According to the FTC, LifeLock violated the 2010 settlement agreement by continuing to make deceptive claims about its identity theft protection services and failing to take the required steps to protect the data of its users.
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The Federal Trade Commission says LifeLock did not set up a program to protect sensitive data like credit card numbers, Social Security numbers and bank account numbers, which the company agreed to do as part of the 2010 settlement.
LifeLock, the FTC said, falsely claimed it protected consumers’ identity 24/7/365 by providing alerts “as soon as” it received any indication there was a problem, and charged consumers $10-a-month for the service. LifeLock’s failure to implement better security systems is a violation of a $12 million settlement, the FTC added.
In trading on Tuesday, the stock fell to around $10 per share – a two-year low. Most of the money was used to cover the cost of customer refunds.
The company violated a previous settlement with the Federal Trade Commission and 35 state attorneys general, the agency said Tuesday.
Jessica Rich, Director of Bureau of Consumer Protection at the FTC emphasized, “It is essential that companies live up to their obligations under orders obtained by the FTC”.
Lifelock came out with a statement, saying, “After more than 18 months of cooperation and dialogue with the FTC, it became clear to us that we could not come to a satisfactory resolution of their issues outside a court of law. The alerting claims raised by the FTC did not result in any known identity theft for LifeLock members”, the company said in statement. “As required by the FTC’s consent order in 2010, LifeLock hired highly credentialed, independent professionals to assess its information security”, the company said.
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Lifelock said today that it is proud of the valuable service it provides its customers and that it disagrees with the substance of the FTC’s contentions and is prepared to take its case to court. The Tempe, Arizona-based company said it has been cooperating and talking to the agency for a year and a half. It had about 3.9 million members at the end of the quarter. If a customer’s identity has been stolen, the company pledges to spend up to $1 million on experts to help with their recovery. The company even revealed its CEO’s social security number in advertising campaigns as a means to prove the quality of its data protection. LifeLock went public in October 2012 in an IPO that priced at $141 million.
