Federal Trade Commission v. D-Link Corporation et al
Filing
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Administrative Motion to File Under Seal filed by Federal Trade Commission. (Attachments: # 1 Declaration, # 2 Proposed Order, # 3 Exhibit Redacted Complaint, # 4 Exhibit Unredacted Complaint, # 5 Certificate/Proof of Service)(Tully, Cathlin) (Filed on 1/5/2017)
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DAVID SHONKA
Acting General Counsel
LAURA D. BERGER (FL Bar No. 11762)
Federal Trade Commission
901 Market Street, Suite 570
San Francisco, CA 94103
P: (202) 326-2471/F: (415) 848-5184
lberger@ftc.gov;
KEVIN H. MORIARTY (DC Bar No. 975904)
CATHLIN TULLY (NY Bar)
Federal Trade Commission
600 Pennsylvania Ave N.W.
Washington, DC 20580
P: (202) 326-3644/F: (202) 326-3062
kmoriarty@ftc.gov; ctully@ftc.gov
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Attorneys for Plaintiff Federal Trade Commission
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
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____________________________________
FEDERAL TRADE COMMISSION,
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Plaintiff,
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v.
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D-LINK CORPORATION
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and
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D-LINK SYSTEMS, INC.,
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corporations,
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Defendants.
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___________________________________ )
Case No. ______________________
COMPLAINT FOR
PERMANENT INJUNCTION AND
OTHER EQUITABLE RELIEF
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1.
Plaintiff, the Federal Trade Commission (“FTC”), for its Complaint, brings this
action under Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C.
COMPLAINT
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§ 53(b), to obtain permanent injunctive relief and other equitable relief against Defendants for
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engaging in unfair or deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15
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U.S.C. § 45(a), in connection with Defendants’ failure to take reasonable steps to secure the
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routers and Internet-protocol cameras they designed for, marketed, and sold to United States
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consumers.
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JURISDICTION AND VENUE
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This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a),
and 1345, and 15 U.S.C. §§ 45(a) and 53(b).
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Venue in the Northern District of California is proper under 28 U.S.C. § 1391(b)
and (c) and 15 U.S.C. § 53(b).
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PLAINTIFF
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The FTC is an independent agency of the United States Government created by
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statute. 15 U.S.C. §§ 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a),
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which prohibits unfair or deceptive acts or practices in or affecting commerce.
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The FTC is authorized to initiate federal district court proceedings, by its own
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attorneys, to enjoin violations of the FTC Act and to secure such other equitable relief as may be
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appropriate in each case. 15 U.S.C. §§ 53(b), 56(a)(2)(A).
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DEFENDANTS
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Defendant D-Link Corporation (“D-Link”) is a Taiwanese corporation with its
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principal office or place of business at No. 289, Xinhu 3rd Rd., Neihu District, Taipei City,
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Taiwan 114. D-Link transacts or has transacted business in this district and throughout the
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United States. At all times material to this Complaint, acting alone or in concert with others, D-
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Link purposefully directed its activities to the United States by designing, developing, marketing,
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and manufacturing routers, Internet-protocol (“IP”) cameras, and related software and services,
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intended for use by consumers throughout the United States.
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Defendant D-Link Systems, Inc., (“DLS”) is a California corporation with its
principal office or place of business at 17595 Mt. Herrmann St., Fountain Valley, California
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92708. DLS transacts or has transacted business in this district and throughout the United States.
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At all times material to this Complaint, acting alone or in concert with others, DLS has
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advertised, marketed, distributed, or sold routers, IP cameras, and related software and services,
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intended for use by consumers throughout the United States. The Chairman of DLS’s Board of
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Directors has served as D-Link’s Chief Executive Officer and the two entities have coordinated
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closely regarding the security of Defendants’ routers and IP cameras.
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The FTC’s claims against D-Link and DLS arise from or relate to Defendants’
acts or practices aimed at or taking place in the United States.
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COMMERCE
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At all times material to this Complaint, Defendants have maintained a substantial
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course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act,
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15 U.S.C. § 44.
