Nationwide Mortgage Group, Inc., et al.; Analysis To Aid Public Comment, 12487-12489 [05-4967]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 70, Number 48 (Monday, March 14, 2005)]
[Notices]
[Pages 12487-12489]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-4967]


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FEDERAL TRADE COMMISSION

[Docket No. 9319]


Nationwide Mortgage Group, Inc., et al.; Analysis 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 April 4, 2005.

ADDRESSES: Comments should refer to ``Nationwide Mortgage Group, Inc., 
et

[[Page 12488]]

al., Docket No. 9319,'' 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 H-159, 600 Pennsylvania Avenue, NW., Washington, DC 20580. 
Comments containing confidential material must be filed in paper form, 
as explained in the Supplementary Information section. 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 filed in electronic form 
(except comments containing any confidential material) should be sent 
to the following e-mail box: consentagreement@ftc.gov.

FOR FURTHER INFORMATION CONTACT: Jessica Rich, FTC, Bureau of Consumer 
Protection, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-3224.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and section 
3.25(f) of the Commission's Rules of Practice, 16 CFR 3.25(f), 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 March 4, 2005), on the World Wide Web, at https://www.ftc.gov/os/2005/03/index.htm. 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.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. Written comments must be submitted 
on or before April 4, 2005. Comments should refer to ``Nationwide 
Mortgage Group, Inc., et al., Docket No. 9319,'' 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 H-159, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. If the comment contains any material for which 
confidential treatment is requested, it must be filed in paper (rather 
than electronic) form, and the first page of the document must be 
clearly labeled ``Confidential.''\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 filed in electronic form should be sent to the following e-
mail box: consentagreement@ftc.gov.
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). 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).
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    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 Web site, to the extent 
practicable, at https://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 Web site. More information, including routine uses permitted by 
the Privacy Act, may be found in the FTC's privacy policy, at https://www.ftc.gov/ftc/privacy.htm.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted a 
consent agreement, subject to final approval, from Nationwide Mortgage 
Group, Inc., and John D. Eubank (collectively ``Nationwide''). 
Nationwide is a mortgage broker with headquarters in Fairfax, Virginia. 
Nationwide collects sensitive customer information, including customer 
names, social security numbers, credit histories, bank account numbers, 
and income tax returns, and is a ``financial institution'' subject to 
the Gramm-Leach-Bliley Act's Standards for Safeguarding Customer 
Information Rule, 16 CFR part 314 (``Safeguards Rule'') and Privacy of 
Consumer Financial Information Rule, 16 CFR part 313 (``Privacy 
Rule'').
    The proposed consent agreement 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 concerns Nationwide's alleged violations of the 
Safeguards and Privacy Rules. The Safeguards Rule, which became 
effective on May 23, 2003, requires financial institutions to implement 
reasonable policies and procedures to ensure the security and 
confidentiality of customer information, including:
     Designating one or more employees to coordinate the 
information security program;
     Identifying reasonably foreseeable internal and external 
risks to the security, confidentiality, and integrity of customer 
information, and assessing the sufficiency of any safeguards in place 
to control those risks;
     Designing and implementing information safeguards to 
control the risks identified through risk assessment, and regularly 
testing or otherwise monitoring the effectiveness of the safeguards' 
key controls, systems, and procedures;
     Overseeing service providers, and requiring them by 
contract to protect the security and confidentiality of customer 
information; and
     Evaluating and adjusting the information security program 
in light of the results of testing and monitoring, changes to the 
business operation, and other relevant circumstances.
    The Privacy Rule, which became effective on July 1, 2001, requires 
financial institutions to provide customers with clear and conspicuous 
notices that explain the financial institution's information collection 
and sharing practices and allow customers to opt out of having their 
information shared with certain non-affiliated third parties.
    The Commission's administrative complaint, issued on November 9, 
2004, charges that Nationwide engaged in violations of the Safeguards 
Rule, specifically by: (1) Failing to identify reasonably foreseeable 
internal and external risks to the security, confidentiality, and 
integrity of customer information; (2) failing to implement information 
safeguards to control the risks to customer

[[Page 12489]]

information and failing to regularly test or monitor them; (3) failing 
to develop, implement, and maintain a comprehensive written information 
security program; and (4) failing to designate one or more employees to 
coordinate the information security program. The complaint also alleges 
that Nationwide failed to provide its customers with the notice 
required by the Privacy Rule.
    The proposed order contains provisions designed to prevent 
Nationwide from engaging in future practices similar to those alleged 
in the complaint. Specifically, Part I of the proposed order prohibits 
Nationwide from violating the Safeguards Rule or the Privacy Rule. Part 
II of the proposed order requires that Nationwide obtain, within 180 
days after being served with the final order approved by the 
Commission, 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 that: (1) Nationwide 
has in place a security program that provides protections that meet or 
exceed the protections required by the Safeguards Rule, and (2) 
Nationwide's security program is operating with sufficient 
effectiveness to provide reasonable assurance that the security, 
confidentiality, and integrity of consumers' personal information has 
been protected. This provision is substantially similar to comparable 
provisions obtained in prior Commission orders under Section 5 of the 
FTC Act. See In the Matter of Petco Animal Supplies Inc., FTC File No. 
032-3221 (consent order) (Placed on the public record on Nov. 17, 
2004); In the Matter of MTS, Inc., doing business as Tower Records/
Books/Video, et al., FTC Docket No. C-4110 (consent order) (Issued May 
28, 2004); In the Matter of Guess?, Inc., and Guess.com, Inc., FTC 
Docket No. C-4091 (consent order) (Issued July 30, 2003); and In the 
Matter of Microsoft Corporation, FTC Docket No. C-4069 (consent order) 
(Issued Dec. 20, 2002).
    Part II of the proposed order also requires Nationwide to retain 
documents relating to compliance. For the assessments and supporting 
documents, Nationwide must retain the documents for three years after 
the date that each assessment is prepared.
    Parts III through VI of the proposed order are reporting and 
compliance provisions. Part III requires dissemination of the order now 
and in the future to all employees and other persons having 
responsibilities with respect to the subject matter of the order. Part 
IV requires Mr. Eubank to notify the FTC, for a period of ten years, if 
he discontinues his current business or becomes affiliated with a new 
one. Part V ensures notification to the FTC of changes in corporate 
status. Part VI mandates that Nationwide submit compliance reports to 
the FTC. Part VII 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. 05-4967 Filed 3-11-05; 8:45 am]
BILLING CODE 6750-01-P