Foolproof way to prevent I.D. theft? Nope

Herb Weisbaum • Profile • E-mail

Todd Davis is a super salesman with a mighty convincing pitch. You may not know his name, but I bet you’ve seen his ads for LifeLock. Davis, the company’s CEO, gives out his real Social Security number to prove his confidence in Lifelock’s identity theft protection service.

“The advertisements are bold, but the protection is less than you would expect,” notes Jeff Blyskal, senior editor at Consumer Reports. “It creates the false impression that you don’t have to worry about ID theft; just do what you want, you can even be careless.”

But clearly you shouldn’t do what Davis does. In fact, the LifeLock terms and conditions agreement states, "...you agree that you will not purposely engage in behavior that will put your personal information at unnecessary risk, such as leaving your PIN or passwords in obvious places or publishing your Social Security Number."

So what is LifeLock?
For $10 a month or $110 a year, LifeLock offers what it calls “proactive identity theft protection.” According to its Web site, the company provides “a proven solution that prevents your identity from being stolen before it happens.”

It backs up that claim with a “$1 million total service guarantee.”

How does LifeLock protect you from identity thieves?  It puts a “fraud alert” on your credit files at the big three credit bureaus – Experian, Equifax and TransUnion – and renews that alert every 90 days. The company also contacts the Direct Marketing Association to remove your name from pre-approved credit card offers and provides you with a free copy of your credit report each year. Of course, you can do all this yourself – for free.

Davis agrees he’s selling convenience and he readily admits LifeLock isn’t foolproof. “No system can stop your identity from being stolen.” But he says that the million dollar guarantee is there should something go wrong. “We actually accept the burden of resolving the issue, hiring whomever we need to hire, engaging whatever experts we need to resolve the problem for you.”

Do fraud alerts work?
A 90-day fraud alert flags your credit file. It tells a potential lender you suspect you are or could be the victim of identity theft. This should make them more careful when someone applies for a new credit account in your name, requests a new card for one of your existing accounts, or tries to increase the credit limit.

On its Web site, LifeLock says it wants to “lock down every individual’s private information” so no one else can use it. But a fraud alert does not lock your credit file. And it’s far from perfect.

According to the advocacy group Consumer Action, fraud alerts are only effective in about 75 percent of the cases. The only way to restrict access to your credit file is with a credit freeze, something LifeLock does not do.

Lawsuits and more lawsuits

In February, Experian (one of the big three credit reporting agencies) sued LifeLock, claiming its use of fraud alerts is illegal. The Fair Credit Reporting Act limits a 90-day fraud alert to someone who “asserts in good faith” a suspicion that he or she “has been or is about to become a victim of fraud or related crime, including identity theft.” Experian says it does not believe all of LifeLock’s 1.3 million customers meet that requirement. But according to LifeLock's terms and conditions agreement,  by becoming a member, "You certify that you have a good faith suspicion that you (or your child you have enrolled) have been or are about to become a victim of fraud or related crime, including identity theft ..."

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