LifeLock Is To Pay $100 Million Settlement For Deceptive Advertising
By Staff Writer
LifeLock must pay $100 million settlement to Federal Trade Commision for its failure to provide adequate protection and other violations of the 2010 settlement.
Wall Street Journal reported that Federal Trade Commission alleged company violated a previous 2010 settlement. LifeLock in 2010 had paid $11 million to the FTC and also $1 million to a group of U.S. attorney general to settle charges that the Arizona-based company made a false claims in its deceptive advertising.
According to FTC official statement, LifeLock has violated four components of the 2010 court order that enforce LifeLock to increase its protection system. FTC filed the complaint to the U.S. District Court for the District of Arizona in July.
Last Thursday, FTC and LifeLock agreed to a $100 million settlement which LifeLock must pay for misleading the consumers and other misconduct. That is the largest settlement FTC has ever obtained in an order enforcement action. The amount of $68 milllion from the settlement will be dispensed to consumers who filed class action lawsuit againts LifeLock on similar charges.
"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," FTC Chairwoman Edith Ramirez said. "The fact that consumers paid Lifelock for help in protecting their sensitive personal information makes the charges in this case particularly troubling."
Ars Technica reported that LifeLock's alleged misconducts include failing to establish a protection system for all customers information that the company had gathered. LifeLock also launched two false advertising regarding its security protection which it said to be comparable to financial institutions protection level, and the immediate alert system for any suspected fraud. The last violation is insufficient record-keeping rules that the FTC imposed on the company in 2010.
In 2010 settlement, FTC found out that LifeLock claim regarding its secured customer information data was proven to be false. Since the company received its customers data unencrypted, including customers' sensitive data. More than that, LifeLock did not have the system to protect its database from intrusion either.
LifeLock charges its customers a monthly fee of $10 to $30 or annual fee of $110 and $330 to its service. Based on the latest quarter report, LifeLock recorded a $152 million revenue. The company is also known for its aggressive advertising which is turned out to be false, such as its 2008 advertisement that became center of FTC allegations in 2010.
LifeLock launched a daring advertising in 2008. The advertising portrayed company's CEO Todd Davis displaying his social security number and said that LifeLock will prove how safety its identity protection system.
The advertising seem to be a joke, because Todd Davis' identity was reported being stolen 13 times following the advertising.