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Electronics Firm Faces FTC Lawsuit Following Multiple Hacks

Federal case says Compgeeks didn't do enough to prevent well-known SQL injection attacks

Warning to security professionals: If you don't do your job right, then it might not only be a firing offense -- it might be a federal offense.

Case in point: An online seller of computer supplies and other consumer electronics today agreed to settle Federal Trade Commission (FTC) charges that it violated federal law by failing to provide reasonable security to protect sensitive customer data. The FTC is charging that the company didn't do enough to prevent SQL injection attacks that compromised customer data.

According to the FTC's complaint, Compgeeks.com (Compgeeks), which operates the Geeks.com Web site, and its parent company, Genica, collect sensitive information from consumers to obtain authorization for credit card purchases. The Geeks.com site requires each consumer to provide his or her personal information, credit card data, and security code, the FTC noted. In January 2008, media reports revealed a data breach at the company. It was later confirmed that hackers accessed the sensitive information of hundreds of consumers.

The complaint alleges that until at least December 2007, Compgeeks routinely stored this sensitive information in unencrypted text on its corporate computer network, among other security failures. The complaint also charges that the respondents did not adequately assess whether its Web application and network were vulnerable to commonly known or reasonably foreseeable attacks, such as SQL injection.

Compgeeks did not implement simple, readily available, and inexpensive defenses to these attacks, according to the FTC. The company also "failed to employ reasonable measures to detect and prevent unauthorized access to personal information, such as by logging or employing an intrusion detection system," the complaint alleges.

From January 2007 or earlier until June 2007 or later, hackers repeatedly exploited these vulnerabilities by using SQL injection attacks on the Geeks.com Web site, the complaint says. Compgeeks did not become aware of the breach until December 2007.

The proposed settlement bars Compgeeks from making deceptive privacy and data security claims, and requires the company to implement and maintain a comprehensive information-security program that includes administrative, technical, and physical safeguards. It also requires the company to obtain, every other year for 10 years, an audit from a qualified, independent, third-party professional to ensure that the security program is complying with the order.

The FTC complaint names as respondents Compgeeks, doing business as Computer Geeks Discount Outlet and Geeks.com; and Genica, which, as Compgeeks' parent company allegedly controlled the security practices. According to the complaint, the respondents violated federal law by falsely stating that they took reasonable and appropriate measures to protect personal information from unauthorized access. Their privacy policy states, in part: "We use secure technology, privacy protection controls, and restrictions on employee access in order to safeguard your information."

The Commission vote to accept the proposed complaint and consent agreement was 4-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through March 9, 2009, after which the Commission will decide whether to make it final.

Have a comment on this story? Please click "Discuss" below. If you'd like to contact Dark Reading's editors directly, send us a message Tim Wilson is Editor in Chief and co-founder of Dark Reading.com, UBM Tech's online community for information security professionals. He is responsible for managing the site, assigning and editing content, and writing breaking news stories. Wilson has been recognized as one ... View Full Bio

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