LifeLock didn't live up to their hype, and now they're $100m lighter
FTC exacts its pound of flesh from ID theft preventer
The US Federal Trade Commission (FTC) has agreed to a $100m settlement in its deceptive advertising case with LifeLock.
The identity protection provider will pay the nine-figure penalty to end the FTC's complaint that it violated a 2010 order related to charges of misleading consumers. The settlement does not include an admission of guilt.
The settlement has been known about for some time, thanks to a financial disclosure from LifeLock earlier this year, but was only today made official by the US trade bod.
LifeLock has been charged twice by the FTC, first in 2010 and again earlier this year, with failing to provide users with the strong identity-theft protection services it had advertised.
The FTC claimed that while LifeLock claimed in its ads that the service could effectively block users from all identity theft, the actual product was only able to catch and stop a portion of identity theft activity.
"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 of the case.
Most famously, LifeLock ran a publicity stunt in which its CEO drove a truck painted with his own social security number around New York City, touting the effectiveness of the LifeLock service. It was later revealed that the executive's identity had in fact been stolen several times.
Under the terms of this latest settlement, LifeLock will pay out $100m to be held by the US District Court in Arizona. Of that, $68m will be earmarked for class-action refunds with the stipulation that payouts can go only to aggrieved LifeLock customers, and not attorneys. The rest of the money, and any of the $68m unclaimed after a 120 day period, will be given to the FTC.
LifeLock will also be forced to adhere to a further set of monitoring and compliance rules to ensure it does not run afoul of its original settlement with the FTC, including regular audits of the company's handling of customer information. ®