Tag Archives: Federal Trade Commission

LifeLock Identity Theft Company pays $11 million to Federal Trade Commission (FTC)

  By Charles | March 9, 2010 - 9:47 pm | News, Press Release, True Stories
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For Release: 03/09/2010

LifeLock Will Pay $12 Million to Settle Charges by the FTC and 35 States That Identity Theft Prevention and Data Security Claims Were False.

LifeLock, Inc. has agreed to pay $11 million to the Federal Trade Commission and $1 million to a group of 35 state attorneys general to settle charges that the company used false claims to promote its identity theft protection services, which it widely advertised by displaying the CEO’s Social Security number on the side of a truck.

In one of the largest FTC-state coordinated settlements on record, LifeLock and its principals will be barred from making deceptive claims and required to take more stringent measures to safeguard the personal information they collect from customers.

“While LifeLock promised consumers complete protection against all types of identity theft, in truth, the protection it actually provided left enough holes that you could drive a truck through it,” said FTC Chairman Jon Leibowitz.

“This agreement effectively prevents LifeLock from misrepresenting that its services offer absolute prevention against identity theft because there is unfortunately no foolproof way to avoid ID theft,” Illinois Attorney General Lisa Madigan said. “Consumers can take definitive steps to minimize the chances of having their personal information stolen, and this settlement will help them make more informed decisions about whether to enroll in ID theft protection services.”
Since 2006, LifeLock’s ads have claimed that it could prevent identity theft for consumers willing to sign up for its $10-a-month service.

According to the FTC’s complaint, LifeLock has claimed:

“By now you’ve heard about individuals whose identities have been stolen by identity thieves . . . LifeLock protects against this ever happening to you. Guaranteed.”
“Please know that we are the first company to prevent identity theft from occurring.”
“Do you ever worry about identity theft? If so, it’s time you got to know LifeLock. We work to stop identity theft before it happens.” The FTC’s complaint charged that the fraud alerts that LifeLock placed on customers’ credit files protected only against certain forms of identity theft and gave them no protection against the misuse of existing accounts, the most common type of identity theft. It also allegedly provided no protection against medical identity theft or employment identity theft, in which thieves use personal information to get medical care or apply for jobs. And even for types of identity theft for which fraud alerts are most effective, they do not provide absolute protection. They alert creditors opening new accounts to take reasonable measures to verify that the individual applying for credit actually is who he or she claims to be, but in some instances, identity thieves can thwart even reasonable precautions.

New account fraud, the type of identity theft for which fraud alerts are most effective, comprised only 17 percent of identity theft incidents, according to an FTC survey released in 2007.

The FTC’s complaint further alleged that LifeLock also claimed that it would prevent unauthorized changes to customers’ address information, that it constantly monitored activity on customer credit reports, and that it would ensure that a customer always would receive a telephone call from a potential creditor before a new account was opened. The FTC charged that those claims were false.

In addition to its deceptive identity theft protection claims, LifeLock allegedly made claims about its own data security that were not true. According to the FTC, LifeLock routinely collected sensitive information from its customers, including their social security numbers and credit card numbers. The company claimed:

“Only authorized employees of LifeLock will have access to the data that you provide to us, and that access is granted only on a ‘need to know’ basis.”
“All stored personal data is electronically encrypted.”
“LifeLock uses highly secure physical, electronic, and managerial procedures to safeguard the confidentiality and security of the data you provide to us.” The FTC charged that LifeLock’s data was not encrypted, and sensitive consumer information was not shared only on a “need to know” basis. In fact, the agency charged, the company’s data system was vulnerable and could have been exploited by those seeking access to customer information.

The FTC and state settlements with LifeLock bar deceptive claims, and prohibit the company from misrepresenting the “means, methods, procedures, effects, effectiveness, coverage, or scope of any identity theft protection service.” They also bar misrepresentations about the risk of identity theft, and the manner and extent to which LifeLock protects consumers’ personal information. In addition, the settlements require LifeLock to establish a comprehensive data security program and obtain biennial independent third-party assessments of that program for twenty years.

The Attorneys General of Alaska, Arizona, California, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Missouri, Mississippi, Montana, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, Washington, and West Virginia participated in this settlement.

