[Federal Register Volume 78, Number 176 (Wednesday, September 11, 2013)]
[Notices]
[Pages 55717-55719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-22070]


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FEDERAL TRADE COMMISSION

[File No. 122 3090]


TRENDnet, 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 October 4, 2013.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/trendnetconsent online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``TRENDnet, File No. 122 
3090'' on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/trendnetconsent 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 Berger (202-326-2471), 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 September 4, 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 October 4, 2013. 
Write ``TRENDnet, File No. 122 3090'' 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

[[Page 55718]]

4.9(c).\1\ Your comment will be kept confidential only if the FTC 
General Counsel 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/trendnetconsent 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 ``TRENDnet, File No. 122 
3090'' 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 (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 October 4, 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, an agreement containing a consent order applicable to 
TRENDnet, Inc. (``TRENDnet'').
    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.
    TRENDnet is a California corporation that among other things, sells 
networking devices, such as routers, modems, and Internet Protocol 
(``IP'') security cameras that allow users to conduct remote 
surveillance of their homes and businesses via the Internet. In many 
instances, TRENDnet markets its IP cameras under the trade name 
``SecurView,'' and tells consumers they may use the cameras to monitor 
``babies at home, patients in the hospital, offices and banks, and 
more.'' By default, these IP cameras are subject to security settings, 
such as a requirement to enter a user name and password (``login 
credentials'') in order to access the live video and audio feeds 
(``live feeds'') over the Internet. On approximately January 10, 2012, 
a hacker discovered a flaw in the IP cameras that allowed access to 
these live feeds without entering login credentials, resulting in 
hundreds of previously private live feeds being made public.
    The Commission's complaint alleges that TRENDnet violated Section 
5(a) of the FTC Act by falsely representing that it had taken 
reasonable steps to ensure that its IP cameras and mobile apps are a 
secure means to monitor private areas of a consumer's home or 
workplace. The complaint also alleges that TRENDnet misrepresented that 
it had taken reasonable steps to ensure that a user's security settings 
on its devices would be honored. Finally, the Commission's complaint 
alleges that TRENDnet engaged in a number of practices that, taken 
together, failed to provide reasonable security to prevent unauthorized 
access to personal information, namely the live feeds from the IP 
cameras. Among other things, TRENDnet:
    (1) Transmitted user login credentials in clear, readable text over 
the Internet, despite the existence of free code libraries (i.e., 
repositories of programming language that can be integrated by third 
parties), publicly available since at least 2008, that would have 
enabled respondent to secure such transmissions;
    (2) stored user login credentials in clear, readable text on a 
user's mobile device, despite the existence of free software, publicly 
available since 2008, that would have enabled respondent to secure such 
stored credentials;
    (3) failed to implement a process to actively monitor security 
vulnerability reports from third-party researchers, academics, or other 
members of the public, despite the existence of free tools to conduct 
such monitoring, thereby delaying the opportunity to correct discovered 
vulnerabilities or respond to incidents;
    (4) failed to employ reasonable and appropriate security in the 
design and testing of the software that it provided consumers to 
install, operate, and access its IP cameras. Among other things, 
TRENDnet, either directly or through its service providers, failed to:
    (a) Perform security review and testing of the software at key 
points, such as upon the release of the IP camera or upon the release 
of software to install, operate, or access the IP camera, including 
measures such as:
    i. A security architecture review to evaluate the effectiveness of 
the software's security infrastructure;
    ii. vulnerability and penetration testing of the software, such as 
by inputting invalid, unanticipated, or random data to the software;
    iii. reasonable and appropriate code review and testing of the 
software to verify that access to data is restricted consistent with a 
user's privacy and security settings; and
    (b) implement reasonable guidance or training for any employees 
responsible for the testing, designing, and reviewing the security of 
its IP cameras and related software.
    The complaint further alleges that, due to these failures, TRENDnet 
subjected users to a significant risk that their live feeds would be 
compromised, thereby causing significant injury to consumers. Moreover, 
the complaint alleges that affected consumers include not only those 
consumers who maintained login credentials for their cameras, but also 
unwitting third parties who were present in locations under 
surveillance by the cameras. The exposure of personal information 
through TRENDnet's IP cameras increases the likelihood that consumers 
or their property will be targeted for theft or other criminal 
activity, increases the likelihood that consumers' personal activities 
or the activities of their young children or other family members will 
be observed and recorded by strangers over the Internet, impairs 
consumers' peaceful enjoyment of their homes, increases consumers' 
susceptibility to physical tracking or stalking, and reduces consumers' 
ability to control the dissemination of personal or proprietary 
information (e.g., intimate video and audio streams or images from 
business properties). Indeed, consumers had little, if any, reason to 
know that their information was at risk, particularly if those 
consumers maintained login credentials for their cameras or were merely 
unwitting third parties present in locations where the cameras were 
used.

