The Biggest Identity Theft Scam...?
Lifelock, the publicly-traded “identity-theft protection” service, is in trouble with the Federal Trade Commission again. Read on to learn why, how it might affect you, and ten free steps YOU can take to protect your identity...
Does Lifelock Really Protect Your Identity?
The FTC filed a complaint against Lifelock in U.S. District Court on July 21, alleging that Lifelock has failed to live up to the terms of a 2010 settlement by continuing to make deceptive claims about its services, and failing to protect its customers data.
Todd Davis, Lifelock’s CEO, is famous for publishing his Social Security Number on billboards as proof of faith in his company’s ID protection services, daring crooks to “Steal My Identity!” Well, they did – at least 13 times! That snafu put a huge damper on consumer purchases of ID theft services, which is probably the best thing that Lifelock has ever done for consumers.
Some 50 million Americans spent $3.5 billion on ID theft protection services in 2010. As consumers wised up and stopped wasting up to $300 per year, ID theft “protection” firms switched to peddling their services to corporations and institutions that suffered data breaches.
Target, the federal Office of Personnel Management, and hundreds of other entities that have failed to protect personal data now offer a complimentary year’s worth of ID theft protection services to victims. In my opinion, it’s just a PR Band-Aid, not real protection.
Lifelock is not the only bad actor in the ID theft-protection industry. Capital One and Discover Financial Services paid a combined $410 million in refunds and penalties related to deceptive marketing of identity protection, credit monitoring, and other services. Affinion, Experian Consumer Direct, and LifeLock were punished for not adequately disclosing automatic charges after “free” trials and for promising to prevent ID theft, which none of these services can do.
What's the Problem With LifeLock?
Consumer Reports did a devastating job of debunking the illusory protection that firms like Lifelock offer back in 2013. In summary,
- ID theft-protection only monitors your credit reports, and often skimps by monitoring just one of the three credit reporting agencies. Even if a suspicious application for credit is found, it may be weeks or months before you are notified.
- Offers of up to $1 million of insurance against ID theft losses are illusory. That coverage doesn’t kick in until you have exhausted all consumer protections that banks and merchants must provide by law, your homeowner’s or renter’s insurance, and all other remedies available to you. What’s left to cover?
- “Web scans” of black-market forums where stolen ID info is traded are useless. The thieves already have your data, so what’s the point of knowing it’s somewhere on “the dark Web?” Lifelock even says on their home page that their protection "does not cover all transactions" and that "No one can prevent all identity theft."
You can monitor your own financial accounts for suspicious activity for free, and spot unauthorized transactions a lot faster than third-party firms can. Your bank may already be doing this for you. Several times in the recent past, I've been alerted by my bank about potentially suspicious transactions. Most were okay, but a couple of them were bogus, and the bank removed those charges.
“Identity” protection is a misnomer; all these services do is monitor your credit. If your Social Security Number and other personal data are used to impersonate you for other purposes, Lifelock and its ilk will never know. Medical insurance fraud, tax fraud, and even felonies committed by people posing as you are not covered by “identity protection” services.
Enrolling in one of these services may actually increase your vulnerability to ID theft. The FTC is alleging in its complaint that Lifelock has failed (after five years!) to implement industry-standard security practices to protect the sensitive data that it collects from subscribers. It’s unlikely that Lifelock’s competitors do much better to protect customers’ data.
So, if you receive notice of a data breach along with an offer of free ID-theft “protection,” my advice is to turn it down. Do your own monitoring and be pro-active. The steps I've outlined above (see the sidebar) are free, and will put you in charge of protecting your own privacy.
Your thoughts on this topic are welcome. Post your comment or question below...
This article was posted by Bob Rankin on 23 Jul 2015
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Article information: AskBobRankin -- The Biggest Identity Theft Scam...? (Posted: 23 Jul 2015)
Copyright © 2005 - Bob Rankin - All Rights Reserved