In addition to LifeLock, the FTC complaint named co-founders Richard Todd Davis and Robert J. Maynard, Jr., who will be barred from the same misrepresentations as LifeLock.

The Commission vote to authorize staff to file the complaint and the settlement with LifeLock and Richard Todd Davis was 4-0. The Commission vote to authorize staff to file the settlement with Robert J. Maynard, Jr. was 3-1, with Commissioner J. Thomas Rosch dissenting. The documents were filed in the U.S. District Court for the District of Arizona.

The FTC will use the $11 million it receives from the settlements to provide refunds to consumers. It will be sending letters to the current and former customers of LifeLock who may be eligible for refunds under the settlement, along with instructions for applying. Customers do not have to contact the FTC to be eligible for refunds. Up-to-date information about the redress program can be found at 202-326-3757 and at www.ftc.gov/lifelock.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. Stipulated judgements are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.

In addition to announcing the LifeLock case, the FTC’s Northeast Regional Office sponsored an event to kick off National Consumer Protection week. The goal was to alert consumers to the top complaint categories in the Northeast Region and to arm consumers with the tools to recognize and protect themselves against all types of fraud. Also participating were the Better Business Bureau serving Metropolitan New York, the New York Attorney General’s Office, the New York City Department of Consumer Affairs, and AARP.

The Federal Trade Commission works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftccomplaintassistant.gov or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,700 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

MEDIA CONTACT:
Claudia Bourne Farrell
Office of Public Affairs
202-326-2181
STAFF CONTACT:
Maneesha Mithal or David Lincicum
Bureau of Consumer Protection
202-326-2771 or 202-326 2773
(FTC File No. 072-3069)
(Lifelock)

HOW TO FIGHT BACK AGAINST IDENTITY THEFT

  By Charles | January 12, 2010 - 2:03 am | identity theft awareness, Identity Theft Shield, Self Help
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COMMON WAYS ID THEFT HAPPENS:
Skilled identity thieves use a variety of methods to steal your personal information, including:

1.Dumpster Diving. They rummage through trash looking for bills or other paper with your personal information on it.
2.Skimming. They steal credit/debit card numbers by using a special storage device when processing your card.
3.Phishing. They pretend to be financial institutions or companies and send spam or pop-up messages to get you to reveal your personal information.
4.Changing Your Address. They divert your billing statements to another location by completing a “change of address” form.
5.”Old-Fashioned” Stealing. They steal wallets and purses; mail, including bank and credit card statements; pre-approved credit offers; and new checks or tax information. They steal personnel records from their employers, or bribe employees who have access.

DETER
Identity theft is a serious crime. It occurs when your personal information is stolen and used without your knowledge to commit fraud or other crimes. Identity theft can cost you time and money. It can destroy your credit and ruin your good name.

Deter identity thieves by safeguarding your information.

Shred financial documents and paperwork with personal information before you discard them.
Protect your Social Security number. Don’t carry your Social Security card in your wallet or write your Social Security number on a check. Give it out only if absolutely necessary or ask to use another identifier. Don’t give out personal information on the phone, through the mail, or over the Internet unless you know who you are dealing with.

Never click on links sent in unsolicited emails; instead, type in a web address you know. Use firewalls, anti-spyware, and anti-virus software to protect your home computer; keep them up-to-date. Visit OnGuardOnline.gov for more information.

Don’t use an obvious password like your birth date, your mother’s maiden name, or the last four digits of your Social Security number.
Keep your personal information in a secure place at home, especially if you have roommates, employ outside help, or are having work done in your house.

DETECT

Detect suspicious activity by routinely monitoring your financial accounts and billing statements.
Be alert to signs that require immediate attention:
Bills that do not arrive as expected
Unexpected credit cards or account statements
Denials of credit for no apparent reason
Calls or letters about purchases you did not make

Inspect:

Your credit report. Credit reports contain information about you, including what accounts you have and your bill paying history.

The law requires the major nationwide consumer reporting companies—Equifax, Experian, and TransUnion—to give you a free copy of your credit report each year if you ask for it.

