Tuesday, March 9, 2010

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States, FTC Reach Agreement with ID Theft Protection Provider Over Misleading Advertising and Sales Practices

AUSTIN Texas Attorney General Greg Abbott, 34 other states and the U.S. Federal Trade Commission (FTC), today resolved their investigation of a leading provider of identity theft protection services.

Under the terms of today’s agreement, Arizona-based LifeLock Inc. agreed to more accurately describe its ID theft protection services and provide $11 million in restitution to eligible customers. The joint investigation by the states and the FTC revealed that LifeLock unlawfully exaggerated its range of services and ability to prevent ID theft.

Media links
Final Texas court judgment against LifeLock Inc.

LifeLock claimed its services were guaranteed to protect customers’ personal information and prevent criminals from using that sensitive information to open accounts. Thus, customers were given the impression that identity thieves would be absolutely prevented from stealing LifeLock customers’ identifying information.

State and federal authorities were also concerned about LifeLock marketing materials that improperly claimed that customers faced a heightened risk of ID theft despite the fact that LifeLock had no basis for its claims. Under today’s agreement, LifeLock is prohibited from making false claims about potential customers’ identity theft risk profile. In addition, LifeLock must not misrepresent that it:

Protects against all forms of ID theft;
Eliminates the risk of ID theft;
Constantly monitors activity on each of its customers’ consumer reports;
Always prompts a call from a potential creditor before a new credit account is opened in the customer’s name.

Texans have a variety of tools at their disposal to protect themselves against ID theft under state and federal laws. Individuals who suspect they could be possible ID theft victims may place free fraud alerts on their credit reports by contacting one of three major credit reporting agencies. In addition, Texans may obtain free copies of their credit reports to review their own credit histories and identify errors. Under the restitution program, the states and the FTC will send letters to eligible LifeLock customers notifying them of the agreement with instructions on how they can opt-in to participate in the settlement.