LifeLock

lifelock

LifeLock Inc., founded in 2005, is an American identity theft protection company based in Arizona. The company charges $10 a month for the LifeLock identity theft protection system intended to detect fraudulent applications for some forms of credit and non-credit related services.

LifeLock’s CEO Todd Davis was the victim of identity theft 13 times during 2007 and 2008, after he publicly posted his Social Security number on billboards and in TV commercials as part of a campaign to promote the company’s identity theft protection services.

Lifelock provides a $1 million guarantee in the event of identity theft. The guarantee is that Lifelock will spend up to $1,000,000 on restoring your identity; Lifelock does not cover the direct losses you incur from identity theft or pay restitution to you for money lost. In 2010, LifeLock was fined $12 million by the FTC for deceptive advertising. The agency called their prior marketing claims misleading to consumers. LifeLock has partnered with major banks, national corporations and has celebrity endorsers like Rush Limbaugh.

The company’s ex-cofounder, Robert Maynard, was accused in 2007 of misrepresenting his story about identity theft, which resulted in his resignation. Maynard often recants the story that the idea for the company was founded from a jail cell in 2003. He was serving for $16,000 in casino loans that he claims were made by someone who stole his identity. The story goes that he spent $20,000 and many phone calls to clear his name and thought of LifeLock as a way to prevent others from being victimized. The media was sucked into the story of LifeLock, but investigations later showed he was lying. Video recordings showed that he was at the casino and a drivers license confirmed the debt was his. He started LifeLock in 2005, even as he himself was filing for bankruptcy for the third time.

In December 2008 LifeLock entered into an agreement with TransUnion, one of the three main credit bureaus, to automate the process of alerting customers of potential unauthorized access via their credit reports. LifeLock’s primary service is to place an electronic red flag, called a fraud alert, on your account, with the three major credit bureaus. These flags are placed on an account whenever the account holder thinks someone has stolen their identity and calls at least one credit bureau, but they’re wiped clean every three months. LifeLock notifies the credit bureaus every three months to maintain a permanent red flag, so long as the account holder is a subscriber. LifeLock’s million dollar guarantee was only used three times from 2005 – 2007.

LifeLock advertises heavily on the Internet and radio; its ads can be heard on the Howard Stern, Paul Harvey, and Rush Limbaugh shows. Celebrity spokespersons for LifeLock have included Howard Stern, Paul Harvey, Mark Levin, and Rush Limbaugh. During the large sponsor exodus from the Rush Limbaugh radio program that followed the Sandra Fluke controversy (Rush was heavily criticized for called a woman’s rights activist a slut) , LifeLock was one of the few national advertisers to choose to remain with the program. LifeLock is also active in many community groups including the National Organization for Victim Assistance (NOVA) and Junior Achievement.

In 2008, the credit information company Experian sued LifeLock for fraud and false advertising. Experian alleged that LifeLock placed false fraud alerts on behalf of its clients, thus keeping LifeLock clients’ files in a constant state of alert. As part of a 2009 settlement, LifeLock set up a new proprietary service that does not rely on setting fraud alerts. In 2010 LifeLock was fined $12 million by the FTC, ‘to settle charges that the company used false claims to promote its identity theft protection services, which it widely advertised by displaying the CEO’s Social Security number on the side of a truck.’ FTC Chairman Jon Leibowitz, referring to the LifeLock TV ad showing the truck, said that ‘the protection they provided left such a large hole … that you could drive that truck through it.’ LifeLock will pay $12 million to settle charges, by the FTC and 35 states, that the company’s identity theft prevention and data security claims were false.

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