ID Security Firm LifeLock Sued For Misleading Marketing
LifeLock, a subscription service that aims to protect consumers‘ credit and identities, promises to “guarantee your good name.” But a lawsuit filed against the company in New Jersey in late March alleges that the company’s claims are deceptive and that its services may actually damage its customers’ credit.
The lawsuit alleges that LifeLock is engaged in the “concealment, suppression, and omission of material facts” about its service. The company allegedly fails to make clear that it charges subscribers for an annual credit report that’s available to them for free when placing a fraud alert. And it allegedly fails to adequately disclose that its $1 million service guarantee “is essentially futile” given the way the guarantee is worded.
LifeLock has about 980,000 subscribers who pay about $110 annually for its identity-theft protection services, according to CEO Todd Davis.
“We want to go out there and be this first company to actually put preventive measures in place,” Davis said in an interview. “And we know they’re not bulletproof. We tell people on our Web site. Some of the things we do, some of the steps we do for you, you can do for free.”
The lawsuit alleges that LifeLock failed to divulge that one of the company’s founders is subject to a Federal Trade Commission injunction.
More than a decade ago, the FTC obtained an injunction against Robert J. Maynard Jr. “for alleged unfair or deceptive acts or practices by the defendants in connection with the sale of credit improvement services advertised in an infomercial and the collection of fees by depositing drafts drawn on consumers’ checking accounts.” It forbids Maynard from “advertising, promoting, offering for sale, selling, performing or distributing any product or service relating to credit improvement services.”
An FTC attorney was not immediately available to comment on whether it sees Maynard’s past involvement in LifeLock as a violation of the injunction.
Finally, the lawsuit claims, Maynard “engaged in the very type of identity theft his company had set out to eliminate, by stealing his father’s own identity.” It states that Maynard posed as his father to obtain an American Express card and ran up more than $100,000 in debt, which eventually prompted American Express to sue his father.
Davis considers these claims to be irrelevant to LifeLock today. “Robert has been gone for coming up on a year from the company,” he said. “He has no bearing, no involvement, zero, in the company. I think that’s just them grasping at straws.”
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