E8-5090. Goal Financial, LLC; Analysis of Proposed Consent Order to Aid Public Comment

AGENCY:

Federal Trade Commission.

ACTION:

Proposed Consent Agreement.

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 draft 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 3, 2008

ADDRESSES:

Interested parties are invited to submit written comments. Comments should refer to “Goal Financial, File No. 072 3013,” 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 135-H, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Comments containing confidential material must be filed in paper form, must be clearly labeled “Confidential,” and must comply with Commission Rule 4.9(c). 16 CFR 4.9(c) (2005).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 that do not contain any nonpublic information may instead be filed in electronic form by following the instructions on the web-based form at http://secure.commentworks.com/​ftc-GoalFinancial. To ensure that the Commission considers an electronic comment, you must file it on that web-based form.

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 website, to the extent practicable, at 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 website. 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.

FOR FURTHER INFORMATION CONTACT:

Jessica Rich, FTC Bureau of Consumer Protection, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580, [phone].

SUPPLEMENTARY INFORMATION:

Pursuant to section 6(f) of the Federal Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and § 2.34 of the Commission Rules of Practice, 16 CFR 2.34, 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, 2008), on the World Wide Web, at http://www.ftc.gov/​os/​2008/​03/​index.htm. A paper copy can be obtained from the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580, either in person or by calling [phone].

Public comments are invited, and may be filed with the Commission in either paper or electronic form. All comments should be filed as prescribed in the ADDRESSES section above, and must be received on or before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order to Aid Public Comment

The Federal Trade Commission has accepted, subject to final approval, a consent agreement from Goal Financial, LLC (“Goal Financial”).

The proposed consent order 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.

Goal Financial markets and originates a variety of student loans and provides loan-related services. In conducting its business, Goal Financial routinely obtains personal information from loan applications and other sources, including name, address, telephone number, driver’s license number, Social Security number, date of birth, and income, debt, and employment information. Goal Financial, therefore, is a “financial institution” subject to the requirements of the Gramm-Leach-Bliley (“GLB”) Safeguards Rule and Privacy Rule. This matter concerns Goal Financial’s alleged violations of the GLB Safeguards Rule, the GLB Privacy Rule, and Section 5 of the Federal Trade Commission (“FTC”) Act.

The Commission’s proposed complaint alleges that Goal Financial engaged in a number of practices that, taken together, failed to employ reasonable and appropriate security measures to protect personal information. In particular, Goal Financial failed: (1) to assess adequately risks to the information it collected and stored in its paper files and on its computer network; (2) to restrict adequately access to personal information stored in its paper files and on its computer network to authorized employees; (3) to implement a comprehensive information security program, including reasonable policies and procedures in key areas such as the collection, handling, and disposal of personal information; (4) to provide adequate training to employees about handling and protecting personal information and responding to security incidents; and (5) in a number of instances to require third-party service providers by contract to protect the security and confidentiality of personal information. As a result of these alleged failures, Goal Financial put at risk the sensitive information of more than 41,000 consumers.

The complaint alleges that these security failures violated the GLB Safeguards Rule. In addition, the complaint alleges that Goal Financial misrepresented that it implemented reasonable and appropriate security measures to protect personal information from unauthorized access, in violation of Section 5 of the FTC Act. Further, the proposed complaint alleges that Goal Financial disseminated a privacy policy that does not accurately reflect its privacy practices, including its security policies and practices, in violation of the GLB Privacy Rule.

The proposed order applies to personal information Goal Financial collects from or about consumers in connection with its student loan and related services and contains provisions designed to prevent Goal Financial from engaging in the future in practices similar to those alleged in the complaint.

Part I of the proposed order requires that Goal Financial not misrepresent the extent to which it maintains and protects the privacy, confidentiality, or integrity of any personal information collected from or about consumers.

Part II of the proposed order requires Goal Financial to establish and maintain a comprehensive information security program in writing that is reasonably designed to protect the security, confidentiality, and integrity of personal information it collects from or about consumers. The security program must contain administrative, technical, and physical safeguards appropriate to its size and complexity, the nature and scope of its activities, and the sensitivity of the personal information collected. Specifically, the order requires Goal Financial to:

1. Designate an employee or employees to coordinate and be accountable for the information security program.

2. Identify material internal and external risks to the security, confidentiality, and integrity of consumer information that could result in unauthorized disclosure, misuse, loss, alteration, destruction, or other compromise of such information, and assess the sufficiency of any safeguards in place to control these risks.

3. Design and implement reasonable safeguards to control the risks identified through risk assessment, and regularly test or monitor the effectiveness of the safeguards’ key controls, systems, and procedures.

4. Develop and use reasonable steps to retain service providers capable of appropriately safeguarding personal information they receive from Goal Financial, require service providers by contract to implement and maintain appropriate safeguards, and monitor their safeguarding of personal information.

5. Evaluate and adjust its information security program in light of the results of testing and monitoring, any material changes to its operations or business arrangements, or any other circumstances that it knows or has reason to know may have a material impact on the effectiveness of its information security program.

Part III of the proposed order requires that Goal Financial not violate any provision of the GLB Safeguards Rule and Privacy Rule.

Part IV of the proposed order requires that Goal Financial obtain, within 180 days after being served with the final order approved by the Commission, and on a biennial basis thereafter for ten (10) years, an assessment and report from a qualified, objective, independent third-party professional, certifying that: (1) Goal Financial has in place a security program that provides protections that meet or exceed the protections required by Parts II and IIIA of the proposed order, and (2) its security program is operating with sufficient effectiveness to provide reasonable assurance that the security, confidentiality, and integrity of nonpublic personal information has been protected. This provision is substantially similar to comparable provisions obtained in prior Commission orders under the Safeguards Rule and Section 5 of the FTC Act.

Parts V through IX of the proposed order are reporting and compliance provisions. Part V requires Goal Financial to retain documents relating to its compliance with the order. For most records, the order requires that the documents be retained for a five-year period. For the third-party assessments and supporting documents, Goal Financial must retain the documents for a period of three years after the date that each assessment is prepared. Part VI requires dissemination of the order now and in the future to persons with responsibilities relating to the subject matter of the order. Part VII ensures notification to the FTC of changes in company status. Part VIII mandates that Goal Financial submit an initial compliance report to the FTC, and make available to the FTC subsequent reports. Part IX 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.

Footnotes

1. 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).