[Federal Register Volume 74, Number 89 (Monday, May 11, 2009)]
[Notices]
[Pages 21805-21806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-10959]



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FEDERAL TRADE COMMISSION

[File No. 072 3108]


James B. Nutter & Company; 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 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 8, 2009.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to ``Nutter, 
File No. 072 3108'' to facilitate the organization of comments. Please 
note that your comment--including your name and your state--will be 
placed on the public record of this proceeding, including on the 
publicly accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm).
    Because comments will be made public, they should not include any 
sensitive personal information, such as an individual's Social Security 
Number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. Comments also 
should not include any sensitive health information, such as medical 
records or other individually identifiable health information. In 
addition, comments should not include any ``[t]rade secret or any 
commercial or financial information which is obtained from any person 
and which is privileged or confidential. . . .,'' as provided in 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule 
4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing material for which 
confidential treatment is requested must be filed in paper form, must 
be clearly labeled ``Confidential,'' and must comply with FTC Rule 
4.9(c), 16 CFR 4.9(c).\1\
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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 FTC Rule 4.9(c), 16 CFR 
4.9(c).
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    Because paper mail addressed to the FTC is subject to delay due to 
heightened security screening, please consider submitting your comments 
in electronic form. Comments filed in electronic form should be 
submitted by using the following weblink: (https://secure.commentworks.com/ftc-nutter) (and following the instructions on 
the web-based form). To ensure that the Commission considers an 
electronic comment, you must file it on the web-based form at the 
weblink: (https://secure.commentworks.com/ftc-nutter). If this Notice 
appears at (http://www.regulations.gov/search/index.jsp), you may also 
file an electronic comment through that website. The Commission will 
consider all comments that regulations.gov forwards to it. You may also 
visit the FTC website at http://www.ftc.gov/ to read the Notice and the 
news release describing it.
    A comment filed in paper form should include the ``Nutter, File No. 
072 3108'' 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-135 (Annex D), 600 
Pennsylvania Avenue, NW, Washington, DC 20580. 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.
    The Federal Trade Commission Act (``FTC Act'') and other laws the 
Commission administers permit the collection of public comments to 
consider and use in this proceeding as appropriate. The Commission will 
consider all timely and responsive public comments that it receives, 
whether filed in paper or electronic form. Comments received will be 
available to the public on the FTC website, to the extent practicable, 
at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of 
discretion, the Commission 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: Alain Sheer or Loretta H. Garrison, 
Bureau of Consumer Protection, 600 Pennsylvania Avenue, NW, Washington, 
D.C. 20580, (202) 326-3321 or (202) 326-3043.

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 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 5, 2009), on the World Wide Web, at (http://www.ftc.gov/os/actions.shtm). 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 James B. Nutter & Company (``JBN'').
    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.
    The Commission's proposed complaint alleges that JBN is in the 
business of making and servicing mortgage loans throughout the United 
states. In doing so, JBN routinely obtains information from or about 
its customers, including, but not limited to, name; address; Social 
Security number; financial information; employment history; credit 
scores; and information contained in credit reports.
    The complaint further alleges that JBN engaged in a number of 
practices that, taken together, failed to provide reasonable and 
appropriate security for

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sensitive information from consumers and employees, in violation of the 
Gramm-Leach-Bliley (``GLB'') Act Safeguards Rule. In particular, JBN: 
(1) did not develop, implement, and maintain a comprehensive written 
information security program; (2) did not implement reasonable policies 
and procedures in areas such as employee training; (3) stored personal 
information in clear text on its computer network; (4) did not employ 
sufficient measures to prevent or detect unauthorized access to 
personal information on its computer network or to conduct security 
investigations; (5) did not assess risks to personal information it 
collected and stored on its computer network and in paper files; and 
(6) provided back-up tapes containing personal information in clear 
text to a third party service provider but did not require the service 
provider by contract to protect the security and confidentiality of the 
information.
    According to the complaint, JBN's practices violated the Safeguards 
Rule by, among other things, failing to: (1) develop, implement, and 
maintain a comprehensive written information security program; (2) 
identify reasonably foreseeable internal and external risks to the 
security, confidentiality, and integrity of customer information; (3) 
design and implement information safeguards to control the risks to 
customer information and regularly test and monitor them; (4) 
investigate, evaluate, and adjust the information security program in 
light of known or identified risks; 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 JBN disseminated 
privacy notices that did not comply with the GLB Privacy Rule. In 
particular: (1) JBN began providing notices in 2004 even though under 
the Rule notices were to be provided starting on July 1, 2001; and (2) 
the notices it provided did not: set out its security practices; 
accurately describe that customer information would be disclosed to 
third parties; or accurately inform customers that they could exercise 
their opt-out rights at any time during the course of their loans.
    The proposed order applies to personal information from or about 
consumers that JBN collects in connection with its lending business. 
The proposed order contains provisions designed to prevent the company 
from engaging in the future in practices similar to those alleged in 
the complaint.
    Part I of the proposed order requires JBN to establish and maintain 
a comprehensive information security program that is reasonably 
designed to protect the security, confidentiality, and integrity of 
such information (whether in paper or electronic format) from or about 
consumers. The security program must contain administrative, technical, 
and physical safeguards appropriate to JBN's size and complexity, the 
nature and scope of its activities, and the sensitivity of the 
information collected from or about consumers and employees. 
Specifically, the order requires JBN 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 select and retain 
service providers capable of appropriately safeguarding personal 
information they receive from JBN and require service providers by 
contract to implement and maintain appropriate safeguards.
     Evaluate and adjust its information security programs in 
light of the results of testing and monitoring, any material changes to 
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 II of the order prohibits JBN from violating any provision of 
the GLB Safeguards Rule and Privacy Rule.
    Part III of the proposed order requires JBN to obtain within one 
year, 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 I 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 sensitive consumer and employee 
information has been protected.
    Parts IV through VIII of the proposed order are reporting and 
compliance provisions. Part IV requires JBN to retain documents 
relating to its 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, JBN 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 company status. Part VII mandates that JBN submit a 
compliance report to the FTC within 60 days, and periodically 
thereafter as requested. 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 its terms in any way. 
By direction of the Commission.

Donald S. Clark
Secretary.
[FR Doc. E9-10959 Filed 5-8-09: 8:45 am]
BILLING CODE: 6750-01-S