FTC Orders Mobile Device Maker to Patch Up Its Software Security

by Ifrah PLLC
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Following a public comment period, the Federal Trade Commission recently approved a final order settling charges against mobile device manufacturer HTC America, Inc. HTC develops and manufactures mobile devices based on the Android, Windows Mobile, and Windows Phone operating systems. This case, which focuses on device security, is the FTC’s first case against a device manufacturer.

The FTC alleged that HTC failed to take reasonable steps to secure the software it developed for its smartphones and tablet computers. According to the FTC, HTC’s failures introduced various security flaws that placed consumers’ sensitive information at risk. The FTC’s action against HTC signals the agency’s continued focus on data security and data privacy issues and use of its broad “Section 5” authority, which the FTC has repeatedly asserted against various organizations, including its ongoing litigation with Wyndham Hotels. The HTC case also reiterates the agency’s strong interest in securing mobile networks,[link to blog regarding mobile apps], now that mobile phones, which are full of sensitive contact, financial, and other personal information, have become so prevalent.

Companies may be asking what HTC actually did to warrant this FTC action. The FTC claims that HTC, when customizing the software on mobile devices, failed to provide its staff with sufficient security training, failed to review or test the software on its mobile devices for potential security vulnerabilities, failed to follow commonly accepted secure coding practices, and did not have a process for receiving and addressing vulnerability reports from third parties.

In particular, the FTC asserted that HTC devices potentially permitted malicious applications to send text messages, record audio, and install additional malware onto a consumer’s device, without the user’s consent or even knowledge. These malicious applications allegedly could access financial and medical information and other sensitive information such as a user’s geolocation and text message content.

In particular, in the case of Android devices, the FTC claimed that HTC pre-installed a custom application that could download and install applications outside the normal Android installation process. However, HTC did not include an appropriate permission check code to protect the pre-installed application from installation. Consequently, a third party application could command this pre-installed application to download and install any additional applications onto the device without a user’s knowledge or consent.

The FTC further charged that HTC’s actions actually undermined Android consent mechanisms that, but for HTC’s actions, would have prevented unauthorized access and transmission of sensitive information. The FTC’s complaint alleged that the vulnerabilities have been present on approximately 18.3 million HTC devices running Android. The complaint further alleged that HTC could have prevented these vulnerabilities through readily available, low-cost measures, such as adding a few lines of permission check code when programming its pre-installed applications.

In a precedent-setting remedy, the FTC’s final order requires HTC to develop and release software patches within 30 days of service of the FTC’s final order on HTC. The patches must fix vulnerabilities in millions of HTC’s devices, including every covered device having an operating system version released on or after December 2010. HTC must also establish a comprehensive security program designed to address security risks during the development of HTC devices. The FTC requires the program to include consideration of employee training and management; product design, development and research; secure software design and testing; and review, assessment, and response to third party security vulnerability reports.

Further, HTC must undergo independent security assessments every other year for the next 20 years. Among other requirements, the independent, professional assessment must certify that HTC’s security program operates with sufficient effectiveness to provide reasonable assurance that the security of covered device functionality and the security, confidentiality, and integrity of covered information is protected and has operated during the reporting period. HTC is barred from making false or misleading statements about the security and privacy of consumers’ data on HTC devices.

The FTC’s action against HTC has broad application beyond the mobile device and software marketplace. The agency’s action further solidifies the FTC’s role as the leading enforcer of data security standards. Once again the FTC has demonstrated that it is setting data security standards and will continue to monitor and police the marketplace when it believes companies have not incorporated what it believes are commonly accepted security features or when organizations have failed to take steps to prevent vulnerabilities.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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