Class action filed against LifeLock for deceptive marketing

By Michelle Massey, East Texas Bureau | Jun 19, 2008

Lifelock CEO Todd Davis confidently displays his own social security number in ads for his identity protection company.

MARSHALL – The self-proclaimed industry leader in identity theft protection, LifeLock Inc., is facing its fourth class action that alleges the company commits deceptive and misleading marketing regarding its ability to prevent any possibility of identity theft.

In the company's numerous advertisements, LifeLock's CEO Richard Todd Davis confidently broadcasts his own social security number declaring that his company can prevent any possibility of identity theft.

However, according to court records, Davis' representations are misleading since his own identity was stolen as a LifeLock customer. LifeLock has acknowledged that Davis' identity was compromised on one occasion when a check cashing company failed to follow proper procedures and a thief was able to cash a $500 check.

On behalf of named plaintiff Tommy Ly and others similarly situated, the West Virginia law firm Marks and Klein LLP filed the class action against LifeLock and Davis on June 16 in the Marshall Division of the Eastern District of Texas.

With nearly one million subscribers to its identity theft protection services, for $10 a month LifeLock's subscription provides four services. First, the company secures fraud alerts on the subscriber's behalf. Then, it renews those alerts. Third, LifeLock requests the removal of subscriber's name from credit card and junk mail lists. Fourth, every year the company orders the subscriber's free credit reports from the major credit bureaus.

In addition, LifeLock advertises that it provides a $1 million service guarantee purportedly to reimburse any consumer for any direct expenses incurred due to someone stealing personal information.

According to LifeLock's Web site, "LifeLock will pay you up to $1 million for damages stemming from the security breach. LifeLock says they will "make sure that you get every dollar back, lost wages, costs, actual losses, every dollar up to $1,000,000. Period."

However, according to the complaint, the guarantee is severely limited in scope and application due to "numerous restrictions, limitations, and waivers that are present within its terms." The complaint argues that the service guarantee actually only covers a defect in their service

Contrary to LifeLock's promotions of all-encompassing identity protection, the complaint alleges the company only extends protection to limited, credit-related instances of "new-account" identity theft.

Further, the complaint states that LifeLock's advertisements fail to disclose or intentionally omit the potential adverse impact its services may have on consumer's ability to obtain credit or favorable interest rates.

The complaint argues that LifeLock misrepresents the scope and effectiveness of its services, conceals the true origin of the free credit report, provides terms and conditions that are substantively and procedurally unconscionable, misrepresents the scope and nature of its service guarantee, misrepresents the security of personal information, and uses misleading and deceptive data to substantiate its services.

The class action contends that LifeLock's actions violate the Texas Deceptive Trade Practices–Consumer Protection Act.

On behalf of the proposed class, the lawsuit is seeking more than $5 million in damages and injunctive relief preventing the company from further advertisements and marketing in Texas.

In addition to the West Virginia law firm of Marks and Klein LLP, Tyler attorney Deron R. Dacus of Ramey and Flock PC will represent the potential class.

U.S. District Judge T. John Ward will preside over the litigation.

Ly vs. Lifelock Case No 2:2008cv00242

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