LifeLock vs the FTC: Lessons Learned?
The case of the FTC vs LifeLock illustrates just why lawmakers at all levels of government to take the threat of identity theft seriously.
Lifelock CEO Todd Davis decided to take a big risk – he was confident enough in the ability of his new firm to protect its customers against the damage done by identity theft that he dared thieves to use his Social Security number – placing it on billboards, trucks and in radio, TV and print advertising.
The FTC determined that he went too far.
In a ruling, the FTC penalized LifeLock for potentially false advertising – assuming that its customers interpret the ads as claiming LifeLock can totally prevent all incidences of identity theft, then they would have been mistaken.
It is very significant that the FTC did not challenge the effectiveness or validity of LifeLock’s guarantee of service – that in the event one of its customers is victimized, LifeLock representatives will step in to do the time-consuming work of repairing the damage done – what Mr. Davis calls the “curative” aspect of LifeLock’s service. The FTC ruling only addressed advertising wording – claims related to identity theft prevention, such as using the words and phrases, “complete protection,” “prevent,” “constantly monitors,” or “always receive a phone call.” Obviously nothing and no one can entirely prevent identity theft– and LifeLock knows this.
Interestingly enough, Davis never lost money and he was saved many hours of invaluable time correcting his credit report. Also, he did not suffer any damage to his credit or financial standing as a result.
In other words – LifeLock’s service worked precisely as it was designed to do.
Davis claims that giving out his Social Security number was “a risk worth taking to alert consumers to the rising tide of identity theft.” As one result, a Texas man was able to take out a $500 loan using that information. Davis’ story very clearly illustrates the looming threat facing millions of consumers every day. And while LifeLock is doing its part to help protect consumers by constantly developing new technologies, no private identity theft company can do it alone.
Major studies conducted by the U.S. Public Interest Research Group, Consumers Union, Consumer Federation of America, and the Federal Reserve Board of Governors determined that 70 to 80 percent of all credit reports contain significant errors. Consumers with common names are especially vulnerable to mistakes on their credit reports. The Fair and Accurate Credit Transactions Act of 2003 (FACT Act) was intended to provide consumers with the protection of fraud alerts, but fraud alerts are clearly not enough, especially when not all lenders check credit reports!
The lender who gave $500 to a man claiming to be Davis almost certainly did not check a credit report or accurately verify the man’s true identity.
”Fortunately, proactive identity theft protection services evolve more quickly than legislation. Last fall, LifeLock introduced their Identity Alert System™, a multifaceted, technologically advanced service that makes fraud alerts seem quaint. As a company, LifeLock is doing what it can. As a country, we need to make combating identity theft a top national priority – and lawmakers at all levels of government to take the threat of identity theft seriously.
Tags: LifeLock, Todd Davis