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DEFENDANTS’ BUSINESS PRACTICES
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D-Link is a hardware device manufacturer that designs, develops, markets, and
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manufactures networking devices, including devices with core functions that relate to security,
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such as consumer routers and IP cameras. D-Link designs, develops, and manufactures these
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products, their marketing materials, and related software and services for distribution or sale to
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United States consumers through its subsidiary, DLS.
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When releasing new software for such
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routers and IP cameras, D-Link uses a digital signature issued in its name, known as a “private
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key,” to sign the software, in order to assure entities, such as browsers and operating systems,
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that the software comes from an authentic or “trusted” source and is not malware.
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DLS is a subsidiary of D-Link and is nearly 98% owned by D-Link and its
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holding company, D-Link Holding Company, Ltd. DLS provides marketing and after-sale
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services integral to D-Link’s operations, including by marketing and acting as the sole
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distributor of Defendants’ routers and IP cameras throughout the United States.
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Among other services, DLS acts as the primary point-of-contact for
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problems that United States consumers have with Defendants’ routers, IP cameras, or related
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software and services;
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DLS also assists in notifying
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United States consumers about the availability of security updates through means such as
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DLS’s websites.
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Defendants have provided software applications that enable users to access their
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routers and IP cameras from a mobile device (“mobile apps”), including a free “mydlink Lite”
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mobile app. Defendants designed the mydlink Lite app to require the user to enter a user name
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and password (“login credentials”) the first occasion that a user employs the app on a particular
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mobile device. After that first occasion, the app stores the user’s login credentials on that
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mobile device, keeping the user logged into the mobile app on that device.
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DEFENDANTS’ ROUTERS
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Defendants’ routers, like other routers, operate to forward data packets along a
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network. In addition to routing network traffic, they typically play a key role in securing
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consumers’ home networks, functioning as a hardware firewall for the local network, and
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acting as the first line of defense in protecting consumer devices on the local network, such as
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computers, smartphones, IP cameras, and other connected appliances, against malicious
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incoming traffic from the Internet.
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DEFENDANTS’ IP CAMERAS
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Defendants’ IP cameras, akin to many such IP cameras, play a key security role
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for consumers, by enabling consumers to monitor private areas of their homes or businesses, to
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detect any events that may place the property or its occupants at risk. In many instances,
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Defendants offer them as a means to monitor the security of a home while consumers are away,
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COMPLAINT
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or to monitor activities within the household, including the activities of young children, while a
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consumer is at home. Consumers seeking to monitor the security of their homes or the safety
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of young children may access live video and audio feeds (“live feeds”) from their cameras over
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the Internet, using a mobile device or other computer.
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DEFENDANTS’ SECURITY FAILURES
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Defendants have failed to take reasonable steps to protect their routers and IP
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cameras from widely known and reasonably foreseeable risks of unauthorized access, including
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by failing to protect against flaws which the Open Web Application Security Project has ranked
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among the most critical and widespread web application vulnerabilities since at least 2007.
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Among other things:
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a. Defendants repeatedly have failed to take reasonable software testing and
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remediation measures to protect their routers and IP cameras against well-
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known and easily preventable software security flaws, such as “hard-coded”
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user credentials and other backdoors, and command injection flaws, which
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would allow remote attackers to gain control of consumers’ devices;
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b. Defendant D-Link has failed to take reasonable steps to maintain the
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confidentiality of the private key that Defendant D-Link used to sign
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Defendants’ software, including by failing to adequately restrict, monitor, and
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oversee handling of the key, resulting in the exposure of the private key on a
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public website for approximately six months; and
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c. Defendants have failed to use free software, available since at least 2008, to
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secure users’ mobile app login credentials, and instead have stored those
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credentials in clear, readable text on a user’s mobile device.
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THOUSANDS OF CONSUMERS AT RISK
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As a result of Defendants’ failures, thousands of Defendants’ routers and
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cameras have been vulnerable to attacks that subject consumers’ sensitive personal
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information and local networks to a significant risk of unauthorized access. In fact, the press
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COMPLAINT
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has reported that Defendants’ routers and cameras have been vulnerable to a range of such
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attacks and have been compromised by attackers, including by being made part of large scale
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networks of computers infected by malicious software, known as “botnets.”
