EPN, Inc.; Analysis of Proposed Consent Order to Aid Public Comment, 35389-35391 [2012-14369]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 77, Number 114 (Wednesday, June 13, 2012)]
[Notices]
[Pages 35389-35391]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14369]


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FEDERAL TRADE COMMISSION

[File No. 112 3143]


EPN, 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 July 9, 2012.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write AEPN, File No. 112 
3143'' on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/epnconsent, 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: Jessica Lyon (202-326-2344), 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, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 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 June 7, 2012), on the World Wide Web, at https://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 July 9, 2012. 
Write AEPN, File No. 112 3143'' on your comment. Your comment B 
including your name and your state B will be placed on the public 
record of this proceeding, including, to the extent practicable, on the 
public Commission Web site, at https://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

[[Page 35390]]

any ``[t]rade secret or any commercial or financial information which 
is obtained from any person and which is privileged or confidential,'' 
as provided 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/epnconsent by following the instructions on the web-based form. If 
this Notice appears at https://www.regulations.gov/#!home, you also may 
file a comment through that Web site.
    If you file your comment on paper, write AEPN, File No. 112 3143'' 
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 https://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 July 9, 2012. You can find more information, 
including routine uses permitted by the Privacy Act, in the 
Commission's privacy policy, at https://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 agreement from EPN, 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.
    The Commission's proposed complaint alleges that EPN, which does 
business as Checknet, Inc., is a Utah corporation that is in the 
business of collecting debts for clients in a variety of industries, 
including commercial credit, retail, and healthcare. According to the 
complaint, In conducting business, EPN routinely obtains information 
about its clients' customers, which includes, but is not limited to: 
name, address, date of birth, gender, Social Security number, employer 
address, employer phone number, and in the case of healthcare clients, 
physician name, insurance number, diagnosis code, and medical visit 
type.
    The complaint further alleges that EPN engaged in a number of 
practices that, taken together, failed to provide reasonable and 
appropriate security for personal information on its computers and 
networks. In particular, EPN failed to: (1) Adopt an information 
security plan that was appropriate for its networks and the personal 
information processed and stored on them; (2) assess risks to the 
consumer personal information it collected and stored online; (3) 
adequately train employees about security to prevent unauthorized 
disclosure of personal information; (4) use reasonable measures to 
assess and enforce compliance with its security policies and 
procedures, such as scanning networks to identify unauthorized peer-to-
peer (``P2P'') file sharing applications and other unauthorized 
applications operating on the networks or blocking installation of such 
programs; and (5) use reasonable methods to prevent, detect, and 
investigate unauthorized access to personal information on its 
networks, such as by adequately logging network activity and inspecting 
outgoing transmissions to the Internet to identify unauthorized 
disclosures of personal information.
    The complaint alleges that as a result of these failures, an EPN 
employee was able to install a P2P application on her desktop computer, 
which was connected to EPN's computer network, resulting in two files 
containing personal information about a client's customers being made 
available on a P2P network; other files containing personal information 
may also have been shared to P2P networks from that computer. The 
breached files contained personal information about approximately 3,800 
consumers, including each consumer's name, address, date of birth, 
Social Security number, employer name, employer address, health 
insurance number, and a diagnosis code. The complaint alleges that such 
information, among other things, can easily be used to facilitate 
identity theft (which also could result in medical histories that are 
inaccurate because they include the medical records of identity 
thieves) and exposes sensitive medical data.
    In fact, the presence of P2P software on business computers can 
pose significant data security risks. A 2010 FTC examination of P2P-
related breaches uncovered a wide range of sensitive consumer data 
available on P2P networks, including health-related information, 
financial records, and drivers' license and Social Security numbers. 
See Press Release, FTC, Widespread Data Breaches Uncovered by FTC Probe 
(Feb. 22, 2010), https://www.ftc.gov/opa/2010/02/p2palert.shtm. Files 
shared to a P2P network are available for viewing or downloading by any 
computer user with access to the network. Generally, a file that has 
been shared cannot be removed permanently from the P2P network. In 
addition, files can be shared among computers long after they have been 
deleted from the original source computer.
    According to the complaint, EPN's failure to employ reasonable and 
appropriate measures to prevent unauthorized access to personal 
information caused, or is likely to cause substantial injury to 
consumers that is not offset by countervailing benefits to consumers or 
competition and is not reasonably avoidable by consumers. Therefore, 
EPN's practices were, and are an unfair act or practice, in or 
affecting commerce, in violation of Section 5(a) of the Federal Trade 
Commission Act, 15 U.S.C. 45(a).
    The proposed order contains provisions designed to prevent EPN 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, security, confidentiality, and integrity of

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any personal information collected from or about consumers. Part II of 
the proposed order requires EPN to establish, implement, and thereafter 
maintain a comprehensive information security program, including the 
designation of an employee to oversee EPN's security program, employee 
training, and implementation of reasonable safeguards. Part III of the 
order requires EPN to obtain, for a period of twenty years, biennial 
assessments of its information security program from an independent 
third-party professional possessing certain credentials or 
certifications.
    Parts IV through VIII of the proposed order are reporting and 
compliance provisions. Part IV requires EPN 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, EPN 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 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 EPN submit a 
compliance report to the FTC within 90 days, and periodically 
thereafter as requested. Part VIII is a provision ``sunsetting'' the 
order after twenty (20) years, with certain exceptions.
    The purpose of the analysis is to aid 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.
Richard C. Donohue,
Acting Secretary.
[FR Doc. 2012-14369 Filed 6-12-12; 8:45 am]
BILLING CODE 6750-01-P