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Consumer Information lifelock

Published on April 9th, 2013


LifeLock’s Protection Leaves Much to be Desired

With a rising number of consumers falling victim to identity theft, it’s not a surprise some companies are promising services that will protect you from the chaos and costs of stolen identities. More than 12.6 million Americans were victims of identity theft in 2012. LifeLock, based in Tempe, Ariz., promises it will “relentlessly” protect your identity. But what can a company like LifeLock do that you can’t do on your own? And can you trust it?

The answer to the first question is, essentially, not much. LifeLock customers pay between $10 and $25 dollars a month for the company to monitor their identities, but consumers can handle many of the services LifeLock provides – such as credit reports and cancelling cards in lost wallets – on their own with a couple of (free) phone calls. To answer the second question, consumers may want to check into LifeLock’s history. Consider these issues:

  • The company agreed to pay $12 million in 2010 to settle charges by the FTC that the company made deceptive claims about its ability to protect consumers from identity theft.
  • The company didn’t do a particularly good job of protecting its CEO, Todd Davis, from getting his identity stolen after Davis publicized his Social Security number in a LifeLock marketing stunt in 2007.
  • Its co-founder, Robert J. Maynard, was jailed in 2003 for defaulting on a casino loan.
  • The credit bureau Experian sued LifeLock in 2008 after it flooded Experian’s phone lines with bogus fraud alerts on LifeLock’s customer accounts (without alerting its customers that they can place such fraud alerts with the credit bureaus on their own, for free).

Now, let’s take a look at some of these issues a little closer.

Company fails to protect Davis

Davis published his Social Security number in 2007 on flyers, billboards, and radio and print ads as part of a publicity stunt. He also, on occasion, announced it via bullhorn on city streets. LifeLock went so far as to actually print Davis’ Social Security number on the side of a truck and drive the truck across the country. (Davis’ information is still widely available on the Internet thanks to the marketing push.)

Not surprisingly, Davis had his identity stolen repeatedly throughout the ad campaign. The Phoenix New Times reported in 2010 that Davis’ identity had been stolen at least 13 times since the marketing ads began, despite LifeLock’s protection. According to the Associated Press, at least 20 people applied for driver’s licenses with Davis’ Social Security number, some of them successfully. Thieves used Davis’ information to open utility accounts, credit cards, and cell-phone service, racking up thousands of dollars worth of debt in his name.

Consumer data not secured

The federal government stepped in when it said LifeLock was not properly protecting its customers’ information. In 2010, the company agreed to pay $11 million to the FTC and $1 million to a group of 35 state attorneys general to settle charges that the company used false claims to promote its services. The FTC charged that the company provided less protection against identity theft than promised and that it made claims about its own data security that were not true. The company mailed refund checks to 957,928 people the FTC said were victims of the false claims.

“The protection [LifeLock] actually provided left enough holes that you could drive a truck through it,’’ said then-FTC Chairman Jon Leibowitz.

What’s changed since that $12 million settlement? LifeLock, which advertises its services with a crypto-fascist army of laser-shooting robot locks, now includes fine-print disclaimers noting that “not all transactions are covered and scope may vary” and that “no one can prevent all identity theft.”

What’s not protected?

While LifeLock promises to monitor for fraudulent applications made using their customers’ identities (e.g., when an identity thief attempts to take out a loan or open a new credit card with someone else’s information), according to the FTC, only 18.5% of 2012 identity theft complaints were about new account fraud. If someone steals your credit-card number and begins making purchases with that information, there’s little LifeLock can do to preempt the thief. And the FTC now lists tax- and wage-related fraud — when someone steals your tax return or wages using your social security number — as the most common type of identity theft.

In regard to LifeLock’s protection, “scope may vary” indeed.

Check out how to protect yourself from identity theft.

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