[Federal Register Volume 71, Number 227 (Monday, November 27, 2006)]
[Notices]
[Pages 68628-68629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-19965]


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FEDERAL TRADE COMMISSION

[File No. 062 3057]


Guidance Software, 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 December 15, 2006.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Guidance Software, File No. 062 3957,'' 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 hhtp://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.htm.

FOR FURTHER INFORMATION CONTACT: Alain Sheer, Bureau of Consumer 
Protection, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-2252.

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 November 16, 2006), on the World Wide Web, at http://www.ftc.gov/os/2006/11/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. 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 Guidance Software Inc. 
(``Guidance'').
    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

[[Page 68629]]

appropriate action or make final the agreement's proposed order.
    Guidance sells software and related training, materials, and 
services that customers use to, among other things, investigate and 
respond to computer breaches and other security incidents. In selling 
its products and services, Guidance routinely collected sensitive 
personal information from customers, including name, address, e-mail 
address, telephone number, and, for customers paying with a credit 
card, the card number, expiration date, and security code number. It 
collected this information through its website, sales representatives, 
and telephone and fax orders and stored the information on its computer 
network. This matter concerns alleged false or misleading 
representations Guidance made about the security it provided for this 
information.
    The Commission's proposed complaint alleges that Guidance 
represented that it implemented reasonable and appropriate security 
measures to protect the privacy and confidentiality of personal 
information. The complaint alleges this representation was false 
because Guidance engaged in a number of practices that, taken together, 
failed to provide reasonable and appropriate security for sensitive 
personal information stored on its computer network. In particular, 
although it employed SSL encryption, Guidance: (1) Stored the 
information in clear readable text; (2) did not adequately assess the 
vulnerability of its web application and network to certain commonly 
known or reasonably foreseeable attacks, such as ``Structured Query 
Language'' (or ``SQL'') injection attacks; (3) did not implement 
simple, low-cost, and readily available defenses to such attacks; (4) 
stored in clear readable text network user credentials that facilitate 
access to sensitive personal information on the network; (5) did not 
use readily available security measures to monitor and control 
connections from the network to the Internet; and (6) failed to employ 
sufficient measures to detect unauthorized access to sensitive personal 
information.
    The complaint further alleges that beginning in September 2005 and 
continuing through December 7, 2005, a hacker exploited these 
vulnerabilities by using SQL injection attacks on Guidance's Web site 
and web application to install common hacking programs on Guidance's 
computer network. The hacking programs were used to find sensitive 
personal information, including credit card numbers, expiration dates, 
and security code numbers, stored on the network and to transmit the 
information over the Internet to computers outside the network. As a 
result, the hacker obtained unauthorized access to information for 
thousands of credit cards.
    The proposed order applies to personal information Guidance obtains 
from consumers. It contains provisions designed to prevent Guidance 
from engaging in the future in practices similar to those alleged in 
the complaint.
    Part I of the proposed order prohibits Guidance, in connection with 
the 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 privacy, confidentiality, or 
security of any personal information collected from or about consumers.
    Part II of the proposed order requires Guidance 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 Guidance'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 Guidance 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 customer 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 Guidance, 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 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 material impact on its information 
security program.
    Part III of the proposed order requires that Guidance obtain within 
180 days, and on a biennial basis thereafter for a period of ten (10) 
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 consumers' personal information has 
been protected.
    Parts IV through VIII of the proposed order are reporting and 
compliance provisions. Part IV requires Guidance to retain documents 
relating to their 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, Guidance 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 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 Guidance 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 or to modify their terms in any 
way.

By direction of the Commission.
Donald S. Clark,
Secretary.
 [FR Doc. E6-19965 Filed 11-24-06; 8:45 am]
BILLING CODE 6750-01-P