ConsumerMan: Empty promises for protection

Thu Dec 4, 2008 1:22 PM EST

business, only-on-msnbc-com, fraud, credit, theft, social-security, identity, davis, consumerman, lifelock, todd-davis

msnbc.com News — Herb Weisbaum, msnbc.com - Only on msnbc.com

Todd Davis is a super salesman with a mighty convincing pitch. You may not know his name, but I bet you’ve seen his ads for LifeLock. Davis, the company’s CEO, gives out his real Social Security number to prove his confidence in Lifelock’s identity theft protection service.

“The advertisements are bold, but the protection is less than you would expect,” notes Jeff Blyskal, senior editor at Consumer Reports. “It creates the false impression that you don’t have to worry about ID theft; just do what you want, you can even be careless.”

But clearly you shouldn’t do what Davis does. In fact, the LifeLock terms and conditions agreement states, "...you agree that you will not purposely engage in behavior that will put your personal information at unnecessary risk, such as leaving your PIN or passwords in obvious places or publishing your Social Security Number."

So what is LifeLock?
For $10 a month or $110 a year, LifeLock offers what it calls “proactive identity theft protection.” According to its Web site, the company provides “a proven solution that prevents your identity from being stolen before it happens.”

It backs up that claim with a “$1 million total service guarantee.”

How does LifeLock protect you from identity thieves? It puts a “fraud alert” on your credit files at the big three credit bureaus – Experian, Equifax and TransUnion – and renews that alert every 90 days. The company also contacts the Direct Marketing Association to remove your name from pre-approved credit card offers and provides you with a free copy of your credit report each year. Of course, you can do all this yourself – for free.

Davis agrees he’s selling convenience and he readily admits LifeLock isn’t foolproof. “No system can stop your identity from being stolen.” But he says that the million dollar guarantee is there should something go wrong. “We actually accept the burden of resolving the issue, hiring whomever we need to hire, engaging whatever experts we need to resolve the problem for you.”

Do fraud alerts work?
A 90-day fraud alert flags your credit file. It tells a potential lender you suspect you are or could be the victim of identity theft. This should make them more careful when someone applies for a new credit account in your name, requests a new card for one of your existing accounts, or tries to increase the credit limit.

On its Web site, LifeLock says it wants to “lock down every individual’s private information” so no one else can use it. But a fraud alert does not lock your credit file. And it’s far from perfect.

According to the advocacy group Consumer Action, fraud alerts are only effective in about 75 percent of the cases. The only way to restrict access to your credit file is with a credit freeze, something LifeLock does not do.

In February, Experian (one of the big three credit reporting agencies) sued LifeLock, claiming its use of fraud alerts is illegal. The Fair Credit Reporting Act limits a 90-day fraud alert to someone who “asserts in good faith” a suspicion that he or she “has been or is about to become a victim of fraud or related crime, including identity theft.” Experian says it does not believe all of LifeLock’s 1.3 million customers meet that requirement. But according to LifeLock's terms and conditions agreement, by becoming a member, "You certify that you have a good faith suspicion that you (or your child you have enrolled) have been or are about to become a victim of fraud or related crime, including identity theft ..."

Davis countersued Experian and insists LifeLock is “100 percent within the spirit of the law.”

LifeLock also faces consumer lawsuits in at least seven states. These complaints claim the company uses “fraudulent advertising,” and makes “false, deceptive and misleading statements.”

“LifeLock cannot provide the protection it says it provides,” says David Paris, the attorney who filed suit against LifeLock in Maryland, West Virginia, California, Texas, Florida, and New Jersey. “The company’s ads lull people into a false sense of security. They are paying for a service they are not getting.”

Attorney Leonard Aragon filed suit in Arizona because LifeLock is headquartered there. “There is no million dollar guarantee,” he insists because of all the fine print – restrictions, waivers and limitations – in the contract.

