Lifelock began as the brainchild of a man named Robert Maynard. The way Maynard told the story, he was arrested when someone who had stolen his identity failed to pay back a $16,000 loan from a casino in Las Vegas. While sitting in jail mulling over his wrongful imprisonment--just like Martin Luther King, Jr. in Birmingham--he had the idea of starting up a company that would protect users from identity theft.
Only problem? The identity theft never happened. Maynard was the person who took out the loan and failed to pay it back.
Just a couple of years later, Maynard's father was sued by American Express for $154,000 in unpaid bills. Maynard Sr. claimed the charges were not his, and records indicated his son had actually ordered the card in his name and racked up the debt. $170,000 in debt to American Express was listed on Robert Maynard Jr.'s 2005 bankruptcy paperwork.
So, in short, Lifelock is a company that fights identity theft which was founded by an identity thief.
You'd think things could only get better for this company after such a rough start. You'd be wrong. Maynard resigned in 2007, after the information above became public. But that's just where Lifelock's problems really began in earnest.
CEO Todd Davis began posting his Social Security Number on the company's website to promote Lifelock, in effect daring identity thieves to steal it. Lifelock even ran television ads with a truck emblazoned with the number driving around the bustling streets of New York City. In 2007, Wired broke the news that a man in Ft. Worth had used Davis's SSN to obtain a loan. In the months that followed, Davis's identity was successfully stolen again and again--a total of 13 times.
In 2008, Lifelock was sued for corporate identity theft by competitor Namesake, who claimed that "LifeLock stole its trademark and deceptively diverted traffic meant for Namesafe’s web site to LifeLock’s own web site." The suit alleged that Lifelock "purchased sponsored ads on major search engines and portals such as Google, Yahoo, MSN and Hotbot that tricked users into landing on its site."
Then in 2010 Lifelock agreed to pay $12 million to settle a complaint with the FTC and 35 state attorneys general. The complaint alleged that Lifelock was engaged in an "egregious case of deceptive advertising."
Lifelock was essentially relying on fraud alerts flagging new accounts being set up in a customer's name. One of their ads claimed they would prevent ID theft "from ever happening to you. Guaranteed." But the FTC turned up several hundred Lifelock customers who had been victims of identity theft after subscribing to the service. The company also promised to encrypt customers' personal data but used no encryption whatsoever according to the FTC.
Another selling point they used was to vow that they would pay up to $1 million for losses incurred by victims of ID theft--a claim they continue to make. However, investigators found in 2010 that Lifelock "did not pay out-of-pocket expenses" for customers in these cases.
Lifelock also used fear as a common advertising technique, sending potential customers letters that claimed they were especially vulnerable to ID theft. At the time of the case, Illinois attorney general Lisa Madigan said
Don't be scared into spending your hard-earned money...This is the typical tactic of scam artists.
Lifelock continues peddling their $110/yr ID theft protection in Limbaugh's hate radio circus, despite reports that many of the protection services that it promises can be had for free.
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