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The Honolulu Advertiser
Posted on: Thursday, March 11, 2010

State sues Lifelock, alleging deception

By Jim Dooley
Advertiser Staff Writer

The state Office of Consumer Protection has filed an unfair trade practices lawsuit against Lifelock Inc., a national firm that promises to protect its customers from identity theft.

The suit was filed Tuesday after Lifelock agreed earlier in the day to pay $12 million to settle claims filed against it in Arizona by the Federal Trade Commission and 34 states, including Hawai'i.

Lifelock and its chief executive, Todd Davis, have advertised heavily on television and in newspapers by disclosing Davis' Social Security number to demonstrate his confidence in Lifelock's "proactive approach" to preventing identity theft.

Customers are charged $10 per month, or $110 per year, for Lifelock's services.

The settlement requires Lifelock to pay $11 million to the FTC and $1 million to be shared among the 34 states that filed legal claims against the company.

Jeffrey Brunton of the state Consumer Protection Office said his agency did not receive any complaints from Lifelock customers here and that the state's share of the FTC settlement should amount to about $15,000.

"The FTC will be sending letters to eligible victims and we just don't know how many are in Hawai'i," he said.

The state lawsuit filed by Brunton claims Lifelock engaged in unfair or deceptive practices because the company's services "did not protect against all types of identity theft."

The lawsuit alleges the company made other misrepresentations to its customers here and elsewhere about its services.

Company president Davis said in a written statement that the firm changed its business practices in October and welcomes the FTC settlement because it would set national standards to "protect customers from identity theft."

In announcing the settlement in Chicago, FTC chairman Jon Leibowitz said Lifelock's identity theft protection program "left enough holes that you could drive a truck through it."

Despite claims that it protected personal information, Lifelock's data system was not encrypted and was vulnerable to exploitation by identity thieves, the FTC alleged.