Lifelock Inc (LOCK) To Pay $100 Million To Settle FTC Violation

Lifelock Inc (LOCK) To Pay $100 Million To Settle FTC Violation

LifeLock announced that the Federal Trade Commission (FTC) approved a comprehensive agreement that would settle the charges filed against the company for violating the Commission’s order related to its previous marketing practices and information security programs.

Under the agreement, the company agreed to pay $100 million, which will be refunded to consumers affected by its false identity theft prevention and data security claims.

The $100 will be placed into the registry of the court responsible for overseeing the FTC lawsuit against Lifelock. The money will be used to fund the consumer redress ordered by any state attorneys general including the $68 million (authorized to be transferred to the court), which was contemplated in the class action settlement. The remaining $32 million will remain in the registry of the court.

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According to Lifelock, the total amount of the settlement will be $113 million including legal and other administrative fees. The company already accrued and disclosed the amount in its latest 10-Q filing.

Lifelock violations

In 2010, Lifelock agreed to pay $11 million to the FTC and $1 million to a group of 35 state attorneys general to settle the charges filed against it in connection with its false claims in promoting identity theft protection services. The company also agreed to stop making deceptive claims, strengthen measures to safeguard the personal information it collects from customers.

Lifelock failed to comply with the terms of the agreement. The company did not establish and maintain a comprehensive information security program to protect consumers’ personal information.

Moving forward on protecting consumers’ identity

In a statement, Lifelock said, “The FTC’s approval is a key component of a comprehensive settlement designed to enable LifeLock to move forward with a singular focus on protecting our members from threats to their identity. Our members are our highest priority, and we are gratified by their confidence in us, reflected in the performance and continued growth of our business.

The company clarified that the FTC’s allegations are related to advertisements and policies that are no longer in place. The settlement does not require Lifelock to change its current products and practices.

Additionally, the company said, “There is no evidence that LifeLock has ever had any of its customers’ data stolen, and the FTC did not allege otherwise As part of our commitment to continual improvement, in recent years we have made significant investments in our people, process and systems throughout the company to address ever more complex and pervasive identity threats. We are pleased to put this matter behind us.”

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