Zoom has been served with another class action lawsuit — this time by one of its shareholders, who says he lost money after the company “overstated” its security measures, which led its share price to tank.
The video conferencing giant has seen its daily usage rocket from 10 million users to 200 million since the start of the coronavirus pandemic, which forced vast swathes of the world to stay and work from home. As its popularity rose, the company also faced a growing number of security and privacy problems, including claims that Zoom was not end-to-end encrypted as advertised.
Zoom’s later admission saw the company’s share price fall by almost 20%.
Shareholder Michael Drieu, who filed the suit in a California federal court on Tuesday, said he and others have “suffered significant losses and damages” as a result. According to the complaint, Drieu bought 50 shares priced at $149.50 but lost out when he sold the shares a week later at $120.50 per share.
Zoom did not respond to a request for comment.
It’s the latest class action served against Zoom in recent weeks. Zoom was slapped with another suit last month after Zoom’s iOS app was found to have shared data with Facebook — even when users did not have a Facebook account.
Zoom has doubled down on its efforts to improve its image in the past week, including a promise to improve its encryption efforts and by changing its default settings to prevent trolls and intruders from accessing Zoom calls without permission, coined “Zoombombing.” The security problems have led to New York City schools banning Zoom in favor of Microsoft Teams. The Taiwanese government also banned its agencies from using the app.
Just today, former Facebook chief security officer Alex Stamos said he joined Zoom as an advisor. Zoom also said it has enlisted security experts and leaders to advise on the company’s security strategy.