LifeLock Ads Overstate Identity Theft Service, Suit Says

LifeLock, an identity-theft protection service that broadcasts its CEO's Social Security number in its ad campaign, exaggerates the level and effectiveness of its identity protection, according to a Texas federal court lawsuit.

The company already faces five other consumer class actions around the country with similar allegations and a suit by the credit bureau Experian alleging violation of the Fair Credit Reporting Act.

Tommy Ly, a resident of Harris County, Texas, filed the newest suit in the U.S. District Court for the Eastern District of Texas on behalf of all the state's subscribers to the LifeLock service.

The Tempe, Ariz.-based company describes itself on its Web site as a proactive identity-theft protection service aimed at preventing theft rather than just reporting it.

LifeLock has nearly 1 million subscribers across the country, the complaint says.

The company provides four services to its subscribers for a fee of $10 a month. LifeLock asks credit bureaus to set fraud alerts for every subscriber, renews the alerts every 90 days, requests the removal of subscribers' names from junk-mail lists and orders credit reports every year.

As part of a national advertising campaign LifeLock CEO Richard Todd Davis, also named as a defendant in the suit, publicizes his Social Security number to demonstrate his confidence in the company's ability to protect it.

The ads are fraudulent because they mislead consumers about the scope of LifeLock's protection services and the limited nature of its "$1 million guarantee," the suit says.

According to the company's Web site, if a customer's identity is stolen LifeLock will hire lawyers and investigators to "recover your good name" and will reimburse money lost because of the theft.

However, it does not reimburse a customer for the financial losses, such as lost profits or business, caused by identity theft.

The guarantee covers only the cost of assistance to resolve credit rating damage.

The company's ads suggest that it can provide comprehensive identity theft protection, the complaint says, but the service is limited to credit-related theft associated with opening a new account.

The service is ineffective against identity theft involving bank accounts, employment, medical information or telecommunications, the suit says.

Further, consumers can perform most of LifeLock's services on their own free of charge, and the credit reports the company orders are the same free reports that anyone can request every 12 months under federal law, the suit alleges.

LifeLock does not warn customers that the fraud alerts it places and then continuously renews on accounts can negatively affect a person's credit rating, the complaint says.

Each time an alert intercepts an attempt to obtain credit, it is recorded in the person's financial profile used by banks to determine credit risk.

Also, despite LifeLock's assurances that it performs background checks on employees, it fails to disclose that its outside contractors who have access to customers' personal information are not subject to checks, according to the suit.

The suit alleges LifeLock violates the Texas Deceptive Trade Practices-Consumer Protection Act and is unjustly enriched by not providing the services it advertises.

The plaintiff seeks injunctive relief to prevent continued use of deceptive advertisements as well as punitive and compensatory damages.

To comment, ask questions or contribute articles, contact West.Andrews.Editor@ThomsonReuters.com.

The plaintiff is represented by Deron R. Dacus of Ramey & Flock in Tyler, Texas.