Video conferencing company Zoom's (ZM) recently announced $85 million settlement of a privacy class action is a "groundbreaking" and unique settlement that covers both paying customers and those who used free accounts, a lawyer for the plaintiffs told Yahoo Finance.
In reaching the settlement, now pending a judge's approval, Zoom, despite denying wrongdoing, agreed to both compensate its users and adopt new user privacy measures after it came under fire last year for so-called "Zoom-bombings," in which uninvited members crashed Zoom meetings, as well as other security issues.
“We believe it's a great result, frankly a groundbreaking result,” Mark Molumphy, a lawyer for the plaintiffs from the firm Cotchett, Pitre & McCarthy, told Yahoo Finance on Monday.
Molumphy said while he’s confident the agreement will receive preliminary approval, the judge is expected to closely scrutinize its unusual elements, including monetary compensation, not only for Zoom's paying customers, but also for customers who opened and used free accounts.
“Data is the new oil,” Tina Wolfson, another lawyer for the plaintiffs in the case, told Yahoo Finance to explain why non-paying users were included in the settlement. “There's a bargain there, even though you're not paying for the service — which is, you're providing data, unbeknownst to you, to Zoom and third party apps. And, as we know, that’s very, very valuable to those companies.”
Who qualifies for a settlement payment?
Those who can apply for a payment include, with some exceptions, people in the U.S. who registered, used, opened, or downloaded the Zoom app between March 30, 2016 and July 30, 2021.
The class excludes those who asked to be left out of the class, as well as those who used only government accounts, or enterprise level accounts, as opposed to account types such as basic, pro, or business levels. Officers and directors of Zoom, and the judge overseeing the case and her relatives, are also excluded.
Zoom users will apply for awards through a website called www.ZoomMeetingsClassAction.com, which Molumphy said will go live about a week after the judge's preliminary approval of the deal. A hearing on approval is scheduled for Oct. 21.
Zoom account-holders who belong to the class will receive email notices within one week to 30 days after the preliminary approval. Notice will also be made through various social media sites.
Wolfson said it's difficult to predict how many class members will apply for the award, making it difficult to determine exactly how much money each person might receive beyond a base level payment.
While eligible non-paying Zoom users will receive at least $15 at base level, those who paid for Zoom will be compensated at a base level of 15% of the money they paid for Zoom during the class period.
Molumphy said the total class size is estimated to swell as large as 5 million to 6 million paid subscribers, and 160 million to 170 million registered users.
Lawsuit about more than 'Zoom-bombing': Lawyer
In their complaint, the plaintiffs accused Zoom of violating California laws by sharing users’ information with third-parties like Facebook (FB), failing to prevent “Zoom-bombing," and saying it provided end-to-end encryption when it did not.
“Our lawsuit was about [Zoom-bombing], and much more,” Wolfson said, adding that changes to Zoom’s privacy practices are central to the settlement.
The new privacy measures include requiring Zoom to maintain a website repository with resources to prevent and respond to meeting disruptions, to add identity authentication features, and to add new controls allowing meeting hosts to block and lock meetings, as to allow extra layers of security for meetings used in K-12 education.
Zoom reached a separate settlement with the FTC last year that also required it to enhance its security measures. The FTC said the measures were meant to address "deceptive and unfair practices that undermined the security of [Zoom] users."
In a statement to Yahoo Finance, a Zoom spokesperson said, "The privacy and security of our users are top priorities for Zoom, and we take seriously the trust our users place in us. We are proud of the advancements we have made to our platform, and look forward to continuing to innovate with privacy and security at the forefront."
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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