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14 Mar 2010
By Marley Seaman
In one of the largest FTC-state coordinated settlements on record, ID theft-protection firm LifeLock will pay $11 million to the FTC to cover the cost of customer refunds, and another $1 million to the attorneys general of 35 states. The FTC said LifeLock overstated its ability to prevent new account fraud, about one out of every six identity thefts.
LifeLock Inc. — an identity theft protection company that backed its guarantees by putting its CEO’s social security number on the side of its trucks — will pay $12 million to settle claims it misrepresented its services, according to the Federal Trade Commission.
LifeLock will pay $11 million to the FTC to cover the cost of customer refunds, and another $1 million to the attorneys general of 35 states, the agency said. The FTC said LifeLock made false claims about its ability to prevent identity theft, as the services provide no protection against misuse of existing accounts, which is the most common type of identity theft, or medical or employment identity theft.
The agency described the agreement as one of the largest FTC-state coordinated settlements on record.
In a telephone interview, LifeLock CEO Todd Davis said …
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The company press release regarding this is below:
LifeLock, FTC & State Attorneys General Agree to Advertising Standards
Agreement Provides Regulatory Guidance for Identity Theft Protection Industry
TEMPE, Ariz., March 9 /PRNewswire/ — LifeLock, Inc., the industry leader in identity theft protection, today announced that it has signed an agreement with the Federal Trade Commission (FTC) and several State Attorneys General which closes a compliance inquiry by setting advertising standards for the company and establishing regulatory guidance for the identity theft protection industry.
“LifeLock is pleased with this agreement, which, for the very first time, works to set advertising guidelines for the entire industry. We welcome federal and state efforts to regulate our industry, because doing so helps to protect consumers from the risks of identity theft,” said LifeLock Chairman and CEO Todd Davis.
For nine straight years, identity theft and fraud has led all complaints filed with the FTC. With losses to Americans now in excess of $1.8 billion annually, identity theft has grown to epidemic proportions.
“Because of LifeLock’s marketing efforts over the years, many more Americans now know of the risks of identity theft,” said Davis. “More than one and a half million consumers rely on us 24 hours a day to help protect their identities.”
Davis also noted that LifeLock members are very satisfied with the company’s innovative products and services. Of the members who enrolled within the first 18 months of the start-up of LifeLock more than seventy-five percent still remain members today. Ninety percent of LifeLock customers renewed their subscriptions last year. Year after year, LifeLock’s member surveys show extraordinarily high levels of customer satisfaction.
In October 2009, LifeLock rolled out the next generation of identity theft protection services that provide even better and broader protection to its valued members. To date, the new system has prevented more than 5,000 fraudulent credit applications before they could be processed and approved. The FTC and State Attorneys General action, which resulted from an examination of old practices and products, has no impact on LifeLock’s current services. Nothing changes because this was based on activity from over two years ago. LifeLock agreed to settle in order to quickly put this behind the company and get back to doing what it does best – helping to protect members from identity theft.
“We are committed to developing and applying the most advanced technologies available to help protect consumers from the consequences of identity theft,” said Davis. “We will also continue to work closely with lawmakers and regulators going forward to raise awareness about the threats of identity theft and to help consumers take effective action to protect themselves.”
LifeLock, Inc. (www.lifelock.com) is an industry leader in proactive identity theft protection. Since 2005, LifeLock has been providing consumers with the tools and confidence they need to help protect them from identity theft. The company has a strong focus on educating consumers and working with law enforcement and elected officials to better understand the increasing threats of identity theft. A multiple award-winning organization, LifeLock has been recognized by the American Business Awards as Best Overall Company, by AlwaysOn to the Top Global Company 250 list and most recently by Arizona Corporate Excellence as Arizona’s Fastest Growing Company.
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