The US Federal Trade Commission said on Tuesday that heavily promoted identity theft prevention company LifeLock agreed to pay it and 35 states $12m to settle their accusations that it deceived consumers with a bogus $1m “guarantee” that it would stop fraud in their names.
The FTC’s legal complaint is the latest in a series of embarrassments for the Arizona company, which charges $10 a month and seared itself into the public’s mind with ads featuring the likes of former Sen. Fred Thompson, Howard Stern and Rush Limbaugh.
In its most brazen gimmick, LifeLock Chief Executive Todd Davis put his own Social Security number in printed ads as a gesture of confidence in LifeLock’s system, which includes putting freezes on new credit at the three major credit bureaus. Mr Davis’s number was later used by a criminal.
The FTC noted that LifeLock’s formula could hinder new-account fraud, but did nothing to stop the more common fraud on existing accounts. “There is unfortunately no foolproof way to avoid ID theft,” said Illinois Attorney General Lisa Madigan.
The agreement bars LifeLock, Mr Davis and company co-founder Robert J. Maynard Jr from future misstatements.
Mr Maynard, the marketing whiz behind much of LifeLock’s success, resigned from his full-time post at the company in 2007 after reports on his past, which included clashes with regulators over a credit-repair scheme.
Then there was the part about his telling the media that he cared so much about identity theft because he had been victimised by such a thief and wrongly jailed over someone else’s Las Vegas casino debt.
In fact, he had never made that claim during the case, which was dropped after the debt was made good, and authorities said Mr Maynard’s face matched that on two different drivers’ licenses supplied by the gambler at different times.
