Texas Attorney General Greg Abbott, attorneys general from 34 other states and the U.S. Federal Trade Commission yesterday reached a settlement agreement with a leading provider of identity theft protection services over its alleged use of unlawfully exaggerated marketing claims.
Under terms of the agreement, Arizona-based LifeLock Inc. agreed to more accurately describe its identity theft protection services and provide $11 million to the FTC and $1 to the 35 states to settle charges the company used false claims to promote its identity theft services.
The joint investigation by the states and the FTC revealed that LifeLock unlawfully exaggerated its range of services and ability to prevent ID theft. LifeLock claimed its services were guaranteed to protect customers’ personal information and prevent criminals from using that sensitive information to open accounts.
Through the settlement – one of the largest FTC-state coordinated settlements on record – LifeLock and its principals will be barred from making deceptive claims and required to take more stringent measures to safeguard the personal information they collect from customers.
Through company advertising claims, customers were left with the impression identity thieves would be absolutely prevented from stealing LifeLock customers’ identifying information.
FTC Chairman Jon Leibowitz said while LifeLock promised consumers complete protection against all types of identity theft, the protection it actually provided “left holes big enough that you could drive a truck through it.”
State and federal authorities were also concerned about LifeLock marketing materials that improperly claimed customers faced a heightened risk of ID theft, despite the fact that LifeLock had no basis for those claims. Under terms of the settlement, LifeLock is also prohibited from making false claims about potential customers’ identity theft risk profile.
In addition, LifeLock must not misrepresent that it:
- Protects against all forms of ID theft;
- Eliminates the risk of ID theft;
- Constantly monitors activity on each of its customers’ consumer reports;
- Always prompts a call from a potential creditor before a new credit account is opened in the customer’s name.
As part of the restitution program, the states and the FTC will send letters to eligible LifeLock customers notifying them of the agreement with instructions on how they can opt-in to participate in the settlement.
In a statement issued following announcement of the settlement, LifeLock Chairman and CEO Todd Davis said he was pleased with the outcome, which he said works to set advertising standards for the entire identity theft industry.
“As FTC Chairman Jon Leibowitz stated today in the press conference, the FTC has ensured that LifeLock has a legitimate business model going forward with honest advertising. Notably, as part of its just-concluded investigation, the FTC reviewed both the LifeLock service and LifeLock’s current advertising to confirm that LifeLock is in compliance with all applicable legal requirements,” Davis said. “We will abide by the terms of this consent decree because we intend to continue to be true to our core mission – to help protect you, your family and your friends from identity theft.”
Davis added his company welcomed state and federal efforts to regulate the ID theft industry because that regulation also helps protect consumers from the risks of identity theft. He also noted LifeLock’s marketing has raised awareness of identity theft.
“Because of LifeLock’s marketing efforts, many more Americans now know of the risks of identity theft and the need to take effective action to protect themselves. LifeLock is committed to developing and applying the most advanced technologies available to help protect consumers from the consequences of identity theft,” Davis said. “We will continue to work very closely with federal and state regulators on regulatory and best practices to protect individual consumers.”
He also stressed the settlement does not change any current advertising since the claims centered on outdated marketing efforts.
“Nothing changes as a result of this settlement because it was based on activities from over two years ago. We agreed to settle this matter 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,” Davis said.
Founded in 2005, LifeLock is best known for its series of high-profile advertisements featuring Davis’ social security number 457-55-5462 and the guarantee, “If your identity is misused while you are our client, we’ll spend up to $1,000,000 to make it right.”
In addition to Texas, the attorneys general of Alaska, Arizona, California, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Missouri, Mississippi, Montana, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Vermont, Virginia, Washington, and West Virginia all took part in the settlement.
