LifeLock settles with AGs, federal regulator

Chris Rizo Mar. 10, 2010, 3:33am

CHICAGO (Legal Newsline)-The identity protection company LifeLock Inc. has entered into an $11 million settlement with 34 state attorneys general and the Federal Trade Commission, resolving claims that the brand overstated the protections it provides consumers, officials said Tuesday.

Texas Attorney General Greg Abbott is among the AGs agreeing to the settlement.

In announcing the multistate settlement that provides restitution to consumers, attorneys general said the Tempe, Ariz.-based company, which calls itself "the industry leader in identity theft protection," misrepresented its products to consumers, giving them a false sense of security.

"This agreement prevents LifeLock from misrepresenting that its services offer absolute protection against identity theft," said Illinois Attorney General Lisa Madigan, who led the states' investigation.

Last year, the Federal Trade Commission and attorneys general began to jointly investigate LifeLock's claims.

The investigation followed an advertisement from the company that included a testimonial from its chief executive, Todd Davis, in which he gave out his Social Security number to demonstrate his confidence in LifeLock's services.

LifeLock advertisements also implied that fraudulently obtained personal information about its customers would be removed from illegal Web sites, when in fact the company only notified consumers when their information had been compromised.

In sum, officials alleged that LifeLock misled consumers into believing that its fraud alert services would protect them against identity theft, including criminal, mortgage and child identity theft, through its fraud alerts on its customers' consumer records.

"While LifeLock promised consumers complete protection against all types of identity theft, in truth, the protection it actually provided left enough holes that you could drive a truck through it," said Federal Trade Commission Chairman Jon Leibowitz.

LifeLock typically charged consumers $10 a month to subscribe to its identity theft protection services.

Under the settlement, LifeLock has agreed to pay $11 million in restitution to its subscribers and $1 million to cover the costs of the states' investigation.

"LifeLock sold Californians a false sense of security against identity theft with advertisements that were chock full of inflated claims and promises," California Attorney General Jerry Brown said. "Today's settlement prevents the company from misrepresenting and overstating its services and reimburses LifeLock subscribers who were misled."

The agreement is the Federal Trade Commission's biggest identity-theft settlement to date.

In a statement, LifeLock said it is happy with the agreement it has reached with officials.

"LifeLock is pleased with this agreement, which, for the very first time, works to set advertising guidelines for the entire industry. We welcome federal and state efforts to regulate our industry, because doing so helps to protect consumers from the risks of identity theft," said CEO Davis.

States participating in the settlement are: 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, Texas, Vermont, Virginia, Washington and West Virginia.

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