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Terry Goddard Announces $12 Million Deceptive Advertising Settlement

(Phoenix, Ariz. - March 9, 2010) Attorney General Terry Goddard today announced a $12 million settlement with LifeLock, Inc., that resolves a 35-state investigation into advertising practices that overstated the effectiveness of the company’s identity theft protections.

The agreement with LifeLock, which is based in Tempe, Ariz., was reached with Arizona, 34 other states and the Federal Trade Commission (FTC). LifeLock made a number of deceptive advertising claims that encouraged consumers to believe that its $10-a-month service was a “proven solution” that would protect against all forms of identity theft, which was not true.

“It is important for consumers to feel safe and know that the product they are purchasing truly does what it says it will,” Goddard said. “LifeLock promised more than the company could deliver. There is no absolute way to avoid identity theft, but there are things consumers can do to minimize their risk.”

LifeLock sells identity theft services which it claims were “guaranteed” to protect consumers’ personal information and prevent criminals from using it to open accounts in other people’s names. LifeLock’s advertisements also implied that individuals with fraud alerts on their consumer reports would always receive a phone call prior to the opening of new accounts, when in fact such phone calls are not required by federal law and were not always provided.

“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.

Under the agreement, LifeLock will pay $11 million in restitution to consumers and an additional $1 million to cover the costs of the states’ investigation. The states and the FTC will jointly send letters to eligible consumers, notifying them of the agreement and how they can benefit from the settlement. This case ranks as one of the largest state-FTC coordinated settlements on record.

LifeLock is now prohibited from stating that its services:

  • Protect against all types of identity theft.
  • Constantly monitor activity on all of its customers’ consumer reports.
  • Always prompt a call from a potential creditor before a customer’s new credit account is opened. 
  • Eliminate the risk of identity theft.

“LifeLock is pleased with this agreement,” said LifeLock Chairman and CEO Todd Davis. “We welcome federal and state efforts to regulate our industry, because doing so helps to protect consumers from the risks of identity theft.”

The following states participated in the agreement: 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.

Consumers who feel they have been a victim or want to learn how to protect themselves from identity theft can visit the Arizona Attorney General’s website: www.azag.gov/consumer for more information.

Assistant Attorney General Noreen Matts represented Arizona in this case. For additional information, contact Molly Edwards at 602-542-8019.

A copy of the complaint is attached.

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