FTC: Data Security Company Failed to Protect Customer Data

Photo (cc) by r2hox

It’s the ultimate irony: LifeLock, a data security company and self-professed pioneer in identity theft protection, has allegedly failed to protect its users’ data.

According to the Federal Trade Commission, LifeLock violated a settlement it made with the government in 2010 by continuing to deceive consumers with false claims about the effectiveness of its data protection services. The 2010 order also required LifeLock to establish and maintain a comprehensive security program to better protect its users’ sensitive personal data, which the FTC said LifeLock failed to do.

In documents filed with a U.S. District Court in Arizona, where LifeLock is based, the FTC asked the court to require LifeLock to refund consumers who were harmed by the company’s false promises. Details of the FTC’s allegations were filed under seal.

“It is essential that companies live up to their obligations under orders obtained by the FTC,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement. “If a company continues with practices that violate orders and harm consumers, we will act.”

LifeLock’s identity theft protection plans cost $9.99 to $29.99 per month.

LifeLock plans to fight the FTC’s allegations, which it said are all related to past, not current, business practices.

“We disagree with the substance of the FTC’s contentions and are prepared to take our case to court,” the company said in a press release. “LifeLock takes the accuracy of our advertising materials very seriously. The alerting claims raised by the FTC did not result in any known identity theft for LifeLock members. Security of our systems has always been, and will remain, of primary importance to us.”

Shares in LifeLock nose-dived more than 48 percent to $8 after the FTC filed its new complaint.

Check out “Ask Stacy: Should I Pay for Identity Theft Protection and Credit Monitoring?

Have you had any experience with LifeLock or another data security company? Share your comments below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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