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Almost 1 million consumers have signed up for LifeLock, which promises to protect their credit and identity. But amid lawsuits against the company, consumer advocates say LifeLock customers are wasting their money while the company's founder insists it is the best way for consumers to protect themselves.
LifeLock's co-founder and chief executive officer, Todd Davis, is so confident in the product that he shares his Social Security number in the company's many TV, radio and print ads. But consumer advocates and three class-action lawsuits say LifeLock actually provides little protection.
In fact, Davis has been a victim of identity theft by multiple offenders, according to one of the lawsuits now pending against the company. Attorney David Paris said he had found at least 20 instances of people applying for a driver's license using Davis' Social Security number.
The Associated Press reported that Davis acknowledged his stunt had led to at least 87 instances in which people have tried to steal his identity. He said the only successful scam he knows of was conducted by a Texan who duped an online payday loan company into lending him $500.
LifeLock, based in Tempe, Ariz., works by renewing an individual's fraud alert with one of the nation's three large credit bureaus, a service that federal laws mandate any individual can do for free, usually within a few minutes over the phone or Internet.
"What the fraud alert does is it basically puts a red flag on your credit report, and it tells any potential creditor that if they receive an application for credit, they should take additional measures to determine that the person is the person that they're claiming to be. Typically, that would be a phone call," said Paul Stephens, the director of public policy at the Privacy Rights Clearinghouse, a nonprofit consumer advocacy organization.
More from MSN Money and ConsumerAffairs.com
Fraud alerts last 90 days and then must be renewed. LifeLock charges $10 a month to make sure its customers' fraud alerts never expire -- a service most consumer advocates are baffled anyone would pay money for.
"No one needs to pay a third-party firm to assert their federal rights," Ed Mierzwinski, the consumer program director at the U.S. Public Interest Research Group, a nonprofit consumer advocacy organization, wrote in an e-mail. "And for one hundred bucks plus each year, it is certainly not cheap to do so."
'A concierge service'
"I like to think of LifeLock as being a concierge service," Stephens said. "Are you the kind of person who would pay somebody, for example, to do your shopping for you?"I would point out that to do the sorts of things that LifeLock does for you, you don't even need to leave your house," Stephens continued. "You can get on the phone or get on your computer and do it in a couple of minutes. So I don't really see that they bring a lot of value to the consumer."
Davis didn't argue the concierge analogy in a phone interview with ConsumerAffairs.com, but he said the company offers much more than the renewal service.
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"There are certainly steps beyond just convenience that we're doing, but one of the things that people love are those convenient steps: us renewing the fraud alerts, us being there if you have a question in a retail store when you're applying for credit, us being available 24/7, us being there in case you lose your wallet. (We will) assist canceling and renewing credit cards and helping to get a new driver's license," Davis said.
"We're also doing other things like scouring the (Internet) looking for your personal information being bought or sold on the black market. We're authenticating when someone puts in a change of address to confirm it's you."
In advertisements, the company also promises to stop junk mail, including pre-approved credit offers, and provide a credit report -- services that, again, a consumer could get for free over the phone or Internet.
Continued: Million-dollar 'guarantee'
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