[[Page 55719]]

    The proposed order contains provisions designed to prevent TRENDnet 
from engaging in the future in practices similar to those alleged in 
the complaint.
    Part I of the proposed order prohibits TRENDnet from 
misrepresenting (1) the extent to which TRENDnet or its products or 
services maintain and protect the security of covered device 
functionality or the security, privacy, confidentiality, or integrity 
of any covered information; and (2) the extent to which a consumer can 
control the security of any covered information input into, stored on, 
captured with, accessed, or transmitted by a covered device.
    Part II of the proposed order requires TRENDnet to establish and 
implement, and thereafter maintain, a comprehensive security program to 
(1) address security risks that could result in unauthorized access to 
or use of the functions of covered devices, and (2) protect the 
security, confidentiality, and integrity of covered information, 
whether collected by respondent or input into, stored on, captured 
with, accessed or transmitted through a covered device. The security 
program must contain administrative, technical, and physical safeguards 
appropriate to TRENDnet'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 TRENDnet to:
    (1) Designate an employee or employees to coordinate and be 
accountable for the security program;
    (2) identify material internal and external risks to the security 
of covered devices that could result in unauthorized access to or use 
of covered device functionality, and assess the sufficiency of any 
safeguards in place to control these risks;
    (3) identify material internal and external risks to the security, 
confidentiality, and integrity of covered information that could result 
in the unauthorized disclosure, misuse, loss, alteration, destruction, 
or other compromise of such information, whether such information is in 
TRENDnet's possession or is input into, stored on, captured with, 
accessed, or transmitted through a covered device, and assess the 
sufficiency of any safeguards in place to control these risks;
    (4) consider risks in each area of relevant operation, including 
but not limited to (a) employee training and management; (b) product 
design, development and research; (c) secure software design, 
development, and testing; and (d) review, assessment, and response to 
third-party security vulnerability reports;
    (5) design and implement reasonable safeguards to control the risks 
identified through risk assessments, including but not limited to 
reasonable and appropriate software security testing techniques, such 
as: (a) Vulnerability and penetration testing; (b) security 
architecture reviews; (c) code reviews; and (d) other reasonable and 
appropriate assessments, audits, reviews, or other tests to identify 
potential security failures and verify that access to covered 
information is restricted consistent with a user's security settings;
    (6) regularly test or monitor the effectiveness of the safeguards' 
key controls, systems, and procedures;
    (7) develop and use reasonable steps to select and retain service 
providers capable of maintaining security practices consistent with the 
order, and require service providers by contract to establish and 
implement, and thereafter maintain, appropriate safeguards; and
    (8) evaluate and adjust its information security program in light 
of the results of testing and monitoring, any material changes to 
TRENDnet's operations or business arrangement, or any other 
circumstances that it knows or has reason to know may have a material 
impact on its security program.
    Part III of the proposed order requires TRENDnet 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 of covered device functionality 
and the security, confidentiality, and integrity of covered information 
is protected.
    Part IV of the proposed order requires TRENDnet to notify consumers 
whose cameras were affected by the breach that their IP cameras had a 
flaw that allowed third parties to access their live feeds without 
inputting login credentials; and provide instructions to such consumers 
on how to remove this flaw. In addition, TRENDnet must provide prompt 
and free support with clear and prominent contact information to help 
consumers update and/or uninstall their IP cameras. TRENDnet must 
provide this support via a toll-free, telephonic number and via 
electronic mail for two (2) years.
    Parts V through IX of the proposed order are reporting and 
compliance provisions. Part V requires TRENDnet to retain documents 
relating to its compliance with the order for a five-year period. Part 
VI 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 VII ensures notification to the FTC of changes in corporate 
status. Part VIII mandates that TRENDnet submit a compliance report to 
the FTC within 60 days, and periodically thereafter as requested. Part 
IX 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.
Richard C. Donohue,
Acting Secretary.
[FR Doc. 2013-22070 Filed 9-10-13; 8:45 am]
BILLING CODE 6750-01-P