Its chief executive prominently displays his Social Security number in ads for his identity-theft protection company. But LifeLock Inc. couldn't protect customers from the company's own misleading advertising, according to state and federal authorities.
In a settlement with the Federal Trade Commission and attorneys general from California and 34 other states, LifeLock agreed Tuesday to tone down claims about the effectiveness of its service and to pay $11 million to customers and $1 million for the costs of the investigation.
The FTC and the states alleged that the Tempe, Ariz., company misled customers by claiming to offer absolute protection against identity theft, when in reality there was no surefire way to keep thieves from assuming a victim's identity.
"LifeLock sold Californians a false sense of security against identity theft with advertisements that were chock full of inflated claims and promises," California Atty. Gen. Jerry Brown said.
Todd Davis, LifeLock's chief executive, said the company and regulators had "differing" interpretations of LifeLock's claims but agreed to the settlement to dispense with the case.
"We did not intend to create any confusion," Davis said. "If they believed we did, we accepted that responsibility."
Davis has been a fixture in the company's ads, revealing his own Social Security number in a supposed show of his confidence in LifeLock's services.
Several LifeLock statements appeared to claim unequivocally that the company could prevent identity theft, according to the FTC.
"By now, you've heard about individuals whose identities have been stolen by identity thieves," one claim states. "LifeLock protects against this ever happening to you. Guaranteed."
The FTC alleged that LifeLock made other false claims about its service, including that it would prevent thieves from changing a victim's address, that it constantly monitored credit reports and that customers would always receive phone calls from creditors before new credit was opened in their name.
The FTC and Brown's office will send letters in the next two weeks to California customers who subscribed to LifeLock from April 1, 2005, to March 30, 2009, with information about how to sign up to receive refunds.
Additional information can be found at an FTC website, www.ftc.gov/lifelock "> www.ftc.gov/lifelock , or by calling (202) 326-3757.