[Federal Register Volume 76, Number 90 (Tuesday, May 10, 2011)]
[Notices]
[Pages 27056-27058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-11182]
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FEDERAL TRADE COMMISSION
[File No. 102 3076]
Lookout Services, Inc.; Analysis of Proposed Consent Order To Aid
Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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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 June 2, 2011.
ADDRESSES: Interested parties may file a comment online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``Lookout Services, File
No. 102 3076'' on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/lookout, by following the instructions
on the Web-based form. If you prefer to file your comment on paper,
mail or deliver your comment to the following address: Federal Trade
Commission, Office of the Secretary, Room H-113 (Annex D), 600
Pennsylvania Avenue, NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Kandi Parsons (202-326-2369) or
Kristin Cohen (202-326-2276), FTC, Bureau of Consumer Protection, 600
Pennsylvania Avenue, NW., Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and 2.34 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 May 3, 2011), on the World Wide Web, at http://www.ftc.gov/os/actions.shtm. A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington,
DC 20580, either in person or by calling (202) 326-2222.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before June 2, 2011.
Write ``Lookout Services, File No. 102 3076'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to
remove individuals' home contact information from comments before
placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment doesn't include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment doesn't include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, don't
include any ``[t]rade secret or any commercial or financial information
which is obtained from any person and which is privileged or
confidential,'' as provided in Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, don't
include competitively sensitive information such as costs, sales
statistics, inventories, formulas, patterns, devices, manufacturing
processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR
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4.9(c).\1\ Your comment will be kept confidential only if the FTC
General Counsel, in his or her sole discretion, grants your request in
accordance with the law and the public interest.
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\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/lookout, by following the instructions on the web-based form. If
this Notice appears at http://www.regulations.gov/#!home, you also may
file a comment through that Web site.
If you file your comment on paper, write ``Lookout Services, File
No. 102 3076'' on your comment and on the envelope, and mail or deliver
it to the following address: Federal Trade Commission, Office of the
Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, NW.,
Washington, DC 20580. If possible, submit your paper comment to the
Commission by courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before June 2, 2011. You can find more information,
including routine uses permitted by the Privacy Act, in the
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing Consent Order To Aid Public Comment
The Federal Trade Commission has accepted, subject to final
approval, a consent order applicable to Lookout Services, Inc.
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.
The Commission's complaint alleges that Lookout sells a web-based
computer product known as the I-9 Solution. This product is designed to
help employers comply with their obligations under federal law to
complete and maintain a U.S. Citizenship and Immigration Services Form
I-9 about each employee in order to verify that the employee is
eligible to work in the United States. The complaint alleges that the
I-9 Solution routinely collects and stores information about Lookout's
customers' employees, including, but not limited to: Names; addresses;
dates of birth; Social Security numbers; passport numbers; alien
registration numbers; driver's license numbers; and military
identification numbers. This highly sensitive information is maintained
in Lookout's database (the ``I-9 database''). The misuse of such
information--particularly Social Security numbers, which do not
expire--can facilitate identity theft, including existing and new
account fraud, and related consumer harms.
The complaint alleges that, since at least 2006, Lookout engaged in
a number of practices that, taken together, failed to provide
reasonable and appropriate security for the personal information it
collected and maintained. The challenged practices are fundamental
security failures, most of which have been challenged in prior FTC data
security cases. Among other things, Lookout:
a. Failed to implement reasonable policies and procedures for the
security of sensitive consumer information it collected and maintained;
b. Failed to establish or enforce rules sufficient to make user
credentials (i.e., user ID and password) hard to guess;
c. Failed to require periodic changes of user credentials, such as
every 90 days, for customers and employees with access to sensitive
personal information;
d. Failed to suspend user credentials after a certain number of
unsuccessful login attempts;
e. Did not adequately assess and address the vulnerability of its
Web application to widely-known security flaws, such as ``predictable
resource location,'' which enables users to easily predict patterns and
manipulate the uniform resource locators (``URL'') to gain access to
secure Web pages;
f. Allowed users to bypass the authentication procedures on
Lookout's Web site when they typed in a specific URL;
g. Failed to employ sufficient measures to detect and prevent
unauthorized access to computer networks, such as by employing an
intrusion detection system and monitoring system logs; and
h. Created an unnecessary risk to personal information by storing
passwords used to access the I-9 database in clear text.
Each of these failures could have been remedied using well-known,
readily available, and/or free or low-cost data security measures.
The complaint further alleges that, as a result of these failures,
an employee of a Lookout customer was able to obtain unauthorized
access to Lookout's I-9 database on two separate occasions between
October and December 2009. In both instances, the employee gained
unauthorized access to the personal information, including Social
Security numbers, of more than 37,000 consumers. Given the sensitive
nature of the personal information exposed, the company's failure to
provide reasonable and appropriate security for this information is
likely to cause consumers substantial injury as described above. That
substantial injury is not offset by countervailing benefits to
consumers or competition and is not reasonably avoidable by consumers.
The complaint alleges that Lookout's failure to employ reasonable and
appropriate measures to prevent unauthorized access to sensitive
personal information is an unfair act or practice and that the company
misrepresented that it had implemented such measures, in violation of
Section 5 of the Federal Trade Commission Act.
The proposed order applies to personal information that Lookout
collects from or about consumers and employees. It contains provisions
designed to prevent Lookout from engaging in the future in practices
similar to those alleged in the complaint.
Part I of the proposed order prohibits misrepresentations about the
privacy, confidentiality, or integrity of personal information
collected from or about consumers. Part II of the proposed order
requires Lookout to establish and maintain a comprehensive information
security program 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 Lookout's size and
complexity, the nature and scope of its activities, and the sensitivity
of the information collected from or about consumers and employees.
Specifically, the proposed order requires Lookout to:
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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 select and retain
service providers capable of appropriately safeguarding personal
information they receive from Lookout, and require service providers by
contract to implement and maintain appropriate safeguards; and
Evaluate and adjust its information security programs in
light of the results of testing and monitoring, any material changes to
operations or business arrangements, or any other circumstances that it
knows or has reason to know may have a material impact on its
information security program.
Part III of the proposed order requires Lookout to obtain within
the first one hundred eighty (180) days after service of the order, and
on a biennial basis thereafter for a period of 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 II of the proposed order; and (2) its
security program is operating with sufficient effectiveness to provide
reasonable assurance that the security, confidentiality, and integrity
of sensitive consumer, employee, and job applicant information has been
protected.
Parts IV through VIII of the proposed order are reporting and
compliance provisions. Part IV requires Lookout 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, Lookout must retain
the documents for a period of three years after the date that each
assessment is prepared. Part V requires dissemination of the order now
and in the future to all current and future subsidiaries, current and
future principals, officers, directors, and managers, and to persons
with responsibilities relating to the subject matter of the order. Part
VI ensures notification to the FTC of changes in corporate status.
Part VII mandates that Lookout submit a compliance report to the
FTC within 60 days, and periodically thereafter as requested. Part VIII
is a provision ``sunsetting'' the order after twenty (20) years, with
certain exceptions.
The purpose of this analysis is to facilitate 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. 2011-11182 Filed 5-9-11; 8:45 am]
BILLING CODE 6750-01-P