[Federal Register Volume 69, Number 225 (Tuesday, November 23, 2004)]
[Notices]
[Pages 68149-68151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-25935]


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FEDERAL TRADE COMMISSION

[File No. 032 3221]


Petco Animal Supplies, Inc.; Analysis 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 that accompanies the consent agreement 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 December 15, 2004.

ADDRESSES: Comments should refer to ``Petco Animal Supplies, Inc., File 
No. 032 3221,'' 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 H-159, 
600 Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing 
confidential material must be filed in paper form, as explained in the 
SUPPLEMENTARY INFORMATION section. 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 filed in electronic form (except comments containing any 
confidential material) should be sent to the following e-mail box: 
[email protected].

FOR FURTHER INFORMATION CONTACT: Alain Sheer, FTC, Bureau of Consumer 
Protection, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-3321.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Section 2.34 
of the Commission's 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 November 17, 2004), on the World Wide Web, at ``http://www.ftc.gov/os/2004/11/index.htm.'' 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.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. Written comments must be submitted 
on or before December 15, 2004. Comments

[[Page 68150]]

should refer to ``Petco Animal Supplies, Inc., File No. 032 3221,'' 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 H-159, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580. If the comment contains any material 
for which confidential treatment is requested, it must be filed in 
paper (rather than electronic) form, and the first page of the document 
must be clearly labeled ``Confidential.'' \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 filed in electronic form should be sent to the 
following e-mail box: [email protected].
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). 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).
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    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 Web site, to the extent 
practicable, at http://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 Web site. 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.htm.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, a consent agreement from Petco Animal Supplies, Inc. 
(``Petco'').
    The consent agreement 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.
    Petco is a national retailer that sells pet food, pet supplies, and 
pet services from over 600 stores throughout the United States. It also 
sells pet food and supplies through its online store at http://www.PETCO.com. This matter concerns alleged false or misleading 
representations Petco made to consumers about the security of personal 
information collected through its online store.
    The Commission's proposed complaint alleges that Petco represented 
that personal information it obtained from consumers through http://www.PETCO.com was stored in an encrypted format and therefore was not 
accessible to anyone except the consumer that provided the information. 
The complaint alleges this representation was false because a commonly 
known attack on its Web site could and was used to gain access in clear 
readable text to personal information, including credit card numbers 
and expiration dates, that Petco obtained from consumers.
    The proposed complaint also alleges that Petco represented that it 
implemented reasonable and appropriate measures to protect the personal 
information it obtained through the website against unauthorized 
access. The complaint alleges this representation was false because 
Petco did not implement reasonable and appropriate measures to detect 
common vulnerabilities and prevent them from being exploited.
    The proposed order applies to Petco's collection and storage of 
personal information from or about consumers in connection with its 
online business. It contains provisions designed to prevent Petco from 
engaging in the future in practices similar to those alleged in the 
complaint.
    Specifically, Part I of the proposed order prohibits Petco, in 
connection with online advertising, marketing, promotion, offering for 
sale, or sale of any product or service, from misrepresenting the 
extent to which it maintains and protects the security, 
confidentiality, or integrity of any personal information collected 
from or about consumers.
    Part II of the proposed order requires Petco 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 Petco'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 Petco 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 consumer information that 
could result in 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. At a 
minimum, this risk assessment should include consideration of the risks 
in each area of relevant operation.
     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.
     Evaluate and adjust its information security program in 
light of the results of testing and monitoring, any material changes to 
its operations or business arrangements, or any other circumstances 
that Petco knows or has reason to know may have a material impact on 
the effectiveness of its information security program.
    Part III of the proposed order requires that Petco obtain within 
180 days after being served with the final order approved by the 
Commission, and on a biennial basis thereafter, an assessment and 
report from a qualified, objective, independent third-party 
professional, certifying, among other things, that: (1) Petco 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) 
Petco's security program is operating with sufficient effectiveness to 
provide reasonable assurance that the security, confidentiality, and 
integrity of consumers' personal information has been protected.
    Parts IV through VII of the proposed order are reporting and 
compliance provisions. Part IV requires Petco to retain documents 
relating to compliance. It requires Petco to retain most documents for 
a five-year period; assessments and supporting documents, however, must 
be retained for three years after the date when each assessment is 
prepared. Part V requires dissemination of the order now and in the 
future to persons with

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responsibilities relating to the subject matter of the proposed order. 
Part VI requires Petco to notify the Commission of changes in Petco's 
corporate status. Part VII mandates that Petco submit compliance 
reports to the FTC. 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 to modify its terms in any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 04-25935 Filed 11-22-04; 8:45 am]
BILLING CODE 6750-01-P