FTC: Lifelock claims misleading customers
CHICAGO (WBBM/CBS) — Their commercials and ads were everywhere: Lifelock promising that for a fee of $10 a month, it could give you virtually foolproof protection against identity theft.
The problem – Illinois’ attorney general and other law enforcement agencies say their claims were at best, misleading and at worst, downright false.
Now, WBBM’s Regine Schlesinger reports they’re forcing the company to offer refunds to customers in a 12 million dollar settlement with the FTC and 35 states.
You probably remember the ad blitz with Lifelock CEO Todd Davis public proclaiming his Social Security number as proof his business could give you ironclad protection against having your identity stolen.
Attorney General Lisa Madigan says Lifelock preyed on consumer fears of a very real problem. She says they used scare tactics to lure customers, sending even her an advertising letter.
Now, an agreement between Lifelock, the FTC and 35 states, will split 12-million dollars among Lifelock’s more than one million customers as compensation for the company’s deception. FTC chairman Jon Leibowitz says there\’s a lesson in this case for other businesses.
The state will be sending out letters soon, notifying Lifelock customers how they can apply for settlement money
The settlement against LifeLock is one of the largest FTC-state coordinated settlements on record. It requires the company to stop making deceptive claims and take strong measures to safeguard the personal information it collects.
“This agreement effectively prevents LifeLock from misrepresenting that its services offer absolute prevention against identity theft because there is unfortunately no foolproof way to avoid ID theft,” Madigan said in the news release. “Consumers can take definitive steps to minimize the chances of having their personal information stolen, and this settlement will help them make more informed decisions about whether to enroll in ID theft protection services.”
LifeLock has advertised since 2006 that it can prevent identity theft for consumers who sign up for its $10-per-month service.
LifeLock’s advertisements billed it as “the first company to prevent identity theft from occurring,” and said LifeLock prevents identity theft “from ever happening to you. Guaranteed.”
But the FTC says the fraud alerts that LifeLock placed on consumers’ personal information just prevented against some forms of identity theft, such as new account fraud. The company did not protect against the misuse of existing accounts, the FTC said.
LifeLock also did not protect consumers against medical or employment identity theft, which are used by thieves to get medical care or jobs.
Only 17 percent of identity theft cases involve a thief trying to establish a new account in someone else’s name, the FTC said. But LifeLock didn’t even provide absolute protection for new account fraud, the FTC alleged.
Most importantly, consumers were given no protection against the misuse of existing accounts, the FTC said.
“They alert creditors opening new accounts to take reasonable measures to verify that the individual applying for credit actually is who he or she claims to be, but in some instances, identity thieves can thwart even reasonable precautions,” the FTC said in the release.
LifeLock also made claims about its own data security that were not true, the FTC said.
The company would collect sensitive information such as Social Security and credit card numbers from its customers, all the while assuring them that only “authorized employees of LifeLock” would have access to the data, that it was electronically encrypted, and that the company’s “highly secure physical, electronic, and managerial procedures” were sure to protect the sensitive information.
But the data was not encrypted, and the sensitive information was shared within the company on a “need to know” basis, the FTC said. The company’s data system was actually vulnerable enough that it could have been hacked, the FTC said.
The FTC and state settlements forbid the company from misrepresenting the “means, methods, procedures, effects, effectiveness, coverage, or scope of any identity theft protection service,” the FTC said. The company must also establish a security program which will be monitored by a third party for 20 years.
The FTC says it will use the money from the settlement to refund consumers. Current and former customers of LifeLock will be sent letters with instructions to apply. More information is available at (202) 326-3757 or http://www.ftc.gov/lifelock.
Regine Schlesinger Reporting
Read the original article from WBBM News Radio.
4:00 am
CROOKS, CROOKS, CROOKS!!! THEY OUGHT TO LOSE THEIR BUSINESS LICENSE PERIOD!!!!
THE CO-FOUNDER OF LIFELOCK WAS A CROOKED SCAMMING FELON WHO STARTED LIFELOCK WITH TODD DAVIS RIGHT AFTER HE WAS RELEASED FROM PRISON!!
GETTING SO SICK OF PEOPLE GETTING SCAMMED!!
MM
ROCKFORD
7:09 pm
MM,
Don’t hate someone just because they are a felon. Many people make mistakes, end up in prison, and then make a better life for themselves upon release. I am so sick of the hate in our country! EVERY ONE deserves a second chance.
3:47 am
The article does not mention if LifeLock’s services helped or not.
8:23 am
The FTC ruling is about LifeLock advertising policies that were in place from March 2005 to April 2008, policies that LifeLock had already changed. It’s old news. LifeLock did not, as the FTC ruling claims, promise to 100% prevent identity theft anymore than all the credit monitoring products do -they promised to reduce the risk and then remediate the effects of an identity theft if one should occur to one of its subscribers. That’s more than any govt agency or most credit monitoring services offer.
And on the statement: “The company’s data system was actually vulnerable enough that it could have been hacked, the FTC said.”
What about the FTC’s Red Flags Rule that has been delayed over and over due to various demands by corporate entities not ready with policies designed to protect our information? What about all these govt data breaches? How about the banks that have thrown our information in dumpsters? And we can’t forget about the credit bureaus who sell and trade our information for profit.
The FTC said: The company must also establish a security program which will be monitored by a third party for 20 years. In 2007 LifeLock became ISO 270001 certified, the highest rating there is for data management. How many other entities that store our data can say that? What about all the government agencies who have been responsible for data compromises and theft? We can all only hope the government will hold themselves to the same standards they require of others.
