[Federal Register: April 28, 2004 (Volume 69, Number 82)]
[Notices]
[Page 23205-23207]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28ap04-69]
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FEDERAL TRADE COMMISSION
[File No. 032-3209]
MTS, Inc., d/b/a Tower Records/Books/Video, and Tower Direct LLC,
d/b/a TowerRecords.com; Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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[[Page 23206]]
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 that accompanies the consent agreement 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 May 21, 2004.
ADDRESSES: Comments should refer to ``MTS, Inc., d/b/a Tower Records/
Books/Video, et al., File No. 032 3209,'' 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.
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 http://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 http://www.ftc.gov/ftc/privacy.htm
.
FOR FURTHER INFORMATION CONTACT: Laura Mazzarella or 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 2.34
of the Commission's 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 April 21, 2004), on the World Wide Web, at http://www.ftc.gov/os/2004/04/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 May 21, 2004. Comments should refer to ``MTS, Inc., d/b/a
Tower Records/Books/Video, et al., File No. 032 3209,'' 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 http://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 http://www.ftc.gov/ftc/privacy.htm
.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission has accepted a consent agreement,
subject to final approval, from MTS, Inc., and Tower Direct, LLC
(``Tower''). Tower sells music and video recordings, books, and other
entertainment products through retail stores and its Web site,
TowerRecords.com.
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 other appropriate action or make
final the agreement's proposed order.
This matter concerns alleged representations about the security of
personal information collected online through TowerRecords.com, Tower's
online store. According to the Commission's complaint, Tower offers its
online customers an order status page that allows customers to confirm
their orders and view their order information. In December 2002, Tower
redesigned the ``check out'' portion of its Web site, including the
order status page. As alleged in the Commission's complaint, the
redesigned version of the order status page contained a security flaw
that allowed any user of the site that entered a valid order number to
view the personal identifying information and order history of the
Tower customer who placed the order, including name, email address,
billing address, shipping address, telephone number, and items ordered
since 1996.
The complaint charges that Tower falsely represented that it
implemented reasonable and appropriate measures to protect the privacy
and confidentiality of personal information. In particular, the
complaint alleges that Tower failed
[[Page 23207]]
to implement procedures that were reasonable and appropriate to detect
and prevent vulnerabilities in its Web site, including reasonable and
appropriate procedures for writing and revising Web-application code.
The proposed order applies to Tower's collection and storage of
personal information from or about consumers in connection with its
online business. It contains provisions designed to prevent Tower from
future engagement in practices similar to those alleged in the
complaint. The proposed order is substantially similar to the orders
obtained by the Commission in the cases of Eli Lilly, Inc., FTC Docket
No. C-4047 (May 8, 2002); Microsoft Corp., FTC Docket No. C-4069 (Dec.
20, 2002); and Guess, Inc., FTC Docket No. C-4091 (July 30, 2003).
Part I of the proposed order prohibits Tower, in connection with
the online advertising, marketing, promotion, offering for sale, or
sale of any product or service, from misrepresenting the extent to
which it maintains and protects the privacy, confidentiality, or
security of any personal information collected from or about consumers.
Part II of the proposed order requires Tower to establish and
maintain a comprehensive information security program in writing that
is reasonably designed to protect the security, confidentiality, and
integrity of personal information collected from or about consumers.
The security program must contain administrative, technical, and
physical safeguards appropriate to Tower'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 Tower 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. At a minimum, this risk assessment must include consideration of
risks in each area of relevant operation.
Design and implement reasonable safeguards to
control the risks identified through risk assessment, and regularly
test or monitor the effectiveness of the safeguards' key controls,
systems, and procedures.
Evaluate and adjust its information security
program in light of the results of testing and monitoring, any material
changes to its operations or business arrangements, or any other
circumstances that Tower knows or has reason to know may have material
impact on its information security program.
Part III of the proposed order requires that Tower obtain within
one year, and on a biannual basis thereafter for ten (10) years, an
assessment and report from a qualified, objective, independent third-
party professional, certifying that: (1) Tower has in place a security
program that provides protections that meet or exceed the protections
required by Part II of this order; and (2) Tower'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.
Parts IV through VII of the proposed order are reporting and
compliance provisions. Part IV requires Tower to retain documents
relating to compliance. For most records, the order requires that the
documents be retained for a five-year period. For the assessments and
supporting documents, Tower must retain the documents for 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 Tower submit compliance reports to the FTC. Part VIII
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. 04-9639 Filed 4-27-04; 8:45 am]
BILLING CODE 6750-01-P