LifeLock–A Review

LifeLock is an identity theft prevention service available online. Identity theft is one of the fastest growing crimes in America, victimizing over 10 million people a year and costing billions of dollars. Given the rise in identity theft crimes over the past ten years, I thought a review of LifeLock was in order. First we’ll cover some facts about identity theft, then we’ll look at how LifeLock works and what it costs.

Facts About Identity Theft

According to the Identity Theft Resource Center, identity theft affects over 15 million individuals each year:

  • According to the Gartner study the 2006 victim population was at 15 million victims. That means every minute about 28 people become a new victim of this crime, or a new victim in just over 2 seconds.
  • The incidence of victimization increased 11-20% between 2001 and 2002 and 80% between 2002 and 2003 (Harris Interactive). This same study found that 91% of respondents do not see an end to the tunnel and expect a heavy increase in victimization. 49% also stated that they do not feel they know how to adequately protect themselves from this crime.
  • In a bulletin published by the Bureau of Justice Statistics, an estimated 3.6 million households were affected by identity theft during a 6-month period in 2004. If an entire year was considered, that could mean that 7.2 million households were affected in a 12 month period.

Perhaps the most startling statistic is that the United States Department of Justice reports that identity theft crimes are now passing drug trafficking as the number one crime in the United States.

Phishing scams play a significant role in identity theft crimes. A common phishing scam involves sending the victim an email purportedly from their financial institution. The email includes a link and asks the victim to update his or her confidential information. What makes these scams so effective is that the link takes the victim to a website that looks very similar their actual bank’s website. Believing that they are at a legitimate website, they then enter confidential information.

As of July 2006, there were over 23,000 phishing websites compared to just 4,500 a year earlier. One report found that 14% of phishing scams are successful. And the cost in money and time for the victims is significant:

  • Losses from phishing attacks: in 2004 was $137 million, in 2006 it was $2.8 billion
  • Number of US adults who received a phishing email: the number doubled from 57 million in 2004 to 109 million in 2006
  • The per victim loss increased almost five-fold from $257 in 2004 to $1,244 in 2006
  • The money recovered by consumers dropped from 80% in 2004 to 54% in 2006

LifeLock–How does it work?

In a nutshell, LifeLock protects its customers’ identity by placing a fraud alert on the individual’s credit files with the major credit bureaus. With a fraud alert, credit card companies and other credit issuers are then required to take additional steps to confirm your identity before issuing you credit. As a result, they are more likely to catch an individual trying to use your social security number or other identifying information to obtain credit with your name.

In addition, LifeLock performs several other steps:

  1. About, every 90 days LifeLock again places a fraud alert on your credit file with the major credit bureaus.
  2. LifeLock requests that your name be removed from pre-approved credit card and junk mail lists. In addition to reducing your mail, statistics show that thieves often hijack pre-approved offers in the mail and use them to apply for credit under the victim’s name.
  3. LifeLock also orders your free credit reports from the major credit bureaus every year.
  4. LifeLock offers what it calls WalletLock. If you lose your wallet or purse, or if they are stolen, LifeLock will help you contact each credit card, bank or document issuing company, cancel your affected accounts and complete the paperwork and steps necessary to replace your lost documents*, including your credit/debit cards, driver’s license, social security card, insurance cards, and checkbook.
  5. LifeLock monitors certain websites and databases to detect any illegal selling or trading of your personal information or any new address information associated with your name.

Is LifeLock fool-proof?

No. Nothing is fool-proof. But here is what LifeLock says they will do should you be the victim of identity theft:

If your Identity is stolen while you are a member of LifeLock, we’re going to do whatever it takes to recover your good name. If you need lawyers, we’re going to hire the best we can find. If you need investigators, accountants, case managers, whatever, they’re yours. If you lose money as a result of the theft, we’re going to give it back to you.

We will do whatever it takes to help you recover your good name and we will spend up to $1,000,000 to do it.

We don’t think you will see a guarantee like this anywhere else from any other company. If you do, let us know because we’d like to do business with them. There isn’t much fine print in our Guarantee.

How much does LifeLock cost and is it worth it?

Here’s the big question. LifeLock costs $10 per month or $110 per year, although in a minute I’ll tell how you can get LifeLock for 10% less. I first heard of LifeLock on the radio, and my reaction was that I could place fraud alerts on my credit files for free. One thing I find refreshing about LifeLock is that it readily admits that you can take the steps it would take on your behalf for free. What they are selling is convenience and the assurance that it gets done. Of course, they are also offering their assistance and $1 million guarantee.

So is LifeLock worth the cost? I think so. I’ve paid for credit monitoring in the past, and have been happy with the service. LifeLock takes credit monitor one giant step forward, and for the same price.

And now for that 10% discount. It’s simple–you can click here to get a 10% discount., bringing the cost down to $9 or a month or $99 per year.

Topics: Money Management Tools

10 Responses to “LifeLock–A Review”

  1. Hey DR thanks for the link.
    I hope no one has to go through an identity theft situation, but the statistics don’t look too good. It’s a problem that just keeps on growing. Hopefully people will take your advice and sign up for some sort of protection.

  2. Check out this story: “Fraud-prevention pitchman becomes ID theft victim”

    Seems the CEO who puts his SSN all over the place was a victim recently. And a class action law suit is taking shape against the company.

  3. DIMA, one of the credit bureaus is suing LifeLock, although it is unclear how that will resolve itself. I think what LifeLock does for consumers, consumers can do for themselves if they want to. It does take some effort and organization, and you have to remember to stay on top of it. Whether they are misusing fraud alerts or not is an open question, although I do think the credit reporting agencies have a good argument.

  4. KMC, I’ve read the lawsuit and predict that it won’t go far. Having defended many class action lawsuits years ago, I suspect LifeLock will prevail on a motion to compel arbitration. They haven’t filed that motion yet, but they certainly will. That will defeat any class certification. I also suspect that the plaintiff’s fraud claims are weak, at best.

  5. KMC, I should add to my previous response that the Supreme Court just declined to hear a case that involved class action lawsuits and arbitration clauses. I won’t go into the details here, but the decision is not favorable to LifeLock.

  6. David M.

    These guys are as much of a scam as identity thieves themselves. A half hour on the phone with their member services department proved that to me. I had my info stolen and someone fraudulently signed up a LifeLock account in my name (ironic, no?). These guys wouldn’t lift a finger to help me out, it was obvious that they could care less, they got their money and were happy.

    Everyone, just so you know, all they do is sign up for that 90 credit fraud alert for you every 90 days. They sign you up with their phone number and then call you if they get a call. Guess what? You can just sign up your own phone number and get the exact same service for free. Just add a recurring event to your Google Calendar to fill out the online form quarterly and you’re done. Not only is this cheaper, but you don’t have to give all of your confidential info (e.g. SSN) to a bunch of scammers (e.g. LifeLock).

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