ID theft alert biz LifeLock coughs up $96m to FTC in false ad claim deal
Settlement dumps company into the red
Identity-protection company LifeLock will shell out $96m in a settlement to end claims it broke a promise over false advertising.
The Arizona biz, which tries to alert citizens to possible identity theft, said the payout is part of a settlement deal with US trade watchdog the FTC and several state attorneys general.
"The proposed FTC settlement does not require us to change our current products, services, or business and information security practices, including in particular, our current marketing and advertising practices," LifeLock said in a statement.
The regulator said LifeLock had made "deceptive claims about its identity theft protection services," thus breaking that 2010 vow, and had failed "to take steps required to protect its users’ data."
You may recall TV adverts from the late 2000s in which LifeLock CEO Todd Davis revealed his social security number, confident his LifeLock service would protect him from identity theft. It was later reported that Davis' identity was stolen multiple times during the ad campaign.
After that debacle, LifeLock was accused of lying to Americans about the effectiveness of its identity monitoring services, and so in 2010 it agreed it would not make deceptive claims in future.
The latest payout will put LifeLock decidedly in the red this quarter. The company said in its quarterly financial report that the settlement payout had turned what would have been a profit-making quarter into a $65.1m loss, thanks to the $96m charge.
"We believe the agreements we announced today are in the best interest of our shareholders and represent a positive step toward achieving closure on substantial outstanding litigation against the company," Davis said.
"These settlements, if approved, will enable all of us to focus on our mission of protecting our members." ®