settles with FTC

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Updated Monday, Feb. 9, 2009 at 1:56 p.m. EST

An online computer supplies and electronics retailer agreed to settle Federal Trade Commission (FTC) charges that it violated federal law by not providing adequate security to protect customer data, the agency announced Thursday in a statement.

The settlement prohibits the Compgeeks, which does business as Computer Geeks Discount Outlet and, and its parent company, Genica, from making deceptive privacy and data security claims, according to the FTC.

The settlement also requires the company to implement and maintain an information security program that includes administrative, technical and physical safeguards. The firm must also be audited every other year for 10 years, the FTC said in a statement.

The company was involved in a data breach when hackers accessed the sensitive information of hundreds of customers in repeated SQL injection attacks that occurred from about January 2007 until June 2007. The company did not become aware of the breach until that December.

The FTC alleges that the respondents, “did not adequately assess whether their web application and network were vulnerable to commonly known or reasonably foreseeable attacks.” The company did not implement the appropriate defenses to common web attacks, even though the defenses were readily available and inexpensive or free, the statement says.

The company violated federal law by claiming they took the appropriate security measures stated in its privacy policy: “We use secure technology, privacy protection controls, and restrictions on employee access in order to safeguard your information.”

Peter Green, director of marketing at Genica, told Monday that he cannot comment on the specific security measures the company has undertaken since the breach but said it is working with experts and the FTC to improve security and comply with FTC requests.

Once the company became aware of the breach, letters were sent to affected individuals and a toll-free number was established.

“The fact of the matter is that someone hacked into our system and stole our customer's information,” Green said. “It's not to be taken lightly and we haven't taken it lightly. We take it very seriously.”

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