LifeLock to Pay $100 Million to Settle FTC Contempt Charges

Photo (cc) by Don Hankins

A company that consumers pay to help them protect their personal information is in hot water with the Federal Trade Commission for allegedly failing to safeguard that sensitive information and making bogus statements about its services.

LifeLock has agreed to pay $100 million to settle FTC charges that it violated a 2010 federal court order that barred it from using false claims to promote its services and required that the company take steps to more thoroughly protect customers’ personal information.

The FTC said the $100 million settlement with the Arizona-based identity theft protection firm is the largest sum the agency has ever imposed in an order enforcement action. LifeLock paid $12 million in 2010 to settle charges that it used deceptive advertising to promote its services.

“The fact that consumers paid LifeLock for help in protecting their sensitive personal information makes the charges in this case particularly troubling,” FTC chairwoman Edith Ramirez said in a statement.

LifeLock’s services, which start at $9.99 a month, include monitoring customers’ accounts, providing an early warning if identity theft occurs and helping customers’ restore their stolen identity.

Most of the $100 million in settlement funds will be used to reimburse LifeLock customers.

Lifelock, which has neither confirmed nor denied the FTC’s allegations, said it has implemented system upgrades to better protect its customers’ data.

“The allegations raised by the FTC are related to advertisements that we no longer run and policies that are no longer in place,” the company said in a statement. “There is no evidence that LifeLock has ever had any of its customers’ data stolen, and the FTC did not allege otherwise.”

(Check out our earlier reporting on services that charge to protect your identity — and four excellent reasons not to bite.)

Because data breaches are seemingly commonplace these days, many consumers are understandably worried about safeguarding their personal information. But the FTC said it’s important to do your homework before you pony up the cash to hire an identity theft protection company.

Before you pay any fees, evaluate the company and its track record. Type the name of the company or product into a search engine along with words like “review,” “complaint,” or “scam.” Be sure to read a few reviews — don’t rely on just one source. Or, you may decide to take matters into your own hands by reviewing your credit reports on a regular basis or placing a credit freeze on your report.

Have you used an identity theft protection firm before? Share your experiences 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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