[Federal Register Volume 71, Number 94 (Tuesday, May 16, 2006)]
[Notices]
[Pages 28336-28338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-7397]


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FEDERAL TRADE COMMISSION

[File No. 052 3117]


Nations Title Agency, 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 9, 2006.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Nations Title Agency, File No. 052 3117,'' 
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, NW., Washington, DC 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 as part of or as an attachment to e-mail messages 
directed to the following e-mail box: [email protected].
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    \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).
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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.

FOR FURTHER INFORMATION CONTACT: Alain Sheer or Loretta Garrison, 
Bureau of Consumer Protection, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580, (202) 326-3224.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C.

[[Page 28337]]

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 May 10, 2006), on the World Wide Web, at 
http://www.ftc.gov/os/2006/05/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. 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 Nations Title Agency, Inc (``Nations 
Title''), Nations Holding Company (``Nations Holding''), and 
Christopher M. Likens (``Likens'').
    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.
    According to the Commission's proposed complaint, Nations Holding, 
Nations Title, and Likens provide services in connection with financing 
home purchases and refinancing existing home mortgages, including, but 
not limited to, real estate settlement services, residential closings, 
title abstracts, title commitments, appraisals, foreclosure management, 
asset disposition, and real estate management. Likens wholly owns 
Nations Holding, a subchapter ``S'' corporation, and has the authority 
to control the conduct of Nations Holding and its subsidiaries, 
including Nations Title. In providing these services, Nations Title, 
Nations Holding, and Likens (``respondents'') routinely obtain 
sensitive consumer information from banks and other lenders, real 
estate brokers, consumers, public records, and others, including but 
not limited to consumer names, Social Security numbers, bank and credit 
card account numbers, mortgage information, loan applications, purchase 
contracts, refinancing agreements, income histories, and credit 
histories (collectively, ``personal information'').
    The Commission's proposed complaint alleges that respondents failed 
to employ reasonable and appropriate security measures to protect 
personal information. In particular, the proposed complaint alleges 
that respondents have engaged in a number of practices that, taken 
together, failed to provide reasonable and appropriate security for 
consumers' personal information. Among other things, respondents failed 
to: (1) Assess risks to the information they collected and stored both 
online and offline; (2) implement reasonable policies and procedures in 
key areas, such as employee screening and training and the collection, 
handling, and disposal of personal information; (3) implement simple, 
low-cost, and readily available defenses to common website attacks, or 
implement reasonable access controls, such as strong passwords, to 
prevent a hacker from gaining access to personal information stored on 
respondents' computer network; (4) employ reasonable measures to detect 
and respond to unauthorized access to personal information or to 
conduct security investigations; and (5) provide reasonable oversight 
for the handling of personal information by service providers, such as 
third parties employed to process the information and assist in real 
estate closings.
    The proposed complaint alleges that in April 2004, a hacker 
exploited these failures by using a common Web site attack to obtain 
unauthorized access to Nations Holding's computer network. In addition, 
in February 2005, a Kansas City television station found documents 
containing sensitive personal information discarded in a dumpster used 
by respondents located in an unsecured area adjacent to their building.
    According to the complaint, respondents' practices violated the 
Gramm-Leach-Bliley (``GLB'') Safeguards Rule because respondents failed 
to: (1) Identify reasonably foreseeable internal and external risks to 
the security, confidentiality, and integrity of customer information; 
(2) design and implement information safeguards to control the risks to 
customer information and regularly test and monitor them; (3) 
investigate, evaluate, and adjust the information security program in 
light of known or identified risks; (4) develop, implement, and 
maintain a comprehensive written information security program; and (5) 
oversee service providers and require them by contract to implement 
safeguards to protect respondent's customer information.
    In addition, the proposed complaint alleges that respondents 
misrepresented that they implemented reasonable and appropriate 
measures to protect consumers' personal information from unauthorized 
access, in violation of Section 5 of the Federal Trade Commission Act 
(``FTC Act''). Further, the proposed complaint alleges that respondents 
disseminated a privacy policy that does not accurately reflect their 
privacy policies and practices, in violation of the GLB Privacy Rule.
    The proposed order applies to personal information from or about 
consumers that respondents collect in connection with their real 
estate-related services. The proposed order contains provisions 
designed to prevent them from engaging in the future in practices 
similar to those alleged in the complaint.
    Part I of the proposed order requires that respondents not 
misrepresent the extent to which they maintain and protect the privacy, 
confidentiality, or integrity of any personal information collected 
from or about consumers.
    Part II of the proposed order requires respondents 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 they collect from or about consumers. 
The security program must contain administrative, technical, and 
physical safeguards appropriate to their size and complexity, the 
nature and scope of their activities, and the sensitivity of the 
personal information collected. Specifically, the order requires 
respondents 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.
     Design and implement reasonable safeguards to control the 
risks identified

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through risk assessment, and regularly test or monitor the 
effectiveness of the safeguards' key controls, systems, and procedures.
     Evaluate and adjust their information security program in 
light of the results of testing and monitoring, any material changes to 
their operations or business arrangements, or any other circumstances 
that they know or have reason to know may have a material impact on the 
effectiveness of their information security program.
    Part III of the proposed order requires that respondents not 
violate any provision of the GLB Safeguards Rule and Privacy Rule, as 
well as the Fair and Accurate Credit Transactions Act's Disposal Rule.
    Part IV of the proposed order requires that respondents obtain 
within 180 days, and on a biennial basis thereafter, an assessment and 
report from a qualified, objective, independent third-party 
professional, certifying, among other things, that: (1) They have in 
place a security program that provides protections that meet or exceed 
the protections required by Part II of the proposed order, and (2) 
their 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 V through X of the proposed order are reporting and 
compliance provisions. Part V requires respondents to retain documents 
relating to their compliance with the order. Part VI requires 
dissemination of the order now and in the future to persons with 
supervisory responsibilities relating to the subject matter of the 
order. Part VII requires Likens to notify the Commission of changes in 
his business or employment in connection with providing financial 
products or services. Part VIII requires respondents to notify the 
Commission of changes in their corporate status. Part IX mandates that 
they submit compliance reports to the FTC. Part X 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. E6-7397 Filed 5-15-06; 8:45 am]
BILLING CODE 6750-01-P