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The risk that attackers would exploit these vulnerabilities to harm consumers was
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significant. In many instances, remote attackers could take simple steps, using widely available
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tools, to locate and exploit Defendants’ devices, which were widely known to be vulnerable. For
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example, remote attackers could search for vulnerable devices over the Internet and obtain their
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IP addresses using readily available tools, such as a popular search engine that can locate devices
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running particular software versions or operating in particular locations. Alternatively, attackers
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could use readily accessible scanning tools to identify vulnerable devices operating in particular
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areas or on particular networks. In many instances, an attacker could then take simple steps to
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exploit vulnerabilities in Defendants’ routers and IP cameras, impacting not only consumers who
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purchased these devices, but also other consumers, who access the Internet in public or private
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locations served by the routers or who visit locations under the IP cameras’ surveillance.
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By creating these vulnerabilities, Defendants put consumers at significant risk of
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harm in a variety of ways. An attacker could compromise a consumer’s router, thereby obtaining
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unauthorized access to consumers’ sensitive personal information. For example, using a
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compromised router, an attacker could re-direct consumers seeking a legitimate financial site to a
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spoofed website, where they would unwittingly provide the attacker with sensitive financial
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account information. Alternatively, using a compromised router, an attacker could obtain
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consumers’ tax returns or other files stored on the router’s attached storage device or could use
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the router to attack other devices on the local network, such as computers, smartphones, IP
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cameras, or connected appliances. Similarly, by exploiting the vulnerabilities described in
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Paragraph 15, an attacker could compromise a consumer’s IP camera, thereby monitoring
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consumers’ whereabouts to target them for theft or other criminal activity or to observe and
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record over the Internet their personal activities and conversations or those of their young
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children. In many instances, attackers could carry out such exploits covertly, such that
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COMPLAINT
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consumers would have no reason to know that an attack was ongoing. Finally, during the time
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Defendant D-Link’s private key was available on a public website, consumers seeking to
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download legitimate software from Defendants were at significant risk of downloading malware,
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signed by malicious actors using D-Link’s private key.
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DEFENDANTS’ SECURITY STATEMENTS
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Defendants have disseminated or caused to be disseminated to consumers
statements regarding the security of their products, including their routers and IP cameras.
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SECURITY EVENT RESPONSE POLICY
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From approximately December 2013 until early September 2015, after highly-
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publicized security flaws were found to affect many of its products, Defendant DLS posted a
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Security Event Response Policy on its product support webpage,
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http://support.dlink.com/securityadvisories.aspx, in the general form of Exhibit 1. Within
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its Security Event Response Policy, under a bolded heading “D-Link’s commitment to Product
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Security,” Defendant DLS stated:
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D-Link prohibits at all times, including during product development by D-Link or its
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affiliates, any intentional product features or behaviors which allow unauthorized access
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to the device or network, including but not limited to undocumented account
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credentials, covert communication channels, ‘backdoors’ or undocumented traffic
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diversion. All such features and behaviors are considered serious and will be given the
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highest priority.
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PROMOTIONAL CLAIMS
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Defendants highlight their routers’ security features in a wide range of materials
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available on Defendant DLS’s website, including user manuals and promotional brochures,
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which describe these features alongside language that specifically references the device’s
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“security”. Such materials include, but are not limited to, brochures in the general form of
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Exhibits 2-5, which state:
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COMPLAINT
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a. Under a bolded, italicized, all-capitalized heading, “EASY TO SECURE,” that
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the router:
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supports the latest wireless security features to help prevent unauthorized
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access, be it from over a wireless network or from the Internet. Support for
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WPATM and WPA2TM standards ensure that you will be able to use the best
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possible encryption, regardless of your client devices. In addition [the router]
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utilizes dual active firewalls (SPI and NAT) to prevent potential attacks from
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across the Internet.
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Delivering great wireless performance, network security and coverage [the
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router] is ideal for upgrading your existing wireless network. (See PX 2).
