Guidance Software Settles FTC Charges for Security Breach

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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