LifeLock Pays Big to Settle FTC Suit Over Weak Data Security

23 Dec 2015 | Author: | No comments yet »

Identity-theft security firm LifeLock fined $100M for lapses.

A company which sells identity-theft protection services agreed Thursday to pay a fine of $100 million for failing to protect consumer data in the largest settlement on record, officials said. WASHINGTON — LifeLock is paying $100 million to consumers to settle charges by federal regulators that it failed to protect customers’ personal data under a court order.

The US Federal Trade Commission said its settlement with LifeLock came after the company failed to comply with a 2010 federal court order requiring it to secure consumers’ personal information and prohibiting deceptive advertising. 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. Richards (AFP/File) “This settlement demonstrates the Commission’s commitment to enforcing the orders it has in place against companies, including orders requiring reasonable security for consumer data,” said FTC Chairwoman Edith Ramirez. “The fact that consumers paid LifeLock for help in protecting their sensitive personal information makes the charges in this case particularly troubling.” A company statement Thursday said the settlement would “enable LifeLock to move forward with a singular focus on protecting our members from threats to their identity.” Under terms of the settlement, the company will pay $100 million which may be used to reimburse customers claiming they were deceived by LifeLock.

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. 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.

Additionally, the regulators alleged that LifeLock lied to consumers keeping consumer data secure in a similar way to how financial institutions lock up data. 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. Furthermore, there is no evidence that LifeLock has ever had any of its customers’ data stolen, and the FTC did not allege otherwise.” Of the $100 million settlement, LifeLock can use $68 million to pay consumers who filed a class action lawsuit against it. As part of the 2010 settlement, LifeLock was “barred from making deceptive claims and required to take more stringent measures to safeguard the personal information they collect from customers,” according to an FTC announcement at the time. According to the 2010 FTC announcement, one of the ways LifeLock would advertise its services was “by displaying the CEO’s Social Security number on the side of a truck.” But a 2010 article in the Phoenix New Times said that LifeLock’s CEO Todd Davis had his identity stolen “at least 13 times since 2007.”

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.

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