Visit www.AnnualCreditReport.com or call 1-877-322-8228, a service created by these three companies, to order your free credit reports each year. You also can write: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Your financial statements. Review financial accounts and billing statements regularly, looking for charges you did not make.

DEFEND

Defend against ID theft as soon as you suspect it.
Place a “Fraud Alert” on your credit reports, and review the reports carefully. The alert tells creditors to follow certain procedures before they open new accounts in your name or make changes to your existing accounts. The three nationwide consumer reporting companies have toll-free numbers for placing an initial 90-day fraud alert; a call to one company is sufficient:

Equifax: 1-800-525-6285

Experian: 1-888-EXPERIAN (397-3742)

TransUnion: 1-800-680-7289

Placing a fraud alert entitles you to free copies of your credit reports. Look for inquiries from companies you haven’t
contacted, accounts you didn’t open, and debts on your accounts that you can’t explain.

Close accounts. Close any accounts that have been tampered with or established fraudulently.

Call the security or fraud departments of each company where an account was opened or changed without your okay. Follow up in writing, with copies of supporting documents.

Use the ID Theft Affidavit at ftc.gov/idtheft to support your written statement.

Ask for verification that the disputed account has been closed and the fraudulent debts discharged.

Keep copies of documents and records of your conversations about the theft.

File a police report. File a report with law enforcement officials to help you with creditors who may want proof of the crime.

Report the theft to the Federal Trade Commission. Your report helps law enforcement officials across the country in their investigations.

Online: ftc.gov/idtheft

By phone: 1-877-ID-THEFT (438-4338) or TTY, 1-866-653-4261

By mail: Identity Theft Clearinghouse, Federal Trade Commission, Washington, DC 20580
To learn more about ID theft and how to deter, detect, and defend against it, visit ftc.gov/idtheft. Or request copies of ID theft resources by writing to:

Consumer Response Center
Federal Trade Commission
600 Pennsylvania Ave., NW, H-130
Washington, DC 20580

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Identity Theft Shield Helps Guard Against Identity Theft. This membership gives you easy access to the resources you need to fight back against an identity thief that threats you. This service is designed to alert you to certain activities and to restore resulting damage to
your name and credit history. For more information visit www.lifeeventsins.com

FTC Staff Seeks Your Comments on Credit Freezes

  By Charles | January 11, 2010 - 1:49 am | identity theft awareness, Identity Theft Shield, News
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Released: January 10, 2008

FTC Staff Seeks Your Comments on Credit Freezes:

The Impact and Effectiveness Federal Trade Commission staff is seeking comments on the impact and effectiveness of credit freezes as part of a multi-pronged approach to combat identity theft.

There are thirty-nine states and the District of Columbia have enacted laws providing consumers the right to place credit freezes, and each of the three nationwide consumer reporting agencies (“CRAs”) is offering a commercially-developed credit freeze option. In general, once a consumer initiates a credit freeze with a CRA, the freeze prevents that CRA from releasing a consumer report (i.e., a credit report) about that consumer unless the consumer temporarily lifts or permanently removes the freeze. A credit freeze may help prevent identity thieves from opening new accounts in consumers’ names, because businesses typically will not extend new credit (or provide certain other benefits) without first viewing the consumer’s credit report.

Back in April 2007, the President’s Identity Theft Task Force (“Task Force”) issued a strategic plan to make the federal governments effort’s more effective and efficient in the areas of identity theft awareness, prevention, detection, and prosecution, www.idtheft.gov/reports/StrategicPlan.pdf. As part of its strategic plan, the Task Force recommended that the FTC, with support from the Task Force member agencies, assess the impact and effectiveness of credit freeze laws and report on the results, in order to assist policymakers in considering the appropriateness of a federal credit freeze law.

The Commission staff invites interested parties (you) to submit written comments on the impact and effectiveness of state credit freeze laws, as well as the credit freeze options offered by the nationwide consumer reporting agencies. Comments must be received on or before February 25, 2008. For detailed information on how to submit comments and the specific questions and topics FTC staff would like addressed in the comments, please see: http://www.ftc.gov/opa/2008/freeze.pdf.

MEDIA CONTACT:
Office of Public Affairs
202-326-2180

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