Zoom wants to settle SEC probe for $18M, awaiting approval

Zoom Communications Inc. wants to settle a Securities and Exchange Commission (SEC) investigation related to its privacy and communications policies for $18 million.

The SEC launched an investigation into Zoom’s privacy and communications policies back in 2020. Around the same time, Zoom received subpoenas from the Department of Justice’s US Attorney’s Office for the Northern District of California (NDCA) and US Attorney’s Office for Eastern District of New York (EDNY).

They requested information regarding Zoom’s interactions with foreign governments and foreign political parties, as well as information regarding the storage and access to user data, and implementation of Zoom’s privacy policies.

“These investigations are ongoing, and a negative outcome in any or all of these matters could cause us to incur substantial fines, penalties, or other financial exposure, as well as reputational harm,” Zoom concludes in its most recent quarterly financial report.

That’s why the company is willing to pay an amount of $18 million as a “tentative settlement offer” to make this case go away.

Zoom is now awaiting approval by the SEC.

In a separate matter, which also played out in 2020, the Federal Trade Commission (FTC) accused Zoom of misleading millions of users by claiming it secured communications with end-to-end encryption, meaning that only the sender and receiver are able to read the contents of messages.

Zoom however did not apply end-to-end encryption and thus had access to users’ communications. The claim that end-to-end encryption was nevertheless in place gave users a false sense of security, the FTC said.

This resulted in a class action lawsuit, which was eventually settled for $85 million. In addition, Zoom promised to beef up its security. Nowadays, all communication conducted with Zoom is encrypted.

A year later, in 2021, Zoom settled with the FTC over misleading its users about the privacy and security of its core product. The FTC argued that Zoom misled users about the encrypted storage of recorded meetings.

The company claimed that recordings stored with Zoom in the cloud were immediately encrypted. This also was a false promise. Some recordings remained unencrypted on Zoom’s servers for 60 days before being moved to secure cloud storage.