Reed Elsevier Inc. and Seisint, Inc.; Analysis of Proposed Consent Order to Aid Public Comment, 18279-18281 [E8-6952]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 73, Number 65 (Thursday, April 3, 2008)]
[Notices]
[Pages 18279-18281]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-6952]


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FEDERAL TRADE COMMISSION

[File No. 052 3094]


Reed Elsevier Inc. and Seisint, 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 April 28, 2008.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Reed Elsevier and Seisint, File No. 052 
3094,'' 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 135-H, 600 
Pennsylvania Avenue, N.W., Washington, D.C. 20580. Comments containing 
confidential material must be filed in paper form, must be clearly 
labeled ``Confidential,'' and must comply with Commission Rule 4.9(c). 
16 CFR 4.9(c) (2005).\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 
that do not contain any nonpublic information may instead be filed in 
electronic form by following the instructions on the web-based form at 
https://secure.commentworks.com/ftc-ReedElsevierSeisint. To ensure that 
the Commission considers an electronic comment, you must file it on 
that web-based form.
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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 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 website, to the extent 
practicable, at www.ftc.gov. As a matter of discretion, the FTC makes 
every effort to remove home contact information for

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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, 
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at https://www.ftc.gov/ftc/privacy.shtm.

FOR FURTHER INFORMATION CONTACT: Alain Sheer, FTC Bureau of Consumer 
Protection, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580, (202) 
326-2252.

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 of 
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 March 27, 2008), on the World Wide Web, at https://www.ftc.gov/os/
2008/03/index.htm. 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 Reed Elsevier Inc. (``REI'') and 
Seisint, Inc. (``Seisint'').
    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 REI (through its 
LexisNexis division) and Seisint are data brokers. REI acquired Seisint 
on September 1, 2004 and has continued to operate Seisint under the 
Seisint name; REI also uses Seisint's technologies and facilities in 
REI's LexisNexis data broker business. In connection with Seisint's 
business, proposed respondents collect, and store in electronic 
databases, information about millions of consumers, including names, 
current and prior addresses, dates of birth, driver's license numbers, 
and Social Security numbers (``SSNs''). They also sell products 
customers use to retrieve information from the databases, including 
products to locate assets and people, authenticate identities, and 
verify credentials. Until at least mid-2005, access to information in 
Seisint databases was controlled using only user IDs and passwords 
(``credentials''). Seisint customers include insurance companies, debt 
collectors, employers, landlords, law firms, and law enforcement and 
other government agencies.
    The complaint further alleges that REI and Seisint engaged in a 
number of practices that, taken together, failed to provide reasonable 
and appropriate security for sensitive consumer information stored in 
Seisint databases. In particular, they: (1) failed to make credentials 
hard to guess; (2) failed to require periodic changes of credentials 
(such as every 90 days, for customers with access to sensitive consumer 
information); (3) failed to suspend credentials after a certain number 
of unsuccessful log-in attempts; (4) allowed customers to store their 
credentials in a vulnerable format in cookies on their computers; (5) 
failed to require customers to encrypt or otherwise protect 
credentials, search queries, and/or search results in transit between 
customer computers and Seisint websites; (6) allowed customers to 
create new credentials without confirming that the new credentials were 
created by customers rather than identity thieves; (7) permitted users 
to share credentials; (8) did not adequately assess the vulnerability 
of Seisint's web application and computer network to commonly known or 
reasonably foreseeable attacks, such as ``Cross-Site Scripting`` 
attacks; and (9) did not implement simple, low-cost, and readily 
available defenses to such attacks. As a result, an attacker could 
easily guess or intercept the user credentials of legitimate customers 
and use them to access sensitive information--including SSNs--about 
millions of consumers.
    The complaint alleges that on multiple occasions since January 
2003, identity thieves exploited these vulnerabilities to obtain the 
credentials of legitimate Seisint customers. The thieves then used the 
credentials to make thousands of unauthorized searches for consumer 
information in Seisint databases. These breaches disclosed sensitive 
information about more than 300,000 consumers, including, in many 
instances, names, current and prior addresses, dates of birth, and 
SSNs. In some instances, the thieves opened new credit accounts in the 
names of consumers whose information was disclosed and made purchases 
on the new accounts. In other instances, they used the information to 
activate newly-issued credit cards stolen from legitimate cardholders 
and then made fraudulent purchases on the cards. Although some of these 
breaches occurred before REI acquired Seisint on September 1, 2004, 
they continued for at least 9 months after the acquisition, during 
which time Seisint was under REI's control.
    The proposed order applies to nonpublic information sold by Seisint 
and LexisNexis, as well as by any other business within REI to the 
extent that the business sells products that include an SSN, driver's 
license number; date of birth; or bank, credit card, or other financial 
account number or information. The order also contains provisions 
designed to prevent respondents from engaging in the future in 
practices similar to those alleged in the complaint.
    Part I of the proposed order requires each respondent to establish 
and maintain a comprehensive information security program that is 
reasonably designed to protect the security, confidentiality, and 
integrity of nonpublic personal information collected from or about 
consumers. The security programs must contain administrative, 
technical, and physical safeguards appropriate to the respondent's size 
and complexity, the nature and scope of its activities, and the 
sensitivity of the personal information collected from or about 
consumers. Specifically, the order requires each respondent 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

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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 the respondent, 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 proposed order requires each respondent to obtain 
within 180 days, 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 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 consumers' personal 
information has been protected.
    Parts III through VII of the proposed order are reporting and 
compliance provisions. Part III requires respondents to retain 
documents relating to their 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, 
respondents must retain the documents for a period of three years after 
the date that each assessment is prepared. Part IV requires 
dissemination of the order now and in the future to persons with 
responsibilities relating to the subject matter of the order. Part V 
ensures notification to the FTC of changes in corporate status. Part VI 
mandates that each respondent submit a compliance report to the FTC 
within 180 days, and periodically thereafter as requested. Part VII is 
a provision ``sunsetting'' the order after twenty (20) years, with 
certain exceptions.
    This is the Commission's nineteenth case to challenge the failure 
by a company to implement reasonable information security practices. 
Each of the Commission's cases to date has alleged that a number of 
security practices, taken together, failed to provide reasonable and 
appropriate security to prevent unauthorized access to consumers' 
information. The practices challenged in the cases have included, but 
are not limited to: (1) creating unnecessary risks to sensitive 
information by storing it on computer networks without a business need 
to do so; (2) storing sensitive information on networks in a vulnerable 
format; (3) failing to use readily available security measures to limit 
access to a computer network through wireless access points on the 
network; (4) failing to adequately assess the vulnerability of a web 
application and computer network to commonly known or reasonably 
foreseeable attacks; (5) failing to implement simple, low-cost, and 
readily available defenses to such attacks; and (6) failing to use 
readily available security measures to limit access between computers 
on a network and between such computers and the Internet. This proposed 
action against REI and Seisint is the first to challenge alleged 
security failures involving the security of passwords. Passwords are a 
critical part of a reasonable and appropriate security program because 
passwords are typically the first (and are often the only) method used 
to authenticate (or authorize) users to access resources, such as 
programs and databases, available on a computer network or online.
    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. E8-6952 Filed 4-2-08: 8:45 am]
[BILLING CODE 6750-01-S]