FreeLists / networknewsletters / [ECP] Guidance Software Settles FTC Charges

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http://www.washingtonpost.com/wp-dyn/content/article/2006/11/16/AR2006111601339.html

By CHRISTOPHER S. RUGABER
The Associated Press
November 16, 2006

WASHINGTON -- Guidance Software Inc. said Thursday it's settled Federal
Trade Commission charges stemming from a 2005 security failure that
allowed hackers to access the credit card information of thousands of
customers.

Guidance, which makes software used by law enforcement agencies and
corporations to investigate network breaches, failed to take "reasonable
security measures" to protect sensitive customer data and that its
failure to do so "contradicted security promises made on its Web site"
and violated federal law, according to an FTC statement.

The settlement requires the company to implement a comprehensive
information-security program and obtain audits by an independent
third-party security professional every other year for the next 10
years. The settlement also bars the company from misrepresenting its
security measures in the future, the FTC said.

The agency departed from its usual 20-year monitoring period because of
Guidance's cooperation and the "limited nature of the breach," according
to the company.

The settlement agreement involved no financial penalties and did not
constitute an admission of guilt, the privately held company said.

According to the FTC, the company "failed to implement simple,
inexpensive and readily available security measures" to protect its
customers' data. The company, the agency said, also failed to adequately
asses the vulnerability of its network to well-known Web-based attacks
and did not take steps to detect unauthorized access to its consumers'
credit card information.

"In contrast to claims about data security made on Guidance's Web site,
the company created unnecessary risks to credit card information by
permanently storing it in clear readable text," the FTC said.

Pasadena, Calif.-based Guidance said it has taken several steps to boost
its computer security, including hiring a senior director of information
technology and corporate security.

"We will continue with an aggressive approach to information security
and plan to surpass the requirements set forth in our agreement with the
FTC," Guidance Chief Executive John Colbert said.

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