[Federal Register: March 14, 2005 (Volume 70, Number 48)]
[Notices]
[Page 12487-12489]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14mr05-77]
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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 http://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 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 (``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