The terms and conditions clearly state LifeLock is only responsible to “cure the failure or defect in our service.” The company will not pay for lost wages or profits, loss of business, or lost opportunities. And it will not reimburse any fees you spend for professionals or other service providers “unless we choose those providers for your particular matter.”

Davis says his customers don’t need to worry about the fine print. He told me it’s only there to satisfy state and federal regulators. “It’s not about us trying to get out from our responsibilities,” he assured me. But as any lawyer will tell you, clauses are put into contracts for a reason. And when push comes to shove, it’s the contract not the advertising claims that count.

Davis says 329 people have invoked the guarantee so far and they have all been taken care of. “I do not have anybody suing me because I did not honor the guarantee,” he says.

My two cents
The courts will ultimately decide if LifeLock is operating within the law. But there’s no question Davis is being incredibly reckless by using his Social Security number in advertisements.

Here’s something the ads don’t tell you. LifeLock did not prevent Davis from becoming a victim of identity theft. In fact, a man in Texas got a $500 pay-day loan using Davis’ Social Security number. How could that happen? Davis says the loan company did not use one of the major credit bureaus, so they did not know about the fraud alert.

Davis says there have been almost 100 other unsuccessful attempts to steal his identity. He admits he can’t be sure someone hasn’t used his SSN to get a driver’s license or perform some other transaction that doesn’t require a credit check.

Fact: There is nothing you, LifeLock, or any other paid service can do to completely prevent identity theft. The best you can do is minimize your risk.

Is LifeLock worth the money? Not to me. I already told the Direct Marketing Industry I don’t want junk mail and I opted out of pre-approved credit card offers. That took less than five minutes and didn’t cost me a penny. Next, I plan to put a freeze on my credit file. I’ll have more on that in a future column.

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Public Discussion (14)

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{"commentId":4292702,"authorDomain":"debbiede57"}

Deb Dearborn

I was a bit surprised by all this really negativity towards LifeLock. I read all of this stuff on the lawsuits before about a year ago or so. What's new about it? I sleep better at night knowing that if my identity is stolen I can call them to help me recoup my money and name.

The one thing that stands out to me is why are they the only company being sued when there are so many of these companies offering similar services?

What is so bad about hiring someone else to do work I don't want to deal with? I think it's interesting that the advertisers on this site compete with Lifelock. something worth noting. I am always leery when such negative reports come out and the only news is previous news.

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#1 - Thu Dec 4, 2008 3:19 PM EST

{"commentId":4296562,"authorDomain":"barbaras0303"}

barb-756181

Seems as though they are rattling some cages all over the place. What's the big deal if I want to use them or Debix? Sure seems like lifelock is being picked apart and wonder why. Experian offers free credit reports that are not free and I notice they advertise here. Experian is a faceless company at least we know who Todd Davis is. Nobody goes up against the credit reporting agencies because of their advertising dollars. Sure wish someone would call them like we see them.

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#2 - Thu Dec 4, 2008 7:36 PM EST

{"commentId":4298837,"authorDomain":"Wendy1111"}

Wendy-1111

I think these lawsuits are bogus. I wonder why it's so easy for some to sue and we are stuck with binding arbitration. Lifelock is simply trying to make our lives less problematic. Why do I feel dirty because I don't want to do the work myself? too many people are made to feel stupid if they don't want the aggravation of having to handle an identity theft and protection from it on our own. Sheesh, isn't this America??

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#3 - Fri Dec 5, 2008 12:24 AM EST

{"commentId":4301904,"authorDomain":"shar-21"}

Sharon-757444

I used this service for almost a year and recently cancelled it because I just couldn't justify the $10 per month. I also recently came into ownership of a home and with one of the utility companies I had to pay a large deposit. They couldn't verify my credit because of the fraud alert on my file. I was under the impression that I was to be telephoned when someone tried to access my credit file to verify that it was something I knew about but I never received a call.

I was happy with the decrease in junk mail credit card offers which was about the only good thing I could see with the service.

All in all, I believe that if you think the service is a good one and want to use it, then do so.

