Intellectual Property Law

LifeLock, the ID theft protection service whose CEO regularly provides his Social Security number in advertisements (at right), is being sued by customers who claim the service doesn't work as promoted. The proof, they say, lies in the fact that the CEO's own identity has been stolen numerous times.

The CEO in question, Todd Davis, has acknowledged that there have been 87 attempts to steal his identity, and only one case previously reported here in which someone in Texas succeeded to take out a $500 loan in Davis's name. In that case, Davis learned about it only after the person defaulted on the loan and the loan agency called his wife's cell phone number (which the thief had provided when he procured the loan) to collect. The loan was approved because the loan agency never contacted any of the three credit bureaus to see if there was a fraud alert on Davis's records before approving the loan.

LifeLock spokesman Mike Prusinski told Threat Level previously that there was a "loophole" in its protection model and that the company was honest about telling customers that they couldn't "stop every form of identity theft."

For $10 a month, LifeLock places fraud alerts with the three credit-reporting agencies to prevent thieves from opening new accounts in its customers' names. It also helps customers fix credit problems if they do become victims of identity theft. The company offers a $1 million guarantee to help customers restore their credit if their identity is stolen while a LifeLock customer and cover any losses due to the identity theft. But Prusinski says there's no way to prevent identity theft in cases in which a business (such as the check-cashing operation that gave Davis's impersonator a loan) doesn't run a credit report before providing someone with a loan or new credit card.

Davis appeared on the Today show on Friday saying that LifeLock's service works, and pointed to the 87 failed attempts to steal his identity as proof.

In the interview, Davis discloses that 105 LifeLock customers have been victims of identity theft while LifeLock customers.

This is not the first legal action against LifeLock. Experian, one of the three credit-reporting agencies, sued the company earlier this year claiming it overstates what it can do for customers and that it abuses the rules around placing fraud alerts. Experian says that fraud alerts are supposed to be reserved for people who have reason to believe that fraudulent activity on their account has already occurred or is likely to occur -- as in the case of consumers who receive notice from a bank or company that their personal information was stolen in a data breach. LifeLock, however, will place alerts at the credit-reporting agencies on behalf of anyone who pays its fee.

Davis told the Today show that he's confident LifeLock will prevail in all of the suits filed against it.

See also:

• Police Say LifeLock Coerced Unusable Confession from Identity Theft Suspect
• LifeLock Founder a Shady Identity Thief?
• LifeLock Founder Resigns Amid Controversy
• What Happened in Vegas