Debunking the case against LifeLock

Posted by Joe on May 29th, 2008

Thanks for visiting the NextAdvisor Daily blog. You may want to subscribe to our RSS feed.

Todd Davis, the CEO of identity theft protection service LifeLock, appeared on the nationally televised Today Show last Friday to publicly address a handful of recent lawsuits against the company. Given that we have gone on the record stating LifeLock is the best overall value in identity theft protection, we thought we would take the opportunity to address three common criticisms we hear from LifeLock's detractors by researching and presenting the facts to our readers.

Common Criticism #1: LifeLock charges consumers for services that they can get for free.

Some of the identity theft protection tools that LifeLock uses are freely available to consumers. In particular, LifeLock's critics like to point out that anyone can set their own fraud alerts or order their free annual credit report from the three major credit bureaus. There are two points to address here.

First, while it is true that consumers can set their own fraud alerts, for example, that doesn't mean that it is a trivial process. We encourage anyone that is not familiar with the process of setting a fraud alert to read our fraud alert and credit freeze guide.

LifeLock is very upfront about the specific services they provide and which of those that can be done for free by consumers. The analogy that Davis has publicly used in the past is that LifeLock is a service provider and no different than paying someone to change your oil instead of doing it yourself.

Second, these are not the only services that LifeLock provides to its subscribers. LifeLock offers an number of features that help prevent and detect identity theft crimes and help victims recover. For example, LifeLock's eRecon service scours the Internet looking for improper or criminal uses of their subscribers' personal information such as credit card numbers. WalletLock, a LifeLock service that replaces all of an individuals documents such as credit cards, driver's license, Social Security card, credit cards and passport, is also available to every LifeLock subscriber.

It is clear that LifeLock does provide many useful services that would not be available to consumers without incurring some cost in time and/or money. Ultimately, LifeLock provides a service for consumers that want the peace of mind that comes with having a team of experts protect and, if needed, recover their identity for them.

Common Criticism #2: LifeLock can't be effective at identity theft protection because many subscribers, including their CEO, have been victimized by identity theft.

It is true that LifeLock subscribers, including the company's CEO Todd Davis, have been victimized by identity thieves. However, publicly available data shows that LifeLock subscribers are nearly 400 times LESS LIKELY to be victimized by identity theft than non-subscribers.

In the interview with the Today Show's Matt Lauer, Davis reveals that 105 of LifeLock's subscribers have been victimized by identity theft. That means that approximately 0.01% of LifeLock subscribers, or about one in every 9,524 subscribers, have been victimized. Now, compare that with recent statistics published by the Better Business Bureau which found that 4%, or one in every 25, American adults had been victimized by identity theft in 2006, the most recent statistics that were available. Again, this means that LifeLock subscribers are almost 400 times less likely to fall victim to identity thieves than the average American adult.

In Davis' case, a Texas man took out a $500 payday loan in the LifeLock CEO's name using the Social Security number that is featured prominently in the company's marketing campaigns. Since the payday loan company did run a credit check on the loan request, the fraud alerts on Davis' credit report were not triggered and the transaction could not be prevented. To be clear, there is no identity theft protection service on the market today that could have prevented this identity theft incident from occurring. However, LifeLock's recovery services immediately went into effect and Davis' identity was recovered without costing him any time or money.

Davis has publicly commented on the incident many times and has been clear that there was no lasting impact on his identity or credit file as a result. "There's nothing on my actual credit report about uncollected funds, no outstanding tickets or warrants or anything," he said.

While it would be better if no LifeLock subscriber was ever victimized by identity theft, the reality is that no identity theft protection service can be 100% effective. The goal of these services is to minimize the chanced of identity theft as much as possible, and we'd say minimizing your odds of being a victim 400 times is awfully effective. Plus, identity theft protection is only one facet of the company's service. LifeLock also offers a $1 million service guarantee which pays to recover the identity of any subscriber that is victimized while a member of LifeLock. We will address the critic's view of the $1 million guarantee below.

Common Criticism #3: LifeLock's "$1 Million Service Guarantee" isn't worth the paper its printed on.

LifeLock's $1 million guarantee is a straightforward contract between LifeLock and its subscribers in which they commit to spending up to $1 million to recover the identity of any subscriber that falls victim to identity thieves. This does not mean that LifeLock writes a check in the amount of $1 million to any subscriber whose identity is stolen. But, it does mean that LifeLock will provide victims with access to experts and professionals will work to recover the victim's identity on LifeLock's dime. The guarantee is easy to read and understand and is prominently published on LifeLock's website.

All of the 105 LifeLock subscribers that have fallen victim to identity theft to date, including Davis himself, were covered by the company's service guarantee. "What's important is the whole incident proves that LifeLock works, because I was never out a dime of my own money or a minute of my own time," Davis said. "LifeLock protected me and the other 104 members exactly as they promised."

As always, we encourage consumers to develop their own opinion based off of the facts at hand. You can view Davis' Today Show interview below.

To learn more about LifeLock or other identity theft protection services visit our identity theft protection service comparison and reviews.

• LifeLock's $1 Million Guarantee – Separating Fact From Fiction
• ID Watchdog identity theft protection service review
• LifeLock CEO addresses lawsuits and critics head on
• If our identity is stolen or compromised, would LifeLock do the paperwork connected to clearing my name/credit?
• Reader Question: Which identity theft protection service is best if I've already been victimized?