LifeLock shares tank after FTC says it doesn’t protect consumers data as it claimed
written by Jacob Bogage
The Federal Trade Commission on Tuesday said it would sue online data security firm LifeLock for failing to protect users’ personal financial data in violation of a 2010 settlement.
LifeLock’s shares tumbled nearly 50 percent even after trading was halted twice.
The company had broadcast its chief executive’s Social Security number as part of its claim that it could protect anyone against identity theft.
But LifeLock didn’t protect personal finance information with the same high-level safeguards as banks as it claimed to customers and neglected record-keeping requirements, according to the Federal Trade Commission. It also failed to notify users “as soon as” its protection software detected breaches.
The charges hinge both on LifeLock’s response to a 2010 settlement with the FTC over similar charges and on the truthfulness of the company’s current advertisements.
The 2010 settlement forbid LifeLock to establish more rigorous security measures and refund $12 million to customers.
“It is essential that companies live up to their obligations under orders obtained by the FTC,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement. “If a company continues with practices that violate orders and harm consumers, we will act.”
LifeLock in a statement said it “disagree[d] with the substance of the FTC’s contentions.”
“We are committed to maintaining high standards and to continual improvement, and we have spent thousands of hours and millions of dollars to achieve those standards in full compliance with the order,” read the statement in part.
The FTC’s lawsuit were filed under seal in the U.S. District Court of Arizona.