LifeLock has just introduced several new high tech proactive options to their array of consumer protection services. Ironically, the FTC quotes from Javelin Strategy and Research (2009) which also gives LifeLock a 5-Star Excellent rating.
At the press conference, when asked how many complaints had been lodged against LifeLock, there was no clear answer. The response: not sure would check, but they would estimate 200. What? Add some zeros to that to come close to the number of complaints against freecreditreport—or even mortgage servicing companies such as EMC, Chase, Bank of America, or even the credit bureaus! If you have or had a problem with LifeLock you can reach them 24/7 365 days a year. Sadly, the same can’t be said about the credit bureaus -or most in the mortgage servicing industry.
LifeLock did nothing criminal. Neither did Todd Davis whom I know to be a stand-up guy and nothing like the guy portrayed here or by those who may have a competing agenda. I continue to stand beside them and their excellent work. The FTC ruling will, I hope, shine a strong light on inconsistencies in the field of identity theft and consumer protection. I just wish we could focus on the crime itself -and not those trying to stop it.
Now having said that, in the interest of full disclosure, LifeLock has paid me to speak at their free identity theft seminars as one of their many Certified Identity Theft Risk Management Specialists. However, to be clear, I get paid to talk about identity theft and the impact it has on victims such as myself, I do not get paid to promote LifeLock.
1:14 pm
No wonder Lifelock CEO Todd Davis stopped advertising his SS #. couldn’t protect his own identity. What a joke! As a part of this settlement they should have put these crooks out of business and stop all TV and Radio advertisement
6:47 am
I read somewhere that it was against the law to use a SSN in advertising. I assume that applies to your own number as well.
5:23 pm
Well Denise,
I could tell during the first paragraph that you wrote that you are connected with Lifelock in some way. You may not technically be getting paid to PROMOTE Lifelock but that is obviously what you are doing. Being a “Certified Identity Theft Risk Management Specialist” while being paid by Lifelock, to talk about the impact of identity theft… at the very least, when you speak you must be aware that the impression you have to be giving is that if they had only had Lifelock to protect them they wouldn’t be going through the trauma and devastation of identity theft. Otherwise, what would Lifelock’s motive be in PAYING you to go speak about your experience? One would have to be a moron to not see that you are indeed being paid to promote Lifelock. Even if its in a roundabout manner.
3:30 pm
Jean, I am sorry you feel that way -your assumptions are baseless and totally off the mark. I use my knowledge and my life experiences as a victim of identity theft, credit reporting abuses and predatory mortgage servicing to help others avoid the trauma of what happened to me.
I don’t usually respond to this type of response, however I believe minimizing the risk and effect of identity theft trivializes what victims go through.
Calling people ‘morons’ because they choose to do all they can to protect their credit, name and finances is both mean-spirited and baseless. I doubt people like Eric Drew, who had his identity stolen while in the hospital fighting for his life with terminal cancer, Kevin Wehner who wrongfully had his picture plastered on TV for killing a police officer, (a crime he didn’t commit) or Cosmo Ricci – a 72 year old man who sat in jail for a weekend waiting to have his name cleared, (all innocent btw), would agree with you.
I have dedicated nearly two decades of my life to responding to consumers, helping them find the right resources and advocates and do so because that’s my passion. I found a way to follow my passion and make a living at it without ever taking a dime from consumers. I consult, write and speak out about a number of consumer issues -and choose to unite and work with many like-minded non-profits and businesses alike. Over the years I have, and continue to, support a number of products and services that I have not now or ever received financial backing from–I simply believe that their product, their service or their organization could benefit others.
It would truly be a sad testament to our times if we all had to start justifying our careers -advertising revenue or the very people we choose to work for and with. My advocacy record and integrity I have stayed true to over the years speaks for itself.
If it’s hard for you to accept that simply truth -for my message and passion behind it, then I can only surmise that you yourself may be the one with a hidden agenda. Whatever the reason -I just wanted to set the record straight and if you would like to speak with me about it further, please feel free to contact me directly.
4:31 pm
@Jean – I’m not getting paid by Lifelock for anything and I can tell you that what the FTC did here is deplorable. They say that they got around 200 complaints (but their not sure) so they investigated. At the same time, they ignore other companies that have thousands of complaints against them, including banks, credit reporting agencies, brokerage houses, etc… What they are doing appears to be a political witch hunt. Apparently, Lifelock didn’t make campaign contributions to the correct corrupt politicians.
6:39 pm
I never trusted these people. Identity theft is a very important subject. There are som people who never recover from it and to see the CEO posting his social should give a red flag. That was not impressive and I knew he was a idiot! If he didnt take his social serious, what makes you think that he is going to take anyone elses serious. It has nothin to do with him being a felon. First impression is the best and there is no room for nonsense in my book. Coming from a 23 year old who has experiece with identity theft…..
1:12 pm
Lifelock charged us $1,000 to start. But couldn’t even stop the
Glut of junk mail that stuffs our box every day! We feel let down.
9:55 pm
As a long time Lifelock call center employee and recently promoted Member Services Mgr, I can tell you there are a tremendous amount of holes in the way LL does business now. Far far worse now that we cannot place “fraud alerts”. Todd Davis is “hell bent” on wanting to go public soon and the LL replacement to the “fraud alert”, called the “LLIA” Lifelock Identity Alert” is very limited to only detecting applications from a small number of financial institutions (apply with say Wells Fargo, Citibank, Home Depot, B of A, American Express, Ford Motor Credit, Honda American Financial, GMAC or even Discover card WILL go UN-detected). LL likes to refer to these companies as “companies that are outside of their network”.
9:21 pm
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9:35 pm
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