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#4 - Fri Dec 5, 2008 9:13 AM EST

{"commentId":4307644,"authorDomain":"firmani"}

Mark Firmani

If you are interested in learning more about the pending lawsuit against Lifelock, visit the Web site for Hagens Berman Sobol Shapiro

I work with the attorneys and they are good guys, fighting what I believe is a blatant scam.

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#5 - Fri Dec 5, 2008 1:44 PM EST

{"commentId":4308811,"authorDomain":"aewhale"}

Albert E. Whale, CHS CISA CISSP

I am a security consultant that has worked exclusively on security issues since 9/11. I work for businesses in developing better security to protect them, and their customer's information from identity theft. I know that in order for anyone to have a working strategy for protecting personal information, you will need to have a multi-layered approach in order for any one of them to have a chance.

In today's world, I am overwhelmed with how many people are unwilling to take the most basis steps to protect themselves, BEFORE they have an incident. After they experience a major catastrophy, they are willing to do anything, to attempt to turn back the hands of time. Yet very few people will perform simple tasks, like these, becuase they involve work:

1. Shred your personal information.

2. Secure your wireless access point.

3. Stop using a Free email service, it's the party line phone system of the 1960's.

As I said, people refuse to make the most basic changes in their own personal security, because they take time, and effort to make changes.

My wife is LifeLock customer, because the Verizon Telephone service in PA has permitted a woman that lives two hours from us to use my wife's Personal Social Security Number to open a telephone account, on three separate occasions. Here is an example of how a Husband and a Wife can have their own home for 11 years, and still have their information left unchecked.

I believe that you need multiple layers of protection, because if you think that everyone else has your best interests at heart, you are being fooled.

{"commentId":4308811,"threadId":"434729","contentId":"2177321","authorDomain":"aewhale"}

#6 - Fri Dec 5, 2008 2:47 PM EST

{"commentId":4309286,"authorDomain":"kellymariepatrick"}

Marie Burt

I never respond to these types of forums but I couldn't believe my eyes. The lawyer suing Lifelock is here commenting here??? I agree with Deb D. sounds a little bit like a set up. Why would a reputable lawyer be posting about a lawsuit. Sounds like ambulance chasing to me and that is disturbing and annoying!

{"commentId":4309286,"threadId":"434729","contentId":"2177321","authorDomain":"kellymariepatrick"}

#7 - Fri Dec 5, 2008 3:13 PM EST

{"commentId":4311389,"authorDomain":"zfriesen"}

Zach-759119

This article is terrible. How sad it is to see reporters trading real consumer help topics for poorly researched slander ads based on little more than the competitors thoughts and misleading rational. The writer take LifeLock’s metaphors to the extreme stating despite the company’s wants to ‘lock’ down personal information, that a one of their many services, fraud alerts, is incapable of archiving that. I would expect someone in a literary field to be able to better understand not only the use of symbolism, but also be able to support their claims with a little more research. If one of LifeLock’s services, the fraud alert, is able to stop 75% of id theft cases then I am sure glad the company has another bundle of service for the other 25%. Moreover, their million-dollar safety net stands to catch any percent not met by the proactive solutions. Furthermore, whoever believes that commercials represent real life ought to have their head examined! In the Chase id theft commercial they show the guy chasing down his thief as though it were a James Bond film, but I don’t expect any company to do that nor do I expect them to let me try. More to the point still, Freecreditreport.com advertises as free (its even in their name) and I see noting being said or done about their false advertising. What they didn’t tell us the public in the article was that Experian, the major source of information undoubtedly for the writer, had an interest in suing and eliminating LifeLock as it competes with a service that they charge people for to the same end. I can understand marketing and advertising as means to get your product out to the public, but this misuse of the news outlets leaves myself (and hopefully others) thinking twice before trusting newsvine’s reporting integrity again.

