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Petco settles with FTC over cyber security gaffe

Sentenced to 20 years' maximum security

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Pet supply retailer Petco Animal Supplies Inc. will be on a short cybersecurity leash for the next 20 years to settle a Federal Trade Commission action over a security hole on its e-commerce site that may have left as many as 500,000 customer credit card numbers exposed to hackers.

The settlement stems from an incident first reported by SecurityFocus in June of last year, when then 20-year-old independent programmer Jeremiah Jacks discovered that Petco.com suffered from an SQL injection vulnerability that left its database open to anyone able to construct a specially-crafted URL.

SecurityFocus notified Petco of Jacks' discovery, and the company immediately blocked access to the vulnerable web page. The company worked over a weekend to close the hole, and said it had hired a computer security consultant to assist in an audit of the site. Jacks also co-operated with Petco, which said at the time that it found no evidence that anyone previously exploited the hole, which, according to the FTC, had been present since the site's launch in February 2001.

The episode prompted an FTC investigation into alleged deceptive trade practices by Petco, based on the company's privacy policy, which was sprinkled with such reassurances as: "At PETCO.com, protecting your information is our number one priority, and your personal information is strictly shielded from unauthorized access." Under the terms of the settlement announced Wednesday, Petco is prohibited from misrepresenting the extent to which it protects the security of customers' personal information. The company must also establish and maintain a comprehensive information security program, certified by an independent professional every two years for the 20-year life of the order. Any violation can trigger an $11,000 fine.

"Petco is committed to keeping all customer information obtained through our website and stores private and secure, and we have taken - and will continue to take - necessary measures to achieve that goal," the company said in a statement Wednesday. "The agreement we've entered into with the Federal Trade Commission is neither an admission of any violation of law nor that facts in the FTC draft complaint are true."

Programmer's second case

The Petco probe is the FTC's fifth cybersecurity case, and the second for which Jacks can take credit. In February 2002 Jacks discovered a similar SQL injection hole at the website of fashion-retail Guess that exposed, at his count, over 200,000 credit card numbers with corresponding names and expiration dates. Jacks co-operated with the FTC in the resulting investigation, which settled last year under terms nearly identical to the Petco case.

Jacks found Petco vulnerable after a print journalist reporting on the Guess settlement asked him how prevalent SQL injection holes were on the Internet, prompting the young coder to check a few other large e-commerce sites for similar bugs, he says. He says the accessible Petco database contained 500,000 credit card entries. Neither Petco nor the FTC have commented on the number of cards that were at risk.

Jacks, now 22, lives in Orange County, California, working on programming projects for area internet firms and learning the ropes of e-commerce. "Eventually, I do want to fall into security, but I want to be well-rounded," he says. He believes SQL injection vulnerabilities remain widespread, but says he isn't interested in sparking any more federal investigations into Fortune 500 companies. "I don't want to have any legal trouble. I don't need that in my life right now."

Perhaps wary of appearing aligned with hackers, the FTC has not acknowledged Jacks' role in building the commission's cyber security caseload.

The FTC stepped into the business cyber security arena in 2002, when it won a consent decree against Eli Lilly for the inadvertent disclosure of the e-mail addresses of 669 Prozac users. Since then it's won settlements from Microsoft, Guess, and Tower Records, all based on security breaches that appeared at odds with claims made in company privacy policies.

FTC attorney Alan Sheer says the commission has no way to gauge if the cases are making a difference: "Certainly we hope that firms are paying attention to the actions that we're taking and are making appropriate changes to their practices."

Copyright © 2004, SecurityFocus logo

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