LifeLock Paying $100M to Consumers to Settle US Charges

23 Dec 2015 | Author: | No comments yet »

Business Watch.

After a two-week trial, the jury awarded $25 million in damages to the plaintiff, music publisher BMG Rights Management LLC. WASHINGTON (AP) — LifeLock is paying $100 million to consumers to settle charges by federal regulators that it failed to take adequate measures to protect customers’ personal data under a court order.LifeLock, an identity protection service, agreed to a $100 million settlement with the Federal Trade Commission for failing to deliver on promises it would guard personal data and inform users when their information was breached. The jury found that Cox helped contribute to the infringement of BMG copyrights by its Internet subscribers and that Cox’s conduct was “willful.” “We are unhappy with the decision, will review the ruling in detail and are considering our options, including appeal,” said Todd Smith, a spokesman for Cox.

The FTC had accused LifeLock, which is based in Tempe, Arizona, of violating a 2010 court order that required it to take steps to secure data properly and said that LifeLock falsely advertised that it protected that information, among other allegations. The verdict is the first of its kind and could open the door to more lawsuits against the cable industry by movie studios and music publishers, which claim illegal downloading of songs, movies and TV shows have cost them billions in lost revenue in recent years. “We believe this decision sends a message…that [Internet providers] have a responsibility to act upon and limit the massive copyright infringement using their networks that has been brought to their attention,” said Michael Allen, lead counsel for BMG. The 2010 order by a federal court required LifeLock Inc. to secure customers’ data, such as credit card and Social Security numbers, and to avoid false advertising claims. In 2010, the F.T.C. charged the company with failing to provide strong security measures for personal data. “The fact that consumers paid LifeLock for help in protecting their sensitive personal information makes the charges in this case particularly troubling,” Edith Ramirez, the F.T.C. chairwoman, said in a statement. In court papers, Cox had said it had no “actual” knowledge of any specific infringements and that the plaintiffs had no evidence of Cox account holders personally infringing through their Cox accounts.

The order resulted from an action brought by the FTC and attorneys general in 35 states, alleging that LifeLock used false claims to promote its services. The company charges $9.99 per month to monitor a customers’ accounts to get an early warning of identity theft and to help them clean up the mess when identity theft occurs.

Cox also had argued it was shielded from liability by a 1998 law that creates a so-called “safe harbor” from copyright claims for Internet providers so long as they take certain steps, such as investigating claims of illegal downloads by users. The lawsuit targets the practice of downloading music via so-called torrent services, through which a downloader retrieves small bits of data from multiple peers,​with that data then being compiled into a complete file on the downloader’s hard drive.

Company co-founder and CEO Todd Davis used to put his own Social Security number on business cards and company trucks to advertise LifeLock’s services. Maureen Ohlhausen, the sole Republican on the panel, said in her dissent that she was unconvinced that LifeLock had fallen short in protecting its customers data. In the settlement announced Thursday, the FTC said LifeLock also didn’t properly establish internal policies to protect consumer data from cyberattacks or leaks.

The Wall Street Journal reported in October that the software and consulting firm, which Dell acquired in 2011, filed papers for the IPO over the summer and that a roadshow could take place in the winter. SecureWorks said in its Form S-1 that it posted an $18.5 million loss for the quarter ended Oct. 30, compared with a loss of $8.8 million a year earlier.

SecureWorks sells managed-security services, online tools that companies can use to keep tabs on their network activity and prevent hackers from breaking into their computer systems. Under the JOBS Act, companies with revenue below $1 billion are allowed to keep filings confidential until they are ready to market shares to potential investors.

Chief Executive John Standley pointed to revenue and same-store sales growth as well as “positive, significant contributions from our new pharmacy services segment.” He said the company strengthened its retail health-care offering by converting additional stores to its wellness format. The chain, like rivals, has adjusted its offerings to broaden its business model as the pharmacy and drugstore industry expands into the health and wellness sector. Rite Aid has worked to expand its RediClinics and remodeled 96 wellness stores, which offer organic food and natural personal-care options and feature consultation rooms for discussions with pharmacists.

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