{"commentId":4311389,"threadId":"434729","contentId":"2177321","authorDomain":"zfriesen"}

#8 - Fri Dec 5, 2008 5:04 PM EST

{"commentId":4312393,"authorDomain":"cmh9048"}

C9048

Question? Why would someone want to engage in activities that would guarantee that their identity be stolen? I don't know? Todd Davis does it to prove a point. $500 in the grand scheme of things is not that much money. ALSO, that thief didn't get very far because of LifeLock's incredible service.

As a 2-time victim of identity theft myself, I can tell you it's a pain to figure everything out yourself. The 1st time my identity was stolen I was only 19. Someone had acquired a driver's license in my name. I had to fix the problem myself. My identity was then stolen again when I was 25, through a driver's license again. Luckily, I had LifeLock and they fixed the problem for me. My theft wasn't financial or credit based, and LifeLock still provided me the protection and recovery I needed to get on with my life.

{"commentId":4312393,"threadId":"434729","contentId":"2177321","authorDomain":"cmh9048"}

#9 - Fri Dec 5, 2008 6:05 PM EST

{"commentId":4312670,"authorDomain":"cmh9048"}

C9048

Huh! How funny, I just signed up for this less-than reputable "newsvine" to post a comment about this article and they sent me a confirmation/validation email. It arrived in my JUNK mail box. No wonder they don't like LifeLock... A company dedicated to protecting identities... and reduce JUNK mail. If you need anymore proof that "newsvine" is a scam itself, I don't know what else would work any clearer than that! Plus, who honestly checks their sources? I mean come on... updated 16 seconds ago... PLEASE!!! Plus, they allow comments on their stories... That they didn't even write...

{"commentId":4312670,"threadId":"434729","contentId":"2177321","authorDomain":"cmh9048"}

#10 - Fri Dec 5, 2008 6:22 PM EST

{"commentId":4314729,"authorDomain":"jim-73"}

Jim Malmberg

There has been a barrage of these anti-LifeLock articles over the past few days (I've seen this particular article posted elsewhere too) but I have to say that this is the first time that I've seen an attorney involved with any of the suits post a comment. I'm not sure what to make of that.

What strikes me as odd is the fact that none of the suits filed are from LifeLock customers who have used the company's services to restore their identities.

If the basis of the suits is that people shouldn't be able to purchase a convenience item, then watch out. The car valet at you local restraunt will be the next to get pulled into court. If, on the other hand the basis of the suit is that the service doesn't work, I'd really like to hear that from LifeLock customers that have had to invoke the guarantee. But for some reason, these people don't seem to be complaining. Maybe that's an indication that the company is actually doing its job.

{"commentId":4314729,"threadId":"434729","contentId":"2177321","authorDomain":"jim-73"}

#11 - Fri Dec 5, 2008 8:42 PM EST

{"commentId":4325664,"authorDomain":"amarrin1"}

andy marrin

Lifelock really isn't necessary to protect your credit files. For about $10 to each of the three major credit reporting agencies my credit files are "frozen". No one but my current creditors can access my files. When I wish to get new credit I release my file using a pin number provided by the reporting agency. So, for $30, one time, I am better protected than paying Lifelock $100 a year for life.

{"commentId":4325664,"threadId":"434729","contentId":"2177321","authorDomain":"amarrin1"}

#12 - Sat Dec 6, 2008 5:53 PM EST

{"commentId":4345590,"authorDomain":"pbwriter"}

Joe Sindoni

Yo Herb! What’s with the negative slant on a good company? They’re providing a helpful service at a reasonable price and you’re attacking them! What gives??

You write: “According to the advocacy group Consumer Action, fraud alerts are only effective in about 75 percent of the cases.” Like this is bad!

You’re being a little disingenuous here Herb. Chase Utley led the Phillies to a World Series Championship and he only got a hit 30% of the time. And he gets paid millions of dollars to achieve that percentage! I think we’d all be better served if writers and reporters strived for 75 percent accuracy in their reporting!

And as far as the price - are you kidding me!! For around 30 cents a day (about the price a Gumball today) I get a decent degree of protection, and help by knowledgeable people if I do have my identity stolen. Plus they take care of the menial tasks for me - like putting and renewing Fraud Alerts on my files.

