[Federal Register Volume 84, Number 84 (Wednesday, May 1, 2019)]
[Notices]
[Pages 18538-18540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08786]


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FEDERAL TRADE COMMISSION

[File No. 1723003]


ClixSense.com; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement and Statement of the Commission.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices. 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. 
The attached Statement of the Commission describes new requirements in 
recent data security orders.

DATES: Comments must be received on or before May 31, 2019.

ADDRESSES: Interested parties may file comments online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write: ``ClixSense.com; File 
No. 1723003'' on your comment, and file your comment online at https://www.regulations.gov by following the instructions on the web-based 
form. If you prefer to file your comment on paper, mail your comment to 
the following address: Federal Trade Commission, Office of the 
Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 
20024.

FOR FURTHER INFORMATION CONTACT: Jamie Hine (202-326-2188), Bureau of 
Consumer Protection, Federal Trade Commission, 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 April 24, 2019), on the World Wide Web, at 
https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before May 31, 2019. 
Write ``ClixSense.com; File No. 1723003'' 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 https://www.regulations.gov website.
    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 through the https://www.regulations.gov website.
    If you prefer to file your comment on paper, write ``ClixSense.com; 
File No. 1723003'' on your comment and on the envelope, and mail your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D), 
Washington, DC 20580; or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 
20024. If possible, submit your paper comment to the Commission by 
courier or overnight service.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure that your comment does not include any sensitive or 
confidential information. In particular, your comment should not 
include any sensitive personal information, such as your or anyone 
else's Social Security number; date of

[[Page 18539]]

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, such as medical records or other individually identifiable 
health information. In addition, your comment should not include any 
``trade secret or any commercial or financial information which . . . 
is privileged or confidential''--as provided by 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)--
including in particular competitively sensitive information such as 
costs, sales statistics, inventories, formulas, patterns, devices, 
manufacturing processes, or customer names.
    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). 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). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on the public FTC website--as legally required by FTC Rule 
4.9(b)--we cannot redact or remove your comment from the FTC website, 
unless you submit a confidentiality request that meets the requirements 
for such treatment under FTC Rule 4.9(c), and the General Counsel 
grants that request.
    Visit the FTC website 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 May 31, 2019. For information on the Commission's 
privacy policy, including routine uses permitted by the Privacy Act, 
see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an agreement containing a consent order from James 
V. Grago, Jr., individually and doing business as ClixSense.com 
(``Respondent'').
    The proposed consent order (``proposed 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.
    This matter involves ClixSense.com (``ClixSense''), an online 
rewards website owned and operated by James V. Grago, Jr. (``Mr. 
Grago'') since 2010. As the sole owner of ClixSense, Mr. Grago 
controlled or had authority to control, or participated in the acts or 
practices alleged in the proposed complaint.
    ClixSense pays its users for clicking on advertisements, performing 
online tasks, or completing online surveys. ClixSense makes money from 
advertisers and from marketers who purchase information generated from 
consumer surveys. As part of the enrollment process, ClixSense collects 
and stores personal information on its computer network about its 
users, including full names, physical addresses, dates of birth, 
gender, and email addresses. ClixSense also requires users to create a 
username, a password, and an answer to a security question that it 
stores in its database. For users who earn more than $600 annually, 
ClixSense requires a Social Security number.
    The Commission's proposed three-count complaint alleges that 
Respondent has violated Section 5(a) of the Federal Trade Commission 
Act.
    First, the proposed complaint alleges that Respondent deceived its 
users about the level of encryption it used. As alleged in the proposed 
complaint, Respondent has expressly represented to its users through a 
Frequently Asked Question (``FAQ'') entitled ``Is my personal 
information secure?'' that it uses the latest encryption techniques to 
ensure the security of account information. Contrary to this claim, the 
proposed complaint alleges that Respondent used no encryption to 
protect consumers' personal information. In fact, Respondent stored 
consumers' personal information, including SSNs, in clear text.
    Second, the proposed complaint alleges that Respondent 
misrepresented to its users that it utilized the latest security 
techniques to ensure the security of users' personal information. As 
alleged in the proposed complaint, Respondent failed to utilize the 
latest security techniques in multiple areas.
    Third, the proposed complaint alleges that Respondent has engaged 
in a number of unreasonable security practices that led to a breach of 
information regarding 6.6 million consumers. The proposed complaint 
alleges that Respondent:
     Failed to implement readily available security measures to 
limit access between computers on ClixSense's network, and between such 
computers and the internet;
     permitted employees to store plain text user credentials 
in personal email accounts, and on ClixSense's laptops;
     failed to change default login and password credentials 
for third-party company network resources; and
     maintained consumers' personal information, including 
consumers' names, addresses, email addresses, dates of birth, gender, 
answers to security questions, login and password credentials, and 
Social Security numbers, in clear text on ClixSense's network and 
devices.
    The proposed complaint alleges that Respondent could have addressed 
each of the failures described above by implementing readily available 
and relatively low-cost security measures.
    The proposed complaint alleges that Respondent's failures caused or 
are likely to cause substantial injury to consumers that is not 
outweighed by countervailing benefits to consumers or competition and 
is not reasonably avoidable by consumers themselves. Such practice 
constitutes an unfair act or practice under Section 5 of the FTC Act.
    The proposed order contains injunctive provisions addressing the 
alleged deceptive and unfair conduct in connection with Respondent's 
operation of an online rewards website. Part I of the proposed order 
prohibits Respondent from false or deceptive statements regarding the 
extent to which Respondent maintains and protects the privacy, 
security, confidentiality, or integrity of Personal Information, 
including the extent to which it utilizes (1) encryption techniques and 
(2) security techniques.
    Part II of the proposed order prohibits Respondent, in connection 
with any business that Mr. Grago controls directly and indirectly, 
including ClixSense, from transferring, selling, sharing, collecting, 
maintaining, or storing personal information unless it establishes and 
implements, and thereafter maintains, a comprehensive information 
security program that is designed to protect the security,

