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March 9, 2010

States and FTC Challenge Identity Theft Ads and Sales Tactics used by "LifeLock, Inc."

Marketer of identity theft protection services agrees to change advertising claims
-- and to refund $11 million to consumers.

Iowa Attorney General Tom Miller said Tuesday 35 states and the Federal Trade Commission have alleged misleading advertising practices by LifeLock, Inc., a Tempe, Arizona-based company that markets identity theft protection services.

LifeLock has agreed to change its practices and pay $11 million in restitution to consumers. LifeLock is reported to have about 1.5 million customers. It has charged consumers $10 per month or $110 per year for identity theft protection services.

“We alleged LifeLock ads sometimes overstated the risk of identity theft, exaggerated what their services could do to protect consumers, and misrepresented what LifeLock would reimburse consumers who suffered losses,” Miller said.

The Iowa Attorney General’s Office will simultaneously file a lawsuit alleging LifeLock violated Iowa’s Consumer Fraud Act, primarily by misrepresentations in its advertising in recent years, and ask the Polk County District Court to approve an order including terms of an agreement the states and FTC reached with LifeLock about its marketing practices. . [Go to Iowa's lawsuit petition filed 3-10-10. Go to Consent Judgment entered by Polk County District Court, also on 3-10-10.]

  • Under the agreement, LifeLock is prohibited from misrepresenting that its services:
  • Protect against all types of identity theft.
  • Constantly monitor activity on each of its customer’s consumer reports.
  • Always prompt a call from a potential creditor before a new credit account is opened in the customer’s name.
  • Eliminate the risk of identity theft.

Details on consumer restitution will follow soon. The FTC and states will jointly send letters to eligible consumers, notifying them of the agreement and how they can opt-in to the settlement. The FTC will set up a toll-free number to answer consumer questions. Iowans with questions are encouraged to go to for updates on restitution information and the FTC toll-free number when it is established.

More background and detail:

The FTC and states began jointly investigating LifeLock amid allegations that the company made a range of deceptive claims that misled consumers to believe its services were a “proven solution” that would protect against all forms of identity theft, including criminal, mortgage and child identity theft. There also were allegations that LifeLock misrepresented the nature of specific services it provided to protect or alert consumers when their personal information had been compromised.

LifeLock sells identity theft services which past advertisements claimed were “guaranteed” to protect consumers’ personal information and prevent criminals from using it to open accounts in their names. LifeLock’s advertisements also implied that individuals with fraud alerts on their consumer reports will always receive a phone call prior to the opening of new accounts, when in fact a phone call is not required by federal law.

Under the settlement, LifeLock is prohibited from overstating the risk of identity theft to consumers, including whether a particular consumer has become or is likely to become a victim. Past marketing materials have warned consumers about their heightened risk of identity theft when LifeLock did not have information to warrant such a warning.

Steps consumers can take to protect themselves from identity theft:

Federal and state laws provide consumers with a variety of tools to help protect themselves against identity theft. Consumers who have a reasonable suspicion that they are or are about to become victims of identity theft can place free fraud alerts on their credit reports by contacting one of the three major credit reporting agencies.

Consumers also can obtain free copies of their credit reports to review their own credit histories and identify errors and inaccuracies, such as unauthorized accounts.

Consumers are also best-positioned to monitor their own bank accounts and credit card statements for unauthorized withdrawals or charges, and should monitor them every month.

Click here for information on preventing or dealing with identity theft.

States cooperating with the FTC in the LifeLock agreement include: AK, AZ, CA, DE, FL, HI, ID, IL, IN, IA, KY, ME, MD, MA, MI, MO, MS, MT, NE, NV, NM, NY, NC, ND, OH, OR, PA, SC, SD, TN, TX, VT, VA, WA, and WV.

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