FTC Enters Into Settlement With Zoom Over Unfair Practices

The major video conferencing platform, Zoom, has agreed to enter into a settlement with the Federal Trade Commission (FTC) over allegedly deceptive claims related to its security practices. The company has, for months, touted its supposedly superior security features to attract people to its platform. With this settlement, however, the company must significantly revise both its advertising and its security practices to better comply with FTC standards.

Zoom’s Allegedly Deceptive Security Claims

When Zoom first came to prominence in late December 2019, it had about 10 million users worldwide. However, as the coronavirus pandemic raged across the United States and more people began to work from home, it became one of the primary video conferencing platforms for businesses around the country. As a result, its user base expanded to approximately 300 million users by April 2020, an expansion of 3,000% over the course of just four months.

An important part of this expansion were claims made about the security features of the platform, including “end-to-end, 256-bit encryption” for video calls made over Zoom. While it did have some security features, in reality they were substantially less extensive than what Zoom claimed in public advertising. In fact, Zoom secretly stored data from its users’ meetings without their knowledge or consent, and failed to disclose that it installed virtual servers on people’s computers to make meetings faster.

Zoom’s Settlement With the FTC

The FTC settlement includes a consent decree from Zoom that will subject it to strict monitoring from the FTC to ensure it remains in compliance with laws regarding its advertising practices and its treatment of consumer data. In addition to reforming its security policies, it will, among other things, need to undergo an assessment of its security practices biennially by a certified third party. It also must get rid of all stored consumer data that it was not authorized to store within sixty days.

This settlement goes to show that honest advertising is extremely important, and that the FTC takes consumer data violations very seriously. Any company that wants to handle consumer data should tread lightly, and ensure their security practices are up to FTC standards first. Otherwise, they could be the next company facing investigation by federal authorities.

The business law attorneys at Blodnick, Fazio & Clark are skilled and knowledgeable in the areas of business law and commercial transactions.  With offices conveniently located in Garden City, Nassau County, and Babylon, Suffolk County, the firm provides high-quality legal care at reasonable prices. If you require legal assistance concerning business startups, formation, corporate acquisitions and mergers, corporate restructuring, or another business matter, call (516) 280-7105 or fill out our contact form for a free consultation.

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