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Lifelock reaches tentative settlement with FTC to the tune of almost $100 million

Posted on October 29, 2015 by Dissent

Remember when FTC went after Lifelock for failure to comply with an earlier consent order?  And remember when I quoted Lifelock’s 10-Q SEC filing that mentioned the issue but reported:

As a result of those discussions, we have accrued $20,000 as of December 31, 2014 for a possible settlement with the FTC. The ultimate resolution of the matter could result in a loss of up to $100,000.

I had commented:

That’s all? I had imagined that we were looking at a much bigger penalty and costs going forward. While I don’t mean to minimize the importance of $100,000 (I’d love to have it), the stock harm that has been done by the FTC action has likely cost a lot more than $100,000 to the company shareholders by now. LifeLock’s stock dropped about 50% after the announcement of FTC’s action, and so far, it is not rebounding.

Well, it wasn’t $100,000. Maybe they left off a few zeroes? From their press release  yesterday, it looks more on the order of $100 million. Lifelock also announced a possible settlement with attorneys general and a class action lawsuit:

The Company also announced that it has reached agreements with the staff of the Federal Trade Commission and representatives of a national class of consumers on a comprehensive settlement resolving outstanding litigation relating to its past marketing representations and information security programs. The Company noted that the agreements are not yet final, as the FTC staff’s recommendation to approve the settlement must still be approved by the Commission itself and a federal judge, and the class action settlement will require review and approval by the court.

The proposed FTC settlement does not require us to change our current products, services, or business and information security practices, including in particular, our current marketing and advertising practices. In light of the agreements, LifeLock has accrued an additional $96 million in reserves, bringing the total amount of its reserves for this matter to $116 million. This $116 million also includes a $3 million reserve for a potential settlement with state attorneys general.

Overall, they report a net income loss in the third quarter of 2015:

Net income (loss): Net loss was $65.1 million for the third quarter of 2015, which included a pre-tax charge of $96.0 million related to a proposed settlement with the FTC, a consumer class action suit, and state attorneys general, compared with net income of $5.5 million for the third quarter of 2014. Net loss per diluted share was $0.68 for the third quarter of 2015 based on 95.3 million weighted-average shares outstanding, compared with net income per diluted share of $0.06 for the third quarter of 2014 based on 98.5 million weighted-average shares outstanding.

Lifelock’s stock, which was trading at over $16/share prior to the FTC’s announcement in July, still has not recovered, and is still trading at less than $10.

This post was cross-posted from PogoWasRight.org.

Related posts:

  • The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax
  • Forbes Breach Email Statistics
  • LifeLock Will Pay $12 Million to Settle Charges by the FTC and 35 States That Identity Theft Prevention and Data Security Claims Were False
  • FTC Takes Action Against LifeLock for Alleged Violations of 2010 Order
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