LifeLock Lawsuits Putting It On Life Support?

Todd Davis

I’m sure you’ve seen the LifeLock ads, where CEO Todd Davis gives out his Social Security number as if to dare someone to steal his identity.

By the way, it’s 457-55-5462. This has helped the company sign up over a million subscribers--at a current rate of 100,000 new customers a month. Annual fees are $100. Assuming all one million go for the annual fee and you’ve got $100 million. That’s real money, and one reason Goldman Sachs and Kleiner Perkins have helped bankroll the company.

Now, as you may have heard, the company is being sued in several states by customers who claim LifeLock's ads are misleading. In fact, the lawyer behind the lawsuits, David Paris, says a background check of Davis’ Social Security number revealed 20 cases where fraudulent driver's license numbers were issued, proving LifeLock does not protect identities. CEO Davis says there’s been only one case of successful identity theft against him out of 87 tries, and that was for a $500 payday loan in which the lender didn’t even run a check on the applicant.

Davis insists LifeLock is clear about its limitations. “There’s nothing out there that can stop all identity theft,” he told me. Still, he promises the company will do all that it legally can to help you get back your good name if your identity is stolen while a LifeLock customer. He admits that much of what the company does is available free to consumers who wish to take those steps on their own—like setting up fraud alerts with credit monitoring agencies. But that’s “for those people who change their own oil, wash their own cars,” he says. LifeLock is for those who prefer someone else to do the work, including the clean-up work if a breach occurs.

Davis also claims his ads are not misleading. So why all the lawsuits? Check out the video clip and listen to his response in an interview with me.

Attorney David Paris couldn't disagree more. He's filing a fifth lawsuit this week, this time in California, on behalf of LifeLock customer Bob Dillon (talk about identity theft! Oh wait, it’s spelled different). Like the other lawsuits in other states, Paris is seeking class action status.

I asked Paris if Dillon’s identity had actually been stolen. No. So why complain? Paris said Dillon feels mislead and wants LifeLock to change its advertising. I asked, did Dillon tell LifeLock this and demand his money back? No. Why not do that instead of filing a lawsuit? “That was his prerogative,” Paris told me, “but he wants to write a wrong.”

When I suggested that, to some, this may look like another case of an attorney going after a company just to make money, Paris replied, “The company is lining its coffers with somewhere in the arena of $100 million a year by selling a level of protection that it simply cannot provide.” He pointed out that state agencies in New York and Montana are also investigating LifeLock's advertising, so it’s not just class action lawyers. “That’s how I know I’m on the side of right.”

LifeLock has asked a judge to throw out the first lawsuit, in New Jersey. A decision there could signal what other state judges may decide. As CEO Todd Davis told me, the plaintiffs “can bring it on, because they’re about to meet ‘David’ in LifeLock.” Although in this case, it’s the attorney who’s named David.

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