The stock price of LifeLock plummeted after the Federal Trade Commission (FTC) issued a statement indicating its violation of a 2010 settlement with the agency and 35 state attorneys general.
LifeLock is a provider of identity theft protection for consumers and identity risk assessment and protection services for enterprises.
The shares of LifeLock are trading $8.20 a piece, down by more than 49% at the time of this writing around 3:29 in the afternoon in New York.
FTC allegations against LifeLock
According to the FTC, LifeLock violated the 2010 settlement agreement by continuing to make deceptive claims about its identity theft protection services and failing to take the required steps to protect the data of its users.
Based on the documents filed with the U.S. District Court for the District of Arizona, the FTC alleged that LifeLock failed to meet its obligations under the 2010 settlement agreement with the agency and 35 state attorney generals.
The FTC requested the Court to execute an order requiring LifeLock to provide full redress to all consumers affected by its violations.
Jessica Rich, Director of Bureau of Consumer Protection at the FTC emphasized, “It is essential that companies live up to their obligations under orders obtained by the FTC. If a company continues with practices that violate orders and harm consumers, we will act.”
LifeLock previous settlement with the FTC
In 2010, LifeLock agreed to settle charges of the FTC on allegations that the company used false claims to promote its identity theft protection services. Under the settlement, the company and its principals were prohibited from making further deceptive claims. They were also required to implement more stringent measures to protect the personal information of customers. LifeLock was also required to pay $12 million for consumer refunds.
The FTC indicated in its complaint today that LifeLock violated its order by
1. failing to establish and maintain a comprehensive information security program to protect its users’ sensitive personal data, including credit card, social security, and bank account numbers;
2. falsely advertising that it protected consumers’ sensitive data with the same high-level safeguards as financial institutions
3. failing to meet the 2010 order’s recordkeeping requirements
The agency also stated that LifeLock falsely claimed that it protected the identity of consumers 24/7/365 by providing alerts as soon as it received any indication of a problem from January 2012 until December 2014.
The FTC said the details of its actions against the company were filed under seal, and the Court will determine, which part of the case will be unsealed.
“Importantly the FTC is not seeking any relief that would change LifeLock services and products going forward. The claims raised by the FTC are all related to the past, not to current business practices.”