LifeLock Inc. settled charges that it made false claims about its identity theft protection and data security services with the Federal Trade Commission by paying $12 million and agreeing to change its advertising.
In its complaint, the FTC charged that LifeLock’s ads claimed it could prevent identity theft for consumers who paid $10 each month for the service.
Specific claims included: “By now you’ve heard about individuals whose identities have been stolen by identity thieves. . . . LifeLock protects against this ever happening to you. Guaranteed” as well as “Please know that we are the first company to prevent identity theft from occurring.”
However, the FTC said that the company only provided protection against certain forms of identity theft, not including the misuse of existing bank and credit card accounts, the most common type of identity theft.
The company also provided no protection against medical identity theft or employment identity theft, the FTC said.
In addition to false claims about its services, the company misrepresented its own data security, the complaint also charged.
The company claimed that “Only authorized employees of LifeLock will have access to the data that you provide us, and that access is granted on a ‘need to know’ basis” and “All stored personal data is electronically encrypted.”
The FTC charged that the company routinely collected sensitive information from its customers – like Social Security and credit card numbers – and that the data was not in fact encrypted, nor was it only shared on a “need to know” basis.
Under the terms of the settlement, LifeLock agreed to pay $11 million to the FTC and $1 million to 35 state attorneys general. The FTC will use the money to provide refunds to consumers.
The company also agreed to take more stringent measures to safeguard the personal information it collects from its customers and must establish a comprehensive data security program.
It is also prohibited from misrepresenting the “means, methods, procedures, effects, effectiveness, coverage, or scope of any identity theft protection service,” as well as misrepresentations about the risk of identity theft and the manner and extent to which LifeLock protects its customers’ personal information.
Why it matters: The settlement is at the intersection of false advertising and identity theft, an issue the FTC continues to focus on as the number one consumer complaint for each of the last 10 years.