LifeLock Fined for Identity Theft Protection Claims
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LifeLock Fined for Misleading Identity Theft Protection Claims

Identity theft protection company LifeLock must pay $12 million in settlements after federal regulators ruled they can't back up their claims.

According to their Web site, LifeLock says they can help protect a customer's identity from being stolen, and alert customers to security breaches for which they may be vulnerable. In the case that a customer's identity is stolen, LifeLock says they will help customers in the recovery process by canceling and replacing stolen credit cards and verifying information changes.

According to federal regulators, however, LifeLock has made claims about its ability to protect customers from identity theft that it cannot uphold. As a result, the company agreed to pay $12 million in settlements to the Federal Trade Commission and states.

CNNMoney is reporting that the fine will settle charges that LifeLock made deceptive claims about its identity theft protection abilities. Most of the fine will go to the Federal Trade Commission, while another $1 million will go to a group of attorneys general from around the country. According to the FTC, this is one of the largest joint settlements between the FTC and the states.

According to the chairman of the FTC, Jon Liebowitz, LifeLock claimed that it could protect consumers against identity theft completely, including all types of identity theft. “The protection it actually provided,” said the chairmn, “left enough holes that you could drive a truck through it.”

LifeLock advertises its services in a brash manner, by displaying the social security number of the company’s CEO, Todd Davis, on the side of a truck that drives around in public. This show of confidence is meant to publicize their $10 per month services that they claim will keep users safe from identity theft.

The case that the FTC made against LifeLock was that the company made “deceptive claims” about its protection services. Among these claims were that LifeLock could guarantee protection against identity theft, and that, according to CNNMoney, “it was the first company to prevent identity theft from occurring.”

There are certain types of identity theft that LifeLock claimed it could protect against, and the FTC argued that these fraud alerts did not actually protect against one of the most common types of identity theft: the misuse of existing accounts. Nor was it clear how effective this service was in helping clients recover from bankruptcy.

There was also the charge that LifeLock claimed, falsely, to be able to prevent changes to customers’ address listings that weren’t authorized, and that it constantly monitored customer credit report activity.

The FTC also said that LifeLock made untrue statements about data security, claiming that sensitive data was only accessed on a “need-to-know” basis. According to the FTC, however, LifeLock collected social security numbers and credit card numbers on a routine basis.

The CEO of LifeLock said he was pleased with the settlement, and that it would help to establish the advertising standards for the identity theft protection industry. He went on to say that the activities in the FTC charges were from several years ago, and that LifeLock agreed to settle the case as a way to put the issues behind them.

“We agreed to settle this matter,” he said, “in order to quickly put this behind us so we can get back to doing what we do best -- helping to protect our members from identity theft.”

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