LifeLock to Pay $100 Million in FTC Settlement | Practical Law

LifeLock to Pay $100 Million in FTC Settlement | Practical Law

LifeLock has agreed to pay $100 million to settle Federal Trade Commission (FTC) contempt charges that the company violated a 2010 federal court order that requires the company to secure consumers' personal information and prohibits the company from deceptive advertising.

LifeLock to Pay $100 Million in FTC Settlement

Practical Law Legal Update w-001-0964 (Approx. 4 pages)

LifeLock to Pay $100 Million in FTC Settlement

by Practical Law Commercial Transactions
Law stated as of 21 Jan 2016 • USA (National/Federal)
LifeLock has agreed to pay $100 million to settle Federal Trade Commission (FTC) contempt charges that the company violated a 2010 federal court order that requires the company to secure consumers' personal information and prohibits the company from deceptive advertising.
On December 17, 2015, the Federal Trade Commission (FTC) announced that LifeLock has agreed to pay $100 million to settle charges that the company violated a 2010 court order enjoining the company from using deceptive advertising.
In 2010, the FTC and 35 state attorneys general charged LifeLock with using false claims to promote its identity theft protection services. After the parties settled the claims, the US District Court for the District of Arizona issued a final order that:
  • Barred LifeLock and its principals from making any further deceptive claims.
  • Required LifeLock to take more stringent measures to safeguard the personal information it collects from customers.
  • Required LifeLock to pay $12 million for consumer refunds.
In July 2015, the FTC alleged that Lifelock has violated the 2010 order by:
  • Failing to establish and maintain a comprehensive information security program to protect users' sensitive personal information, including their social security, credit card, and bank account numbers.
  • Falsely advertising that it protected consumers' sensitive data with the same high-level safeguards that financial institutions use.
  • Failing to meet the 2010 settlement's recordkeeping requirements.
  • Falsely claiming it protected consumers' identity 24/7/365 by providing alerts "as soon as" it received any indication there was a problem.
This is the largest monetary award that the FTC has obtained in an order enforcement action and demonstrates that the FTC continues to monitor businesses' advertising practices even after settling charges against them.
For more information on complying with federal advertising laws, see Practice Notes, Advertising: Overview and FTC Consumer Protection Investigations and Enforcement.

Update

On January 20, 2016, the United States District Court for the Northern District of California granted plaintiff's Motion for Preliminary Approval of Conditional Class Certification and Class Action Settlement (Settlement). The Settlement requires LifeLock to:
  • Pay $68 million directly to the approved classes, taken from the $100 million paid by LifeLock to settle the FTC contempt charges.
  • Pay $10.2 million in attorney's fees, on top of the $100 million already paid by LifeLock to settle the FTC contempt charges.
The excess of the $100 million not paid directly to consumers will be provided to the FTC for use in further consumer redress.