[Federal Register Volume 73, Number 16 (Thursday, January 24, 2008)]
[Notices]
[Pages 4231-4233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-1168]


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FEDERAL TRADE COMMISSION

[File No. 072 3046]


Life is good, Inc., and Life is good Retail, 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 February 19, 2008.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Life is good, File No. 072 3046,'' 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, 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 as part of or as an attachment to email messages directed to the 
following email 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 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.htm.

FOR FURTHER INFORMATION CONTACT: Jessica Rich, FTC Bureau of Consumer 
Protection, 600 Pennsylvania Avenue, NW., Washington, D.C. 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 January 17, 2008), on the World Wide Web, at http://www.ftc.gov/os/2008/01/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

[[Page 4232]]

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 Life is good, Inc. and Life is good 
Retail, Inc. (collectively, ``Life is good'').
    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.
    Life is good designs and distributes retail apparel and accessories 
and operates a retail website at www.lifeisgood.com. In selling its 
products, Life is good routinely has collected sensitive information 
from consumers, including name, address, e-mail address, phone number, 
credit card number, credit card expiration date, and credit card 
security code (hereinafter ``consumer information''). Life is good has 
collected this consumer information through its website and telephone 
orders and stored it on a network computer accessible through the 
website. This matter concerns alleged false or misleading 
representations Life is good made about the security it provided for 
this information.
    The Commission's proposed complaint alleges that Life is good 
represented that it implemented reasonable and appropriate security 
measures to protect the privacy and confidentiality of sensitive 
consumer information. The complaint alleges this representation was 
false because Life is good engaged in a number of practices that, taken 
together, failed to provide reasonable and appropriate security for the 
sensitive consumer information stored on its computer network. In 
particular, Life is good: (1) created unnecessary risks to credit card 
information by storing it indefinitely in clear, readable text on its 
network without a business need, and by storing credit card security 
codes; (2) failed to assess adequately the vulnerability of its web 
application and corporate computer network to certain commonly known or 
reasonably foreseeable attacks, such SQL injection attacks; (3) failed 
to implement simple, free or low-cost, and readily available defenses 
to SQL and related types of attacks; (4) failed to use readily 
available security measures to monitor and control connections from the 
network to the internet; and (5) failed to employ sufficient measures 
to detect unauthorized access to credit card information.
    The complaint further alleges that between June and August 2006, a 
hacker exploited Life is good's failures by using SQL injection attacks 
on Life is good's website and web application and exporting to the 
hacker's browser consumer information for thousands of customers, 
including credit card numbers, expiration dates, and security codes.
    The proposed order applies to personal information Life is good 
collects from or about consumers. It contains provisions designed to 
prevent Life is good from engaging in the future in practices similar 
to those alleged in the complaint.
    Part I of the proposed order prohibits Life is good, in connection 
with the collection of personally identifiable information from or 
about consumers, in or affecting commerce, from misrepresenting the 
extent to which it maintains and protects the privacy, confidentiality, 
or integrity of such information.
    Part II of the proposed order requires Life is good 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 Life is good'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 Life is good to:
    1. Designate an employee or employees to coordinate and be 
accountable for the information security program.
    2. 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.
    3. 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.
    4. 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.
    5. 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 III of the proposed order requires that Life is good 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 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 is protected.
    Parts IV through VII of the proposed order are reporting and 
compliance provisions. Part IV requires Life is good to retain 
documents relating to their compliance with the order. For most 
records, the order required that the documents be retained for a five-
year period. For the third-party assessments and supporting documents, 
Life is good 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 Life is good submit an initial compliance report to 
the FTC, and make available to the FTC subsequent reports. Part VIII is 
a provision ``sunsetting'' the order after twenty (20) years, with 
certain exceptions.
    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.

[[Page 4233]]

    By direction of the Commission.

Donald S. Clark
Secretary
[FR Doc. E8-1168 Filed 1-23-08: 8:45 am]
[BILLING CODE 6750-01-S]