Tuesday, July 21, 2009

LifeLock Ads -- Curiouser and Curiouser

Full page newspaper ad for LifeLockLast Sunday's Star Tribune business section included this full-page ad for LifeLock. In case you haven't heard of it, it's a company that guarantees it can prevent identity theft, and its CEO is known for publicly disclosing his Social Security number to prove how iron-clad the service is.

I was vaguely aware of LifeLock (I think from an ad that was in Parade magazine a while ago), and wondered if it was a legitimate product. I looked into it a bit at the time, and decided it seemed like it was basically on the up-and-up, and so I left at that.

This recent ad caught my eye, though, because its layout is almost identical to the ads done by the Universal Media Syndicate.

For instance, compare the layout above to this one for the Universal Health Card (ignore the pink boxes -- those are from me):

It has the same right-dominant image at top, photos of "real people" across the bottom with their stories marked off by a square bullet, and a call to action box about two-thirds of the way down the right side of the page, complete with Promo Code and two different phone numbers to call depending upon whether you want single and multiple coverage.

There are even similar little icons for each phone number (although the "padlock man" icon has been used by LifeLock before this ad).

So either LifeLock is imitating the successful formula of the UMS, or possibly they've actually hired UMS to produce the ads.

Looking into LifeLock a little further, I discovered they weren't quite so up-and-up as I had thought. They do offer an actual service (which costs $110 per year), but it's something you could do yourself for free.

Basically, the same 2003 law that brought us each a free credit report per year also made it possible for us to put a fraud alert on our credit reports so that no one can open a new account in our name without checking with us first. Jeez, you say, that sounds like something that should be required in the first place. But it's not, you see, because that would slow down the credit bureaus and therefore cost them money, so they didn't let it become law.

What LifeLock does is put one of those fraud alerts on your reports, and then renew the hold every three months. As security expert Bruce Schneier explained it in Wired, you do get something for your money from LifeLock, but in his opinion, it's not worth it. He writes, "LifeLock's business model is based more on the fear of identity theft than the actual risk."

But just because it's not worth the money, doesn't mean people aren't doing it, which angers the credit bureaus. According to Schneier,

This service pisses off the credit bureaus and their financial customers. The reason lenders don't routinely verify your identity before issuing you credit is that it takes time, costs money and is one more hurdle between you and another credit card. (Buy, buy, buy -- it's the American way.) So in the eyes of credit bureaus, LifeLock's customers are inferior goods; selling their data isn't as valuable. LifeLock also opts its customers out of pre-approved credit card offers, further making them less valuable in the eyes of credit bureaus.
So the credit bureaus and others sued LifeLock, claiming they are misusing the law that allowed fraud alerts. The alerts, they argue, were only meant to be used after a person's wallet had been stolen, or their house broken into. Schneier counters that by saying, "the text of the law states that anyone 'who asserts a good faith suspicion that the consumer has been or is about to become a victim of fraud or related crime' can request a fraud alert. It seems to me that includes anybody who has ever received one of those notices about their financial details being lost or stolen, which is everybody."

Despite that, the credit bureaus recently won their suit, and so I guess LifeLock's whole business model has been thrown out the window.

Which leads me to question what the point of the recent ad was. It ran weeks after the lawsuit was decided. The text does emphasize several times that the service is for people who "have a good faith suspicion that you are at risk of identity theft," so perhaps that's LifeLock's way of trying to get around the recent ruling.

If there's one upside to all of this, it's that it may make more people aware of their right to put a fraud alert on their credit reports. If you want to do it, this is how, according to the site lifelock-scam.com:
Placing your own fraud alert takes a few minutes and costs nothing. You only have to place it with one of the [credit] bureaus as by law the one you place it with must inform the other 2.

To find out just how easy it is simply ring or write to any of the following credit bureaus to request a fraud alert to be placed on your credit file:

TransUnion: 1-800-680-7289; Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790

Equifax: 1-800-525-6285; P.O. Box 740241, Atlanta, GA 30374-0241

Experian: 1-888-EXPERIAN (397-3742); P.O. Box 9532, Allen, TX 75013

An ‘initial’ fraud alert is designed to be used if you feel you are at risk, so if asked for a reason you might mention the wallet or purse that you lost or the ‘post that has been going missing.’
Do it today, if only to annoy the credit bureaus!


trashpad said...

Obviously you didn't read about the suit by the credit bureau. Federal law says companies cannot place fraud alerts, only individuals. that is why they lost. Lifelock is doing exactly what was expressly prohibited when they drafted the statute.

Daughter Number Three said...

Well, trashpad, I had read about the suit, but perhaps not enough.

You're right that the court finding is based on the judge agreeing with credit bureau Experian that the law was intended for individuals to put alerts on their own credit reports, not for an outside company to do so.

However, according to MSNBC the case was only brought by Experian, so LifeLock can still put alerts on reports through the other two credit bureaus, and since the bureaus are required to share alerts, LifeLock's alerts will end up on Experians reports as well.