We spend a fortune on vitamins and it doesn’t guarantee we won’t get a disease. We take all kinds of precautionary medications to help things like cholesterol, high blood pressure, and many other ailments, but it doesn’t guarantee we won’t have a heart attack or stroke. We spend billions of dollars to protect our country and it still does not guarantee we won’t get attacked. If we followed the logic you dispel, that since it can’t protect us 100 percent, that it’s not even worth the cost a cup of coffee a week, we would live with reckless abandon. Nothing is 100 percent!

You go on to say, “In February, Experian (one of the big three credit reporting agencies) sued LifeLock, claiming its use of fraud alerts is illegal. The Fair Credit Reporting Act limits a 90-day fraud alert to someone who “asserts in good faith” a suspicion that he or she “has been or is about to become a victim of fraud or related crime, including identity theft.”

You “report” about Experian suing LifeLock for putting a Fraud Alert on their clients files as a precautionary measure, but you say you’re going to put an even more restrictive “freeze” on your file. It’s good for you, but not for me – because I used LifeLock to do it for me. You’re kind of talking out of both sides of your mouth here Herb. Not all of us have the time to do this, or the knowledge.

Keep in mind that what takes you minutes to do may take someone else hours. For me it’s easy to go into an ocean and save a drowning person. You would likely drown trying. We all have different strengths and weaknesses, we all have things we’re knowledgeable about and things we’re not so knowledgeable about. For me, LifeLock offers a very valuable service for my time and money.

How about doing some real investigative reporting Herb. Maybe if Experian did a better job at protecting our personal information it would not be necessary for everyone to put a “fraud alert” on their files. And can you blame anyone for wanting that alert put on their file when every day we are bombarded with news stories about identity theft, and even more advertisements warning us about it?

A person who is responsible enough to heed these warnings, and is proactive enough to sign up for LifeLock, would certainly want the minimum protection of putting a Fraud Alert on their files. For Experian to be suing LifeLock over this makes no sense on it’s merits. LifeLock is trying to protect the same information Experian is charged with protecting.

Maybe you should look into how many identity thieves have cracked into Experian’s records. How many times has Experian had breaches in their security? How many unauthorized individuals have gained access to personal information from Experian that they had no right to access. How many unscrupulous companies have run credit checks on people using Experian?

I’d like to know if Experian meets that 75 percent threshold in accuracy, and in protecting our personal information. Come on Herb, look at Goliath before picking on David. Many more people would benefit from that!

Maybe everyone who’s had their identity stolen and can trace it back to a breach or flaw in Experian’s security should file a suit against Experian. Once a few good investigative attorneys start looking into Experian’s practices, record keeping, and more important, record protecting, we may find out that Experian is not doing all it can and should do to protect our identity.

I’m familiar with the nightmare of having your identity stolen. It’s worse than getting a computer virus. And that’s pretty bad! I pay to have a company prevent my computer from getting a virus, but it still happened. But the one thing I know is that having tech support walk me through uncorrupting my files saved me a lot of hours and even more frustration. And the same can be said with having LifeLock. Having someone to help prevent identity theft, and if it happens help you get it fixed, will be more than worth the few cents a day it cost.

Come on Herb! You’re a smart guy. I know you would not be swayed to write a story based on appeasing your advertisers as some of the previous comments suggest. It’s probably just that Arctic Canadian air hitting Seattle. I think you had a little brain freeze here.

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#13 - Mon Dec 8, 2008 2:09 PM EST

{"commentId":4471596,"authorDomain":"jkintu2006"}

Shaka Zulu

All these credit protection stuff are bogus, its like the do-not-call phone list. Meaningless, people worry about these things?? FICO scores?? anyone, i see people with 800 getting denied loans etc. In an economic depression which is at our door-steps all this is meaningless. Save your $10/monthly folks.

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#14 - Wed Dec 17, 2008 10:56 PM EST

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ConsumerMan: Empty promises for protection

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