Lifelock and identity theft (San Diego Transcript)

You've seen him on TV and heard the radio commercials. "This is Todd Davis and my Social Security number is 457-55-5462."

Todd Davis, CEO of Lifelock, then goes into a sales pitch about its subscription service that promises to protect us from identity theft.

I had listened to these commercials for months, and had dismissed them as just another pitch for something I never knew I needed. I had read a New York Timesarticle that minimized the value of Lifelock's service, relying on quotes from the credit bureaus such as Equifax and Experian. But I was still curious. As I looked into this further I was surprised by what I found.

Will Lifelock solve all the problems associated with identity theft? Probably not. But it does provide some useful services that can reduce the likelihood of becoming a victim of this crime that strikes about 9 million people a year.

The prevention services Lifelock offers are straightforward, understandable and useful. But because identity theft takes on many faces and the criminals are very creative, you still cannot expect to be immune. And once your identity is stolen, you may still need to get involved, and perhaps call on additional help to repair the damage it caused.

What is identity theft? It's when someone takes over your identity and is in a position to commit a crime in your name. Typically it occurs when they use your Social Security number, license or other identification to obtain a credit card, cell phone, a loan or cash a check in your name. They'll often rack up bills that are not paid and that affect your credit rating. Some may even get a job using your identity. Sadly, it's often not detected until you apply for a mortgage or an auto loan and find your credit rating has plunged.

Social security numbers, credit card numbers and personal information are easier to steal than ever before. More of the businesses and agencies we deal with require them, but often fail to keep them secure. Numbers can be secretly scanned when you use your cards in stores or illegally accessed from computer files and discarded paper records.

Lifelock's primary service is to require the credit bureaus to contact you before approving new requests for increasing a credit limit, obtaining a new credit card or issuing additional cards on an existing account. When you join, Lifelock contacts the credit bureaus and puts a "fraud alert" on your account.

Putting a 90-day fraud alert is something any of us can do by going online or calling one of the credit bureaus and requesting it. But Lifelock does it repeatedly each 90 days, providing a never-ending alert.

Credit bureaus don't like this; it costs them time and money. They'd rather automate the process and issue the cards and credit without our permission, even though it puts us at greater risk.

Experian has sued Lifelock, claiming that its actions are illegal, because the fraud alerts need to be requested by the consumer directly. But this lawsuit can be viewed as self-serving. Experian has a checkered past when it comes to protecting consumers. It has been charged by the FTC with deceptive practices by turning the law requiring them to provide free credit reports into a huge multi-million dollar subscription business. How? The credit bureau bought freecreditreport.com, which is not free, but costs $15 per month. So Experian suing Lifelock might actually be an endorsement.

I spoke with Todd Davis and he agreed that while any of us could make the calls to the credit bureau every 90 days, Lifelock ensures that it's done. He compares it to other services that you can do yourself or pay others to do it, such as filing your own taxes.

It also searches the thousands of Web sites that traffic in illegal credit cards and Social Security numbers, looking for any incidents of its subscribers' numbers being sold.

What happens should your identity is compromised? You'll want to stop it from damaging your credit and incurring debts under your name. If that's already occurred you want to repair that damage.

Lifelock offers a service guarantee that says if your identity is compromised due to a failure in their services, it will pay professionals to assist you in restoring your losses and recovering expenses up to a million dollars. With more than 1.4 million members, Lifelock has only had 400 requesting these services. Lifelock assured me it "will do everything to resolve a member's issue. If they are unable to recover the funds from the creditor, they will pay out of pocket to make the member whole."

So is this something you need? In reality, identity theft rarely occurs with the severity we read about. More often it's a misuse of a credit card for which our financial liability is limited to $50, usually waived by the credit card companies.

Consider it like an insurance policy, much like flight insurance. It's rarely needed, but is something that may put you at ease. I've gone from being a skeptic to a believer and will give it a try.

(UPDATE here)

Comments

[David M.]

These guys are as much of a scam as identity thieves themselves. A half hour on the phone with their member services department proved that to me. I had my info stolen and someone fraudulently signed up a LifeLock account in my name (ironic, no?). These guys wouldn't lift a finger to help me out, it was obvious that they could care less, they got their money and were happy.

Everyone, just so you know, all they do is sign up for that 90 credit fraud alert for you every 90 days. They sign you up with their phone number and then call you if they get a call. Guess what? You can just sign up your own phone number and get the exact same service for free. Just add a recurring event to your Google Calendar to fill out the online form quarterly and you're done. Not only is this cheaper, but you don't have to give all of your confidential info (e.g. SSN) to a bunch of scammers (e.g. LifeLock).