Chegg's Data Security Practices Draw Regulatory Action

  • The Federal Trade Commission took action against education technology provider Chegg, Inc (NYSE: CHGG) for its loose data security practices that uncovered sensitive information about millions of its customers and employees, including Social Security numbers, email addresses, and passwords.

  • Chegg allegedly failed to fix problems with its data security despite experiencing four security breaches since 2017.

  • The FTC’s proposed order requires the company to bolster its data security, limit the data it can collect and retain, offer users multifactor authentication to secure their accounts, and allow users to access and delete their data.

  • “Chegg took shortcuts with millions of students’ sensitive information,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.

  • “Today’s order requires the company to strengthen security safeguards, offer consumers an easy way to delete their data, and limit information collection on the front end. The Commission will continue to act aggressively to protect personal data.”

  • Chegg has sold educational products and services targeted to high school and college students, including online tutoring and a college scholarship search service. Chegg collects a variety of personal information about its users.

  • As a result of these failures, some of the data about Chegg’s 40 million customers stolen by its former contractor was later found for sale online.

  • In October, Chegg promoted Nathan Schultz to the newly created role of Chief Operating Officer

  • Schultz has served in various roles at Chegg for fifteen years and was President of Learning Services.

  • Price Action: CHGG shares are trading lower by 3.86% at 21.93 on the last check Monday.

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