Passport problems could cost Microsoft

Friday, 9 May 2003, 10:08 AM EST

On Thursday, the software giant was scrambling to determine the impact of a flaw in the password reset feature of its Passport identity service. The vulnerability could have allowed attackers armed only with a Passport user's e-mail address to access information such as the user's name, address and credit card number.

For a company that has publicly made security a priority, the Passport problem was a serious setback. But the damage to the company could run to more than just bad public relations.

Last August, Microsoft signed a consent decree promising the Federal Trade Commission that it would not make false statements about the security and privacy protections in its Passport service and that it would improve those protections. While the FTC doesn't comment on potential investigations, the agency does look into questions regarding a company's compliance with agreements.

"Under our order, they need to take reasonable and appropriate steps and safeguards," said Jessica Rich, assistant director for the financial practices division of the FTC. "Obviously, there is not a standard that says if something went wrong, they are in violation of the order. But we will assess whether the steps that were taken were reasonable."

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