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b.
Under a bolded, italicized, all-capitalized heading, “ADVANCED NETWORK
SECURITY,” that the router:
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ensures a secure Wi-Fi network through the use of WPA/WPA2 wireless
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encryption. Simply press the WPS button to quickly establish a secure
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connection to new devices. The [router] also utilizes dual-active firewalls
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(SPI and NAT) to prevent potential attacks and intrusions from across the
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Internet. (See PX 3).
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c. Under a bolded heading, “Advanced Network Security,” that the router:
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supports the latest wireless security features to help prevent unauthorized
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access, be it from over a wireless network or from the Internet. Support for
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WPATM and WPA2TM standards ensure that you will be able to use the best
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possible encryption method. In addition, this [router] utilizes Stateful Packet
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Inspection Firewalls (SPI) to help prevent potential attacks from across the
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Internet. (See PX 4).
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d. Under a heading “128-bit Security Encryption,” that the router:
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protects your network with 128-bit AES data security encryption – the same
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technology used in E-commerce or online banking. Create your own network
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COMPLAINT
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name and password or put it at the tip of your fingers with ‘Push Button
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Security’ standard on every Amplifi device. With hassle-free plug and play
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installation, and advanced Wi-Fi protected setup, the [router] is not only one
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of the fastest routers available, its [sic] also one of the safest. (See PX 5).
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Defendants highlight the security of their IP cameras in a wide range of
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materials available on Defendant DLS’s website, including user manuals and promotional
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brochures, which describe these features alongside language that specifically references the
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device’s “security”. Such materials include, but are not limited to, brochures in the general
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form of Exhibit 6, which display the word “SECURITY” in large, capital letters, in a vividly-
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colored footer across the bottom of each page. (See PX 6). In addition, Defendants have
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designed their IP camera packaging, including in the general form of Exhibit 7, to display
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security-related terms. Such terms include the words “secure connection,” next to a lock icon,
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among the product features listed on the side of the box (see PX 7).
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INTERACTIVE SECURITY FEATURES
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Defendants’ routers offer numerous security features that Defendants present
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alongside instructions that specifically reference the device’s “security”. In particular, in many
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instances, to begin using the router, users must access a graphical user interface (hereinafter,
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“Defendants’ router GUI”), in the general form of Exhibits 8 and 9, which includes
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instructions, such as:
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a. “To secure your new networking device, please set and verify a password
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below” (see PX 8); and
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“It is highly recommended that you create a password to keep your router
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secure.” (See PX 9).
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Defendants’ IP cameras offer numerous security features that Defendants
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present alongside language that specifically references the device’s “security”. In particular, to
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begin using the camera, in many instances, users must access a GUI (hereinafter “Defendants’
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IP camera GUI”), in the general form of Exhibits 10 and 11, which include language, such as:
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COMPLAINT
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a. instructions to “Set up an Admin ID and Password” or “enter a password” in
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order “to secure your camera” (see PX 10); and
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b. security-related banners, including, but not limited to, the words “SECURICAM
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Network,” alongside a lock icon, across the top of the GUI (see PX 11).
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D-LINK DIRECTS ITS PRACTICES TO U.S. CONSUMERS
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VIOLATIONS OF THE FTC ACT
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Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive acts
or practices in or affecting commerce.”
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COMPLAINT
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27.
Acts or practices are unfair under Section 5 of the FTC Act if they cause or are
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likely to cause substantial injury to consumers that consumers cannot reasonably avoid
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themselves and that is not outweighed by countervailing benefits to consumers or competition. 15
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U.S.C. § 45(n).
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COUNT I
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Unfairness
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In numerous instances, Defendants have failed to take reasonable steps to secure
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the software for their routers and IP cameras, which Defendants offered to consumers,
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respectively, for the purpose of protecting their local networks and accessing sensitive personal
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information.
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29.
Defendants’ practices caused, or are likely to cause, substantial injury to
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consumers in the United States that is not outweighed by countervailing benefits to consumers or
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competition and is not reasonably avoidable by consumers.
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30.
