Zoom will heighten security after it falsely touted end-to-end encryption services that could stop third parties from surveiling data as the company’s stock plunges 17% amid COVID-19 vaccine news
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 resolution did not have any financial component but the agency revealed in a report that Zoom would face fines of up to $43,280 for each future violation under the agreement.
It said Zoom's misleading claims about giving users a secure channel of communication with end-to-end encryption while offering a lower level of protection gave them a false sense of security since at least 2016.
The Federal Trade Commission announced on Monday that it reached an agreement with Zoom Video Communications Inc over security concerns
Zoom previously said that meetings were protected by end-to-end encryption, but later backtracked on the claim
End-to-end encryption stops third-parties from accessing data between groups as it transfers from one system to another.
In this case, the FTC alleged Zoom could be the third party surveiller.
'Zoom misled users by touting that it offered “end-to-end, 256-bit encryption” to secure users’ communications, when in fact it provided a lower level of security,' wrote the FTC.
'In reality, the FTC alleges, Zoom maintained the cryptographic keys that could allow Zoom to access the content of its customers’ meetings, and secured its Zoom Meetings, in part, with a lower level of encryption than promised.'
Rohit Chopra : 'The FTC's proposed settlement includes no help for affected parties, no money, and no other meaningful accountability'
Zoom had said it planned to develop tools that would give meeting hosts more control and allow users to join a meeting securely.
The settlement with Zoom comes after Time Magazine reported in April that foreign intelligence agents have used video confrencing apps like Zoom to spy on Americans.
Three counterintelligence sources told Time Magazine that they had observed such acts from Russia, Iran and North Korea.
'More than anyone else, the Chinese are interested in what American companies are doing,' said one official.
Zoom has also been accused of censoring discussions, at the request of Chinese authorities, commemorating those who died during the 1989 Tiananmen Square protests.
The company admitted to shutting down commemorative Zoom meetings, suspending two activists' accounts, as well as the account for Humanitarian China.
And the most well-known Zoom security falter was the wave of 'zoom bombing' that hit in spring.
In April, racist hackers wearing blackface managed to crash a Zoom party that was held for African American students who attend the University of South Carolina
As recently as September, a meeting between Worcester Diocese were horrified when subjected to a barrage of offensive content while a voice repeatedly shouted 'motherf******.'
They were also urged to 'convert to Islam' before images showing four men engaging in a sex act also flashed up on their screen.
'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 17 per cent in afternoon trading, to $413.24.
Stocks tumbled in part because Pfizer revealed its COVID-19 vaccine is 90 percent effective.
Pfizer, which developed a vaccine with German drugmaker BioNTech, is the first to release successful data based on an interim analysis from a large-scale vaccine clinical trial.
Zoom, whose growth hinged on stay-at-home orders and remote working, took an especially notable hit.
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 Video Communications Inc.'s stock shares dropped on Monday after news of the company's settlement with the Federal Trade Commission was announced
The FTC voted 3-2 along party lines to approve the settlement. Democratic commissioner Rohit Chopra issued a dissenting statement saying the company's failures warrant serious action.
'The FTC's proposed settlement includes no help for affected parties, no money, and no other meaningful accountability,' he said.
Chopra further said the commission's order includes no findings of fact or liability and the investigation makes no significant conclusions.
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, the agency said.