Not just that, they have the recover feature, which made it even uglier. Newbies of the market might just go with that feature, allowing Ledger itself to recover it for the customer who has lost their secret recovery phrases, which shouldn't be known to them. But because they're closed source, they have this feature and newbies who owns a ledger or opting for it, please don't pay for a subscription and don't use it. Better to opt for other hardware wallets.
It is still the same thing. The third party companies where the seed phrase are sent to are for the backups and which is very bad. The wallet is not a cold wallet at all.
Totally bad, I hope Op and the other people here will avoid that because it seems that it's a real problem done by the Ledger and the security isn't really on them, but concerning the user, there's the company that knows your holdings and has an idea and a way to recover it by themselves. They are mindful about reminding everyone that if it's not your keys, it's not your coins. But for them, your coins are with them and they know it. Integrity is important and we know that problems occurs with these people behind it when they start seeing these encrypted phrases as they say but it still shows security risks.