LifeLock last month agreed to a $100 million settlement with the Federal Trade Commission to resolve contempt charges that it violated the terms of a 2010 federal court order that requires the company to secure consumers’ personal information and prohibits the company from deceptive advertising. The settlement represents the largest monetary award obtained by an FTC order enforcement action.
“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 in a statement.
The FTC’s filing in the case alleged that LifeLock violated four components of the 2010 order. First, the FTC alleged that from at least October 2012 through March 2014, LifeLock failed 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.
Second, the filing alleged that during this period LifeLock falsely advertised that it protected consumers’ sensitive data with the same high-level safeguards used by financial institutions. Third, the FTC alleged that, from January 2012 through December 2014, LifeLock falsely advertised that it would send alerts “as soon as” it received any indication that a consumer may be a victim of identity theft. Finally, the FTC alleged that the company failed to abide by the order’s recordkeeping requirements.
Under the terms of the settlement, LifeLock must deposit $100 million into the registry of the U.S. District Court for the District of Arizona. Of that $100 million, $68 million may be used to redress fees paid to LifeLock by class action consumers who were allegedly injured by the same behavior alleged by the FTC. These funds, however, must be paid directly to and received by consumers, and may not be used for any administrative or legal costs associated with the class action.
"Any money not received by consumers in the class action settlement or through settlements between LifeLock and state attorneys general will be provided to the FTC for use in further consumer redress," the FTC said. In addition to the settlement’s monetary provisions, record-keeping provisions similar to those in the 2010 order have been extended to 13 years from the date of the original order.
The FTC voted 3-1 to approve the stipulated final order, with Commissioner Maureen Ohlhausen voting "no." In her dissenting statement, Ohlhausen said she dissented from the proposed order settling the FTC's allegations against LifeLock for the same reason she voted against the decision to file the initial contempt motion.The record lacks clear and convincing evidence that LifeLock failed to establish and maintain a comprehensive information security program designed to protect the security, confidentiality, and integrity of consumers’ personal information," she wrote.
In a separate statement, the FTC said it believes the settlement "will provide important protection to consumers, both by providing $100 million of redress to affected consumers and maintaining strong injunctive provisions that require annual assessments and monitoring and prohibit LifeLock from misrepresenting the level of security provided to its customers."
The FTC filed the proposed order in the U.S. District Court for the District of Arizona. Stipulated final orders have the force of law when approved and signed by the district court judge.