[Federal Register Volume 74, Number 26 (Tuesday, February 10, 2009)]
[Pages 6627-6629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-2764]



[File No. 082 3113]

Genica Corporation and Compgeeks.com; Analysis of Proposed 
Consent Order to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.


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 March 9, 2009.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Genica Corporation, File No. 082 3113,'' 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, N.W., 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 by

[[Page 6628]]

following the instructions on the web-based form at (http://secure.commentworks.com/ftc-Genica). To ensure that the Commission 
considers an electronic comment, you must file it on that web-based 

    \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).

    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.shtm).

FOR FURTHER INFORMATION CONTACT: Molly Crawford, Bureau of Coonsumer 
Protection, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580, (202) 

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 February 5, 2009), on the World Wide Web, at (http://www.ftc.gov/os/2009/02/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 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 Genica Corporation (``Genica'') and 
Compgeeks.com, also doing business as Computer Geeks Discount Outlet 
and Geeks.com (``Compgeeks.com'').
    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.
    Genica and its wholly-owned subsidiary, Compgeeks.com, 
(collectively ``respondents'') sell computer systems, peripherals, and 
consumer electronics to consumers over the internet, including through 
a website (www.geeks.com) operated by Compgeeks.com. Respondents 
operate a computer network that consumers use, in conjunction with the 
www.geeks.com website and web application, to obtain information and to 
buy their products. In selling products through the www.geeks.com 
website, respondents routinely collect sensitive information from 
consumers to obtain authorization for credit card purchases, including 
a first and last name, address, e-mail address, telephone number, 
credit card number, credit card expiration date, and credit card 
security code (hereinafter ``personal information''). This information 
is particularly sensitive, because it can be used to facilitate payment 
card fraud and other consumer harm. This matter concerns alleged false 
or misleading representations respondents made about the security they 
provided for this information.
    The Commission's complaint alleges that respondents represented 
that they implemented reasonable and appropriate security measures to 
protect the privacy and confidentiality of personal information. The 
complaint alleges that this representation was false because 
respondents engaged in a number of practices that, taken together, 
failed to provide reasonable and appropriate security for sensitive 
personal information stored on their network. Among other things, 
respondents allegedly: (1) stored personal information in clear, 
readable text; (2) did not adequately assess the vulnerability of their 
web application and network to commonly known or reasonably foreseeable 
attacks, such as ``Structured Query Language'' (``SQL'') injection 
attacks; (3) did not implement simple, free or low-cost, and readily 
available defenses to such attacks; (4) did not use readily available 
security measures to monitor and control connections between computers 
on the network and from the network to the internet; and (5) failed to 
employ reasonable measures to detect and prevent unauthorized access to 
personal information, such as by logging or employing an intrusion 
detection system.
    The complaint further alleges that since at least January 2007 and 
continuing through at least June 2007, hackers repeatedly exploited 
these vulnerabilities by using SQL injection attacks on the 
www.geeks.com website and web application. Through these attacks, the 
hackers allegedly found personal information stored on respondents' 
network and exported the information of hundreds of customers, 
including credit card numbers, expiration dates, and security codes, 
over the internet to outside computers.
    The proposed order applies to personal information respondents 
collect from or about consumers. It contains provisions designed to 
prevent respondents from engaging in the future in practices similar to 
those alleged in the complaint.
    Part I of the proposed order prohibits respondents, in connection 
with the advertising, marketing, promotion, offering for sale, or sale 
of any product or service, from misrepresenting the extent to which 
respondents maintain and protect the privacy, confidentiality, or 
integrity of any personal information collected from or about 
    Part II of the proposed order requires respondents 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 written security program must contain administrative, technical, 
and physical safeguards appropriate to respondents' size and 
complexity, the nature and scope of respondents' activities, and the 
sensitivity of the personal information collected from or about 
consumers. Specifically the order requires respondents 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

[[Page 6629]]

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 and requiring service providers by contract to 
implement and maintain appropriate safeguards; and
    5. Evaluate and adjust respondents' information security program in 
light of the results of the testing and monitoring, any material 
changes to respondents' operations or business arrangements, or any 
other circumstances that respondents 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, in 
connection with the online advertising, marketing, promotion, offering 
for sale, or sale of any product or service to consumers, obtain within 
180 days, and on a biennial bases 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 respondents 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) respondents' 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 VIII of the proposed order are reporting and 
compliance provisions. Part IV requires respondents 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, respondents 
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 respondents 
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.
    By direction of the Commission.

Donald S. Clark
[FR Doc. E9-2764 Filed 2-9-09: 8:45 am]