Zoom to enhance security as part of proposed U.S. settlement with FTC

By Susan Heavey and Nandita Bose

WASHINGTON (Reuters) – Zoom Video Communications Inc must implement a new information security program as part of its proposed settlement with U.S. regulators over user privacy issues, the Federal Trade Commission said on Monday.

The FTC said in a statement that the company would face fines of up to $43,280 for each future violation under the agreement.

It said Zoom’s misleading claims about offering users a secure channel of communication while offering a lower level of protection gave a false sense of security, especially for those who used the company’s platform to discuss sensitive topics such as health and financial information.

“Zoom’s security practices didn’t line up with its promises,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection.

The company’s stock, which has climbed sharply this year, skidded more than 11.6% in midday trading, to $442.

A company spokeswoman said the security of its users is a top priority for Zoom. “We have already addressed the issues identified by the FTC,” she said.

Zoom has been a big beneficiary of the coronavirus lockdowns, with millions of workers and students using its video platform as they work and study from home. Its user base has risen from 10 million in December 2019 to 300 million in April 2020 during the COVID-19 pandemic, the agency said.

The company has faced a backlash for failing to disclose that its service was not fully end-to-end encrypted, a method of securing communications so that only the sender and recipient can read the content. Zoom had said it planned to develop tools that would give meeting hosts more control and allow users to join a meeting securely.

(Reporting by Susan Heavey and Nadita Bose; Editing by Chizu Nomiyama, Richard Chang and Dan Grebler)