without receipts (``unreceipted
returns''). Among other things, it collects: (1) account number,
expiration date, and an electronic security code for payment card
authorization; (2) bank routing, account, and check numbers and, in
some instances, driver's license number and date of birth for personal
check verification; and (3) name, address, and drivers' license or
military or state identification number (``personal ID numbers'') for
unreceipted returns (collectively, ``personal information''). This
information is particularly sensitive because it can be used to
facilitate payment card fraud and other consumer harm.
The Commission's proposed complaint alleges that since at least
July 2005, TJX engaged in a number of practices that, taken together,
failed to provide reasonable and appropriate security for personal
information on its computer networks. Among other things, TJX: (a)
created an unnecessary risk to personal information by storing it on,
and transmitting it between and within, in-store and corporate networks
in clear text; (b) did not use readily available security measures to
limit wireless access to its networks, thereby allowing an intruder to
connect wirelessly to in-store networks without authorization; (c) did
not require network administrators and other users to use strong
passwords or to use different passwords to access different programs,
computers, and networks; (d) failed to use readily available security
measures to limit access among computers and the internet, such as by
using a firewall to isolate card authorization computers; and (e)
failed to employ sufficient measures to detect and prevent unauthorized
access to computer networks or to conduct security investigations, such
as by patching or updating anti-virus software or following up on
security warnings and intrusion alerts.
The complaint alleges that the breach compromised tens of millions
of payment cards as well as the personal information of approximately
455,000 consumers who had made unreceipted returns. The complaint
further alleges that issuing banks have claimed tens of millions of
dollars in fraudulent charges on some of these payment card accounts.
Issuing banks also have cancelled and re-issued millions of payment
cards, and according to the complaint, consumers holding these cards
were unable to use them to access their credit and bank accounts until
they received the replacement cards. Additionally, the complaint
alleges that some consumers have obtained or will have to obtain new
personal ID numbers, such as new drivers' licenses.
The proposed order applies to personal information TJX collects
from or about consumers. It contains provisions designed to prevent TJX
from engaging in the future in practices similar to those alleged in
the complaint.
Part I of the proposed order requires TJX to establish and maintain
a comprehensive information security program in writing that is
reasonably designed to protect the security, confidentiality, and
integrity of personal information collected from or about consumers.
The security program must contain administrative, technical, and
physical safeguards appropriate to TJX's size and complexity, the
nature and scope of its activities, and the sensitivity of the personal
information collected from or about consumers. Specifically, the order
requires TJX to:
Designate an employee or employees to coordinate and be
accountable for the information security program.
Identify material internal and external risks to the
security, confidentiality, and integrity of personal information that
could result in the unauthorized disclosure, misuse, loss, alteration,
destruction, or other compromise of such information, and assess the
sufficiency of any safeguards in place to control these risks.
Design and implement reasonable safeguards to control the
risks identified through risk assessment, and regularly test or monitor
the effectiveness of the safeguards' key controls, systems, and
procedures.
Develop and use reasonable steps to retain service
providers capable of appropriately safeguarding personal information
they receive from respondents, require service providers by contract to
implement and maintain appropriate safeguards, and monitor their
safeguarding of personal information.
Evaluate and adjust its information security program in
light of the results of the testing and monitoring, any material
changes to its operations or business arrangements, or any other
circumstances that it knows or has reason to know may have a material
impact on the effectiveness of their information security program.
Part II of the proposed order requires that TJX obtain, covering
the first 180 days after the order is served, and on a biennial basis
thereafter for twenty (20) years, an assessment and report from a
qualified, objective, independent third-party professional, certifying,
among other things, that (1) it has in place a security program that
provides protections that meet or exceed the protections required by
Part I of the proposed order; and (2) its security program is operating
with sufficient
[[Page 18283]]
effectiveness to provide reasonable assurance that the security,
confidentiality, and integrity of consumers' personal information is
protected.
Parts III through VII of the proposed order are reporting and
compliance provisions. Part III requires TJX to retain documents
relating to its compliance with the order. For most records, the order
requires that the documents be retained for a five-year period. For the
third-party assessments and supporting documents, TJX must retain the
documents for a period of three years after the date that each
assessment is prepared. Part IV requires dissemination of the order now
and in the future to principals, officers, directors, and managers
having responsibilities relating to the subject matter of the order.
Part V ensures notification to the FTC of changes in corporate status.
Part VI mandates that TJX submit an initial compliance report to the
FTC, and make available to the FTC subsequent reports. Part VII is a
provision ``sunsetting'' the order after twenty (20) years, with
certain exceptions.
This is the Commission's twentieth case to challenge the failure by
a company to implement reasonable information security practices. Each
of the Commission's cases to date has alleged that a number of security
practices, taken together, failed to provide reasonable and appropriate
security to prevent unauthorized access to consumers' information. The
practices challenged in the cases have included, but are not limited
to: (1) creating unnecessary risks to sensitive information by storing
it on computer networks without a business need to do so; (2) storing
sensitive information on networks in a vulnerable format; (3) failing
to use readily available security measures to limit access to a
computer network through wireless access points on the network; (4)
failing to adequately assess the vulnerability of a web application and
computer network to commonly known or reasonably foreseeable attacks;
(5) failing to implement simple, low-cost, and readily available
defenses to such attacks; (6) failing to use readily available security
measures to limit access between computers on a network and between
such computers and the internet, and (7) failing to use strong
passwords to authenticate (or authorize) users to access programs and
databases on computer networks or online.
The purpose of the analysis is to aid public comment on the
proposed order. It is not intended to constitute an official
interpretation of the proposed order or to modify its terms in any way.
By direction of the Commission.
Donald S. Clark
Secretary
[FR Doc. E8-6950 Filed 4-2-08: 8:45 am]
[BILLING CODE 6750-01-S]