Oct 272012
 
 October 27, 2012  Breaches, Business, Featured News, Govt

From the FTC:

Following a public comment period, the Federal Trade Commission has accepted as final settlements with two operations it charged with illegally exposing the sensitive personal information of thousands of consumers by allowing peer-to-peer file-sharing software to be installed on their corporate computer systems.  Settlements with Utah-based debt collector EPN, Inc., and Georgia auto dealer Franklin Budget Car Sales, Inc., will bar misrepresentations about the privacy, security, confidentiality, and integrity of any personal information collected from consumers.  Both companies also must establish and maintain comprehensive information security programs.

Franklin Budget Car Sales also dba Franklin Toyota/Scion  and Franklin Toyota.  According to the complaint, as a result of Franklin’s failure to implement adequate privacy and security policies and practices:

customers’ personal information was accessed and disclosed on peer-to-peer (“P2P”) networks by a P2P application installed on a computer that was connected to respondent’s computer network.

Information for approximately 95,000 consumers, including, but not limited to, names, Social Security numbers, addresses, dates of birth, and drivers’ license numbers (“customer files”) was made available on a P2P network. Such information can easily be misused to commit identity theft and fraud.

Debt collection business EPN also dba Checknet, Inc. , and their clients include hospitals and medical providers. In their case, the complaint alleges that as a result of their failure to implement adequate security policies and practices:

EPN’s chief operating officer was able to install a P2P application on her desktop computer, which was connected to EPN’s computer network. Respondent is unaware of the date the application was installed; it was disabled in April 2008 when EPN was informed by a client that two files containing personal information about the client’s debtors were available on a P2P network (“breached files”). EPN had no business need for the P2P application.

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. 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.

The affected hospital was not named in the complaint, and there is no entry in HHS’s breach tool that appears to correspond to this breach.

Significantly, I do not see any allegations that the breaches or exposure actually resulted in ID theft or harm to consumers, but the potential for harm was certainly there and the FTC took the position that these were unfair business practices under the FTC Act. The message, again, is that if you have boilerplate policies that assure consumers of privacy and data security, you’d better live up to them. And if you don’t have policies and practices in place that conform to requirements for annual privacy notices and assessments, etc., you’d better put them in place.

In both cases, the businesses were put under 20-year monitoring and reporting plans but, consistent with the law and available remedies, there is no monetary fine (FTC cannot fine entities for first offenses). The consent decrees also contain no admission of guilt or wrong-doing.

Related Files:

In the Matter of Franklin’s Budget Car Sales, Inc., also doing business as Franklin Toyota/Scion
FTC File No. 102 3094

In the Matter of EPN, Inc., also doing business as Checknet, Inc.
FTC File No. 112 3143

Sorry, the comment form is closed at this time.