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confidentiality, and integrity of such personal information.
    Part III of the proposed order requires any business that Mr. Grago 
controls, directly or indirectly, that collects personal information 
online to obtain initial and biennial data security assessments for 
twenty years.
    Part IV of the agreement prohibits Respondent from misrepresenting 
any fact material to the assessments required by Provision III.
    Part V requires any business that Mr. Grago controls directly or 
indirectly, including ClixSense, to submit an annual certification from 
a senior corporate manager (or senior officer responsible for its 
information security program) that Respondent has implemented the 
requirements of the Order and is not aware of any material 
noncompliance that has not been corrected or disclosed to the 
Commission.
    Parts VI through IX of the proposed order are reporting and 
compliance provisions, which include recordkeeping requirements and 
provisions requiring Respondent to provide information or documents 
necessary for the Commission to monitor compliance. Part X states that 
the proposed order will remain in effect for 20 years, with certain 
exceptions.
    The purpose of this analysis is to aid public comment on the 
proposed order. It is not intended to constitute an official 
interpretation of the complaint or proposed order, or to modify in any 
way the proposed order's terms.

    By direction of the Commission.
Julie A. Mack,
Acting Secretary.

Statement of the Federal Trade Commission

April 24, 2019

    Today, the Commission announces cases against ClixSense and i-
Dressup,\1\ which include allegations that the companies failed to 
employ reasonable security to protect consumers' sensitive data. The 
orders obtained in these matters contain strong injunctive provisions, 
including new requirements that go beyond requirements from previous 
data security orders. For example, the orders include requirements that 
a senior officer provide annual certifications of compliance to the 
Commission, and explicit provisions prohibiting the defendants from 
making misrepresentations to the third parties conducting assessments 
of their data security programs. These new requirements will provide 
greater assurances that consumers' data will be protected going 
forward.
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    \1\ Although the Commission's settlement with i-Dressup 
addresses broader COPPA violations, this statement focuses 
specifically on the data security requirements set forth in the 
proposed stipulated order.
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    Since joining the Commission, we have instructed staff to closely 
review our orders to determine whether they could be strengthened and 
improved--particularly in the areas of privacy and data security. 
Through ongoing discussions both internally and with external 
stakeholders, including through our public Hearings on Competition and 
Consumer Protection in the 21st Century and the comment process,\2\ we 
continue to consider changes to our orders. We will adjust our data 
security orders, as needed, to reflect our ongoing discussions 
regarding the FTC's remedial authority and needs, as well as the 
specific facts and circumstances of each case.
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    \2\ See, e.g., FTC Hearings on Competition and Consumer 
Protection in the 21st Century (Session 9--Data Security), Dec. 11-
12, 2018, https://www.ftc.gov/news-events/events-calendar/ftc-hearing-competition-consumer-protection-21st-century-december-2018.
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    We are particularly committed to strengthening the order provisions 
regarding data security assessments of companies by third parties. The 
Commission expects that these third parties will faithfully assess data 
security practices to identify potential noncompliance with appropriate 
order provisions. Future orders will better ensure that third-party 
assessors know they are accountable for providing meaningful, 
independent analysis of the data practices under examination. The 
announcements today reflect the beginning of our thinking, but we 
anticipate further refinements, and these orders may not reflect the 
approach that we intend to use in every data security enforcement 
action going forward.

[FR Doc. 2019-08786 Filed 4-30-19; 8:45 am]
 BILLING CODE 6750-01-P