[Federal Register Volume 78, Number 22 (Friday, February 1, 2013)]
[Notices]
[Pages 7431-7433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-02143]


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FEDERAL TRADE COMMISSION

[File No. 112 3120]


Cbr Systems, 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 28, 2013.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/cbrsystemsconsent online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Cbr Systems, File No. 
112 3120'' on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/cbrsystemsconsent by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, mail or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex 
D), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Laura Roposo VanDruff (202-326-2999), 
Ryan M. Mehm (202-326-2918), FTC, Bureau of Consumer Protection, 600 
Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 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 28, 2013), 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, DC 20580, either in person or by calling (202) 326-
2222.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before February 28, 
2013. Write ``Cbr Systems, File No. 112 3120'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to 
remove individuals' home contact information from comments before 
placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone'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. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which * * * is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/cbrsystemsconsent by following the instructions on the web-based 
form. If this Notice appears at http://www.regulations.gov/#!home, you 
also may file a comment through that Web site.
    If you file your comment on paper, write ``Cbr Systems, File No. 
112 3120'' on your comment and on the envelope, and mail or deliver it 
to the following address: Federal Trade Commission, Office of the 
Secretary, Room H-113

[[Page 7432]]

(Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580. If 
possible, submit your paper comment to the Commission by courier or 
overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that 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 on or before February 28, 2013. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, a consent order applicable to Cbr Systems, Inc.
    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.
    Cbr collects and stores umbilical cord blood and umbilical cord 
tissue for potential medical use. When a pregnant woman agrees to have 
Cbr collect and store her umbilical cord blood or umbilical cord blood 
and umbilical cord tissue, Cbr collects her personal information, 
including, but not limited to, the following: name, address, email 
address, telephone number, date of birth, Social Security number, 
driver's license number, credit card number, debit card number, medical 
health history profile, blood typing results, and infectious disease 
marker results. During the enrollment process, Cbr also collects 
personal information, such as fathers' Social Security numbers, and the 
company collects information relating to newborn children, such as 
name, gender, date and time of birth, birth weight, delivery type, and 
adoption type (i.e., open, closed, or surrogate). Cbr may also collect 
limited health information for certain children and the name, address, 
email address, and credit card information for individuals, such as 
friends or family members, who contribute to the cost of collecting and 
storing cord blood or cord tissue. The misuse of the types of personal 
information Cbr collects--including Social Security numbers, dates of 
birth, credit card numbers, and health information--can facilitate 
identity theft, including existing and new account fraud, expose 
sensitive medical data, and lead to related consumer harms.
    The Commission's complaint alleges that Cbr misrepresented that it 
maintained reasonable and appropriate practices to protect consumers' 
personal information from unauthorized access. Cbr engaged in a number 
of practices, however, that, taken together, failed to provide 
reasonable and appropriate security for consumers' personal 
information. Among other things, Cbr:
    (1) Failed to implement reasonable policies and procedures to 
protect the security of consumers' personal information it collected 
and maintained;
    (2) Created unnecessary risks to personal information by (a) 
Transporting portable media containing personal information in a manner 
that made the media vulnerable to theft or other misappropriation; (b) 
failing to adequately supervise a service provider, resulting in the 
retention of a legacy database that contained consumers' personal 
information, including consumers' names, addresses, email addresses, 
telephone numbers, dates of birth, Social Security numbers, drivers' 
license numbers, credit card numbers, and health information, in a 
vulnerable format on its network; (c) failing to take reasonable steps 
to render backup tapes or other portable media containing personal 
information or information that could be used to access personal 
information unusable, unreadable, or indecipherable in the event of 
unauthorized access; (d) not adequately restricting access to or 
copying of personal information contained in its databases based on an 
employee's need for information; and (e) failing to destroy consumers' 
personal information for which Cbr no longer had a business need; and
    (3) Failed to employ sufficient measures to prevent, detect, and 
investigate unauthorized access to computer networks, such as by 
adequately monitoring web traffic, confirming distribution of anti-
virus software, employing an automated intrusion detection system, 
retaining certain system logs, or systematically reviewing system logs 
for security threats.
    The complaint further alleges that these failures contributed to a 
December 2010 incident in which hundreds of thousands of consumers' 
personal information was unnecessarily exposed. On December 9, 2010, a 
Cbr employee removed four backup tapes from Cbr's San Francisco, 
California facility and placed them in a backpack to transport them to 
Cbr's corporate headquarters in San Bruno, California, approximately 
thirteen miles away. The backpack contained the four Cbr backup tapes, 
a Cbr laptop, a Cbr external hard drive, a Cbr USB drive, and other 
materials. At approximately 11:35 p.m. on December 13, 2010, an 
intruder removed the backpack from the Cbr employee's personal vehicle. 
The Cbr backup tapes were unencrypted, and they contained consumers' 
personal information, including, in some cases, names, gender, Social 
Security numbers, dates and times of birth, drivers' license numbers, 
credit/debit card numbers, card expiration dates, checking account 
numbers, addresses, email addresses, telephone numbers, and adoption 
type (i.e., open, closed, or surrogate) for approximately 298,000 
consumers. The Cbr laptop and Cbr external hard drive, both of which 
were unencrypted, contained enterprise network information, including 
passwords and protocols, that could have facilitated an intruder's 
access to Cbr's network, including additional personal information 
contained on the Cbr network.
    The proposed order contains provisions designed to prevent Cbr from 
engaging in the future in practices similar to those alleged in the 
complaint.
    Part I of the proposed order prohibits misrepresentations about the 
privacy, confidentiality, security, or integrity of personal 
information collected from or about consumers. Part II of the proposed 
order requires Cbr 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 security program must contain 
administrative, technical, and physical safeguards appropriate to Cbr's 
size and complexity, nature and scope of its activities, and the 
sensitivity of the information collected from or about consumers. 
Specifically, the proposed order requires Cbr 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 personal information that 
could result in the unauthorized disclosure, misuse, loss, alteration, 
destruction, or other compromise of such information, and

[[Page 7433]]

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 Cbr, and require service providers by 
contract to implement and maintain appropriate safeguards; and
     Evaluate and adjust its information security program in 
light of the results of testing and monitoring, any material changes to 
operations or business arrangement, or any other circumstances that it 
knows or has reason to know may have a material impact on its 
information security program.
    Part III of the proposed order requires Cbr to obtain within the 
first one hundred eighty (180) days after service of the order, and on 
a biennial basis thereafter for a period of 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 sensitive consumer, employee, and job applicant information has been 
protected.
    Parts IV through VIII of the proposed order are reporting and 
compliance provisions. Part IV requires Cbr 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, Cbr 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 all current and future principals, officers, 
directors, and managers, and 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 Cbr 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 complaint or order or to modify the 
order's terms in any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2013-02143 Filed 1-31-13; 8:45 am]
BILLING CODE 6750-01-P