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Zoom reaches $85 million settlement over user privacy, 'Zoombombing'

Stock MarketsAug 01, 2021 03:00PM ET
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© Reuters. FILE PHOTO: Small toy figures are seen in front of Zoom logo in this illustration picture taken March 15, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

By Jonathan Stempel

(Reuters) -Zoom Video Communications Inc agreed to pay $85 million and bolster its security practices to settle a lawsuit claiming it violated users' privacy rights by sharing personal data with Facebook (NASDAQ:FB), Google (NASDAQ:GOOGL) and LinkedIn, and letting hackers disrupt Zoom meetings in a practice called Zoombombing.

A preliminary settlement filed on Saturday afternoon requires approval by U.S. District Judge Lucy Koh in San Jose, California.

Subscribers in the proposed class action would be eligible for 15% refunds on their core subscriptions or $25, whichever is larger, while others could receive up to $15.

Zoom agreed to security measures including alerting users when meeting hosts or other participants use third-party apps in meetings, and to provide specialized training to employees on privacy and data handling.

The San Jose-based company denied wrongdoing in agreeing to settle.

In a statement on Sunday, Zoom said: "The privacy and security of our users are top priorities for Zoom, and we take seriously the trust our users place in us."

Saturday's settlement came after Koh on March 11 let the plaintiffs pursue some contract-based claims.

Though Zoom collected about $1.3 billion in Zoom Meetings subscriptions from class members, the plaintiffs' lawyers called the $85 million settlement reasonable given the litigation risks. They intend to seek up to $21.25 million for legal fees.

Zoombombing is where outsiders hijack Zoom meetings and display pornography, use racist language or post other disturbing content.

Koh said Zoom was "mostly" immune for Zoombombing under Section 230 of the federal Communications Decency Act, which shields online platforms from liability over user content.

Zoom's customer base has grown sixfold since the COVID-19 pandemic forced more people to work from home.

The company had 497,000 customers with more than 10 employees in April 2021, up from 81,900 in January 2020. It has said user growth could slow or decline as more people get vaccines and return to work or school in-person.

The case is In re: Zoom Video Communications (NASDAQ:ZM) Inc Privacy Litigation, U.S. District Court, Northern District of California, No. 20-02155.

Zoom reaches $85 million settlement over user privacy, 'Zoombombing'
 

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Comments (7)
Kaveh Sun
Kaveh Sun Aug 01, 2021 4:08PM ET
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Startup companies know how lazy people r. They make software easy to use by cutting corners. Then later harden their software. Then it is cumbersome. Then there will be new kids cutting the corners. The cycle repeats.
Kaveh Sun
Kaveh Sun Aug 01, 2021 4:04PM ET
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Security meaning using check points. If too much check points, people dont use.
Kaveh Sun
Kaveh Sun Aug 01, 2021 4:03PM ET
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There r many others video meeting. You use zoom because it is easy. Easy meaning cutting corners.
Nicholas Segalle
Nicholas Segalle Aug 01, 2021 4:03PM ET
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It’s almost as if people are drawn to easy to use software. 🤷‍♂️
CHADWICK RICHINGTON
CHADWICK RICHINGTON Aug 01, 2021 3:55PM ET
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The world is truly a depressing and dark place
Todd Gray
Todd Gray Aug 01, 2021 2:57PM ET
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the only way they'll stop this behavior, is prison sentences for the executives. otherwise, the law let's these guys steal a billion, and only lose 100 million of it in a lawsuit. amazing the liberal politicians yammer on about fairness. there's nothing fair about anything either of them do. the appearance of fairness is all the people get. government does the exact same thing with all the issues they need more money to pull off. modern robber barrons.
Todd Gray
Todd Gray Aug 01, 2021 2:51PM ET
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to add insult to injury, the victims get a we piece of their money back, but the little law firm representing them probably gets about 40 million. American justice!
Joseph Armour
Joseph Armour Aug 01, 2021 11:29AM ET
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So your privacy is only worth 15 dollars. While Zoom and friends made billions after subtracting settlement. Wonder how profitable it was for the public servants involved in case not to make sure Zoom lost on this behavior instead of profiting monstrously on it?
 
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