Lifelock Getting Picked
Author: admin
Lifelock Getting Picked
Since February 2008 Lifelock the company that guarantees that your identity will not be stolen has been hammered by legal problems. Lifelock charges consumers 10 a month for the privilege of allowing the company to manage your Fair Credit Reporting Act right to a free initial security alert and which automatically opts out a consumer from preapproved credit offers for six months. The Lifelock website states:
LifeLock the industry leader in proactive identity theft protection offers a proven solution that prevents your identity from being stolen before it happens. We’ll protect your identity and personal information for only 10 a month and we guarantee our service up to 1000000. Lifelock website
A consumer must know what it is they are shopping for and buying. Part of the education of the consumer comes from the vendors or retailers where the consumer shops. Lifelock as quoted above claims that their product prevents your identity from being stolen before it happens. Prevents? Come again? It would make sense to say in the careful speech of legalese reduces the likelihood of identity theft or works to protect your identity. The word prevents clearly implies a nonconditional protection. A consumer reading this if he or she is able to overcome their natural inclination to say too good to be true might jump at the opportunity to purchase such protection.
But can Lifelock truly prevent your identity from being stolen. Three legal actions aimed at Lifelock beg to differ. First on February 13 2008 the Montana Attorney General Mike McGrath opened a civil investigation of Lifelock based upon the appearance of CEO Todd Daviss Social Security Number in a full page advertisement in the Great Falls Tribune. Assistant Attorney General Jesse Laslovich is quoted as saying in an article in the same newspaper there also are some businesses cropping up that may only claim to protect people from identity theft pointing out the nature of Lifelocks business is the utilization of nocost initial security alert placed on the credit file by the three credit repository agencies upon request. An additional concern implied by the Attorney General is that the advertisement including Daviss Social Security Number may itself be contributing to attempted identity fraud The Social Security number in the advertisement is registered to numerous people Laslovich said. Thats probably because people see it and try to use it to open lines of credit he added. Great Falls Tribune
Lifelocks second blow came from the credit repository Experian filing a civil suit in the Federal District Court of Central California announced on February 21.
Experians suit alleges that Lifelock is abusing the Fair Credit Reporting Act right to an initial security alert essentially comparing the use of the alert in a permanent fashion to crying wolf. The Fair Credit Reporting Act states in 605A a1 that a suspicion that the consumer has been or is about to become a victim of fraud or related crime including identity theft is the definition of an initial alerts purpose.
Experian also claims that Lifelocks advertising is false and misleading. Another claim is that Lifelocks ordering of credit reports for its customers which are provided free of charge according to the Fair Credit Reporting Act when requesting an initial fraud alert 612. Charges for certain disclosures d Free disclosures in connection with fraud alerts is being conducted without adequate disclosure meaning that consumers are unaware or are not told by Lifelock that the credit reports they receive are provided free by the credit repositories per federal law. Experian goes on to claim that companies are not legally able to place the fraud alerts for consumers which seems to be a stretch provided that consumers are authorizing the company to do so.
Experians most pertinent complaint involves the applying of initial fraud alerts without the imminent fear of or possibility of fraud. The credit bureaus argument is that the protective nature of an initial security alert will be diminished if the alerts become too common place. Experian argues that creditors will essentially be forced to treat every initial alert as equal implying that eventually the alerts will be ignored.
Lifelock is counting on the practice that creditors will always place a telephone call to the consumer upon discovering the initial security alert. However The Fair Credit Reporting Act does not require a creditor to make a telephone call to the consumer every time an initial security alert is found but is permitted to take reasonable steps to verify the consumer’s identity and confirm that the application for a new credit plan is not the result of identity theft meaning that it is possible that the use of database to verify the personal identifying information of the consumer probably suffices to meet the requirements of the law. If the database does not reflect new fraudulent activity the alert may not work. Another possibility is to mail a letter to the consumer. Experian seems to have a good point.
Fair Credit Reporting Act
605A. Identity theft prevention; fraud alerts and active duty alerts 15 U.S.C. 1681c1
h Limitations on Use of Information for Credit Extensions
1 Requirements for initial and active duty alerts
B Limitation on Users
ii Verification. If a consumer requesting the alert has specified a
telephone number to be used for identity verification purposes before
authorizing any new credit plan or extension described in clause i in
the name of such consumer a user of such consumer report shall
contact the consumer using that telephone number or take reasonable
steps to verify the consumerapos;s identity and confirm that the application
for a new credit plan is not the result of identity theft.
Lastly on 28 March 2008 a class action suit was filed in Arizona against Lifelock alleging similar claims as the Experian suit:
The lawsuit alleges that the threeyearold company defrauds customers by offering services it cannot legally perform and by touting a 1 million guarantee that the suit alleges is wildly misleading. press release
The class action suit based upon Arizona’s Consumer Fraud Act and the Arizona Insurance Code alleges that Lifelock misleads the consumer by overstating the protection it affords and reiterates the Experian claim that Lifelock cannot legally order the consumers credit report. The class action suit also calls into question the highly advertised 1000000 guarantee. The press release reports that the guarantees actual language is:
LifeLock will not pay any losses directly to the consumer and does not cover consequential or incidental damages to identity theft. The guarantee is limited to fixing failures or defects in the LifeLock services and paying other professionals to attempt to restore losses.
So a consumer who does become a victim of identity theft at the very least can claim remuneration from Lifelock for professional identity restoration services something that could have been purchased on a monthly basis for not too much more than Lifelocks 10 fee from competitors of Lifelock.
Will Lifelock survive this legal onslaught? Are more suits or investigations coming? Only time will tell. What is for certain is that Lifelocks attorneys are going to be very busy in 2008. Lifelock continues to secure funding from prominent industry financial leaders such as Goldman Sachs Group Inc most recently 25 million in January 2008.
How much of this last funding round will be spent in legal fees or payouts remains to be seen.
About the writer: APRPEH is a seasoned identity theft investigator having helped numerous consumers with identity theft matters.
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