Therefore, Defendants’ acts and practices as described in Paragraphs 15-18 of this
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Complaint constitute unfair acts or practices in or affecting commerce, in violation of Section 5
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of the FTC Act, 15 U.S.C. §§ 45(a) and 45(n).
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COUNT II
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Security Event Response Policy Misrepresentation
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31.
Through the means described in Paragraph 20, Defendant DLS has represented,
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directly or indirectly, expressly or by implication, that Defendants took reasonable steps to
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secure their products from unauthorized access.
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32.
In truth and in fact, as described in Paragraphs 15-18, Defendants did not take
reasonable steps to secure their products from unauthorized access.
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Therefore, the making of the representation set forth in Paragraph 31 of this
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Complaint constitutes a deceptive act or practice, in or affecting commerce in violation of
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Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
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COUNT III
COMPLAINT
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Router Promotional Misrepresentations
34.
Through the means described in Paragraph 21, Defendants have represented,
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directly or indirectly, expressly or by implication, that the routers described by these claims were
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secure from unauthorized access.
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35.
In truth and in fact, as described in Paragraphs 15-18, Defendants’ routers were
not secure from unauthorized access and control.
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Therefore, the making of the representation set forth in Paragraph 34 of this
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Complaint constitutes a deceptive act or practice, in or affecting commerce in violation of
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Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
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COUNT IV
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IP Camera Promotional Misrepresentations
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Through the means described in Paragraph 22, Defendants have represented,
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directly or indirectly, expressly or by implication, that the IP cameras described by these claims
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were secure from unauthorized access and control.
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38.
In truth and in fact, as described in Paragraphs 15-18, Defendants’ IP cameras
were not secure from unauthorized access and control.
39.
Therefore, the making of the representation set forth in Paragraph 37 of this
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Complaint constitutes a deceptive act or practice, in or affecting commerce in violation of
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Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
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COUNT V
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Router GUI Misrepresentations
40.
Through the means described in Paragraph 23, Defendants have represented,
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directly or indirectly, expressly or by implication, that the routers described by these claims were
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secure from unauthorized access.
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41.
In truth and in fact, as described in Paragraphs 15-18, Defendants’ routers were
not secure from unauthorized access and control.
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COMPLAINT
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42.
Therefore, the making of the representation set forth in Paragraph 40 of this
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Complaint constitutes a deceptive act or practice, in or affecting commerce in violation of
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Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
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COUNT VI
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IP Camera GUI Misrepresentations
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43.
Through the means described in Paragraph 24, Defendants have represented,
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directly or indirectly, expressly or by implication, that the IP cameras described by these claims
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were secure from unauthorized access and control.
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44.
In truth and in fact, as described in Paragraphs 15-18, Defendants’ IP cameras
were not secure from unauthorized access and control.
45.
Therefore, the making of the representation set forth in Paragraph 43 of this
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Complaint constitutes a deceptive act or practice, in or affecting commerce in violation of
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Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
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CONSUMER INJURY
46.
Consumers are likely to suffer substantial injury as a result of Defendants’
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violations of the FTC Act. Absent injunctive relief by this Court, Defendants are likely to injure
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consumers and harm the public interest.
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THIS COURT’S POWER TO GRANT RELIEF
47.
Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant
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injunctive and such other relief as the Court may deem appropriate to halt and redress violations
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of any provision of law enforced by the FTC.
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PRAYER FOR RELIEF
Wherefore, Plaintiff FTC, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b),
and the Court’s own equitable powers, requests that the Court:
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A.
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Defendants; and
Enter a permanent injunction to prevent future violations of the FTC Act by
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COMPLAINT
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B.
Award Plaintiff the costs of bringing this action, as well as such other and
additional relief as the Court may determine to be just and proper.
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Respectfully submitted,
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DAVID SHONKA
Acting General Counsel
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Dated: January 5, 2017
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/s/ Cathlin Tully________________
LAURA D. BERGER
KEVIN H. MORIARTY
CATHLIN TULLY
Attorneys for Plaintiff
FEDERAL TRADE COMMISSION
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COMPLAINT
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