Is LifeLock identity theft protection really a rip-off?
The company "guarantees" that your identity will never be stolen, and it offers a "$1,000,000 Service Guarantee." If you sign up for LifeLock, it will set up fraud alerts for you with each of the three credit bureaus. It will also have your name removed from pre-approved credit card offers and junk mail lists, and it has the credit bureaus each send you a credit report once a year.
LifeLock has a WalletLock service to help you if you lose your wallet. It will help cancel accounts and help you if your credit cards are used fraudulently. And if your identity is ever stolen while you're using LifeLock, it says it will hire lawyers and investigators to help "recover your good name."
Sounds good, right?
Here's the main problem with this service: Most of what it offers can be accomplished on your own for free. All it takes is a few phone calls, and you're done. Why would you pay a monthly fee of $10 for these things which you can do for free on your own? (The company suggests that customers like the convenience of having someone else do it for them.)
But there's a bigger issue, and the plaintiff's lawyers have gotten a hold of this one. The $1,000,000 guarantee isn't exactly what it sounds like. The company says it will pay to you repair your credit if your identity is stolen, yet the class action suit says that the actual service guarantee says LifeLock will only pay for expenses resulting from a defect in its service.
The lawsuit also says that the LifeLock CEO's identity is currently being used by about 20 identity thieves. If this is true, I can only suspect that it's more lucrative to advertise his social security number than protect his identity. It's apparently made him a lot of money.
The bottom line with this lawsuit? The attorneys say that the company is basically offering a worthless service with a worthless guarantee. And the more I look at what LifeLock is offering, the more I tend to agree.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.