The Lifelock “Guarantee”: Talking Out of Both Sides of Their Mouth

Here and on WalletPop.com (AOL’s personal finance site), I’ve been discussing a company called LifeLock. They purport to help people prevent identity theft. They’re slick marketers and they’ve really capitalized on people’s fears of identity theft. But I don’t like the company or its services.

One of the reasons I don’t like the LifeLock service is because I don’t think it’s worth the money. Consumers can do more for free on their own, than they get from LifeLock. (Their main service involves placing a “fraud alert” on your credit report, which is not worth much to a consumer. They need a “credit freeze” to have a reasonable chance of protecting themselves, and LifeLock doesn’t offer that.)

And the other reason I don’t like LifeLock is because of their “$1 million guarantee.” I don’t think that guarantee is worth a darn thing.

Oh, and about those new services they recently added: How laughable that they’ll “monitor chat rooms” for people who might be talking about your social security number!

Today I’m focusing on their phony guarantee. I call it phony because it offers almost no protection for the consumer. So it’s not worth the paper it’s printed on. And I don’t think most LifeLock customers are really aware of how worthless the guarantee is. Let me explain…

Here’s what their marketing spiel says about the LifeLock guarantee (bold added by me):

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. To see the details, click here.

If you have a reason to think that you will become a victim of Identity Theft, we can help you stop looking over your shoulder, because we’ve got your back.

Lifelock will do whatever it takes? Not so much. They really won’t do anything it takes, as you’ll see in the fine print. They say there’s not much fine print, but it looks like they don’t need much to never help you. Here’s that fine print in its entirety (bold added by me):

Our $1 Million Service Guarantee

Our service guarantee is simple, but it is limited. We will pay up to $1,000,000 to cure the failure or defect in our service, per member, per lifetime for all incidents in the aggregate, regardless of circumstance (*In North Carolina, we will make payments to professionals we choose). We will not reimburse special, incidental, indirect or consequential damages, such as lost wages or profits, loss of business, or lost opportunities. Other than our service guarantee, we make no representation or warranty about our service of any kind, and we disclaim any implied warranties outside of our service guarantee, such as a warranty of merchantability or fitness of our service for any particular purpose.

Our Service Guarantee (Warranty) is in support of our Service under the Terms and Conditions Agreement and is provided without additional charge:

A. If you are our member when someone accesses your personal identifying information and subsequently uses it without your authorization to commit a fraud, due to a failure or defect in our Service, and you have complied with this Agreement, subject to the terms herein, we will pay professionals to assist in restoring any such loss or recover such expenses, as required, provided however that the maximum limit of our Service Guarantee is $1 (one) million per lifetime for all incidents in the aggregate.

B. You must be truthful with us and you must tell us of the use of your personal identifying information without your authorization to commit a fraud within 30 days of first learning of it. You agree to cooperate with those we hire to help you.

C. If you need professional assistance to help remediate damages caused by the failure or defect in our Service, we will arrange for, and cover the expense of, that assistance to be provided to you through persons or firms we select; we will not reimburse fees of professionals or other service providers unless we choose those providers for your particular matter. Any such professionals, if required or applicable, will be licensed in the jurisdiction where your particular matter resides.

D. We will cure any failure or defect in our Service, resulting in damages you incur, subject to the terms of this Agreement as follows:
(i) If the amount involved is over $1,000, we reserve the right to investigate the Service Guarantee request in order to determine whether the request is valid before we do anything else. We will perform our investigation as promptly as we can. If our investigation shows that a reasonable person would conclude that your personal identifying information was used without your authorization to commit a fraud while you were a member and you have complied with all this Agreement, we will perform as described herein.

E. If we find that you intentionally misrepresented damages or committed a fraud related crime and misrepresented that you were a member when your information was misused, you agree to pay us back upon demand any amount we have paid in connection with your claim, including any costs we incur to collect the money from you. Being found guilty of a crime related to the loss which you attributed to identity theft is sufficient evidence to conclude that we are entitled to recover all amounts paid on your behalf as described above, but it is not the only basis upon which we may so conclude.

F. Similarly, should we decline your Service Guarantee request following our investigation and that decision subsequently is determined to have been wrong, we will honor our Service Guarantee.

Revised on 1 October 2007

Let me break down the good stuff in bold above:

  • They will pay $1 million “to cure the failure”
  • But only if the identity theft happened because of a “defect” in their service
  • And they won’t pay you any money for any losses you claim
  • They’ll only help resolve the debts incurred in your name by the thief and fix your credit report (but again, only if it was because of that defect)
  • Reminder: only if their service has a defect
  • They’ll pay professionals to help (but only if there’s a defect)
  • You don’t decide who helps (if anyone); LifeLock decides
  • They only fix defects
  • And you have to be truthful with them

I’m not an attorney, but I don’t think one needs to be an attorney to understand what’s said in their guarantee. The only way they will help you is if there is a defect in the LifeLock service that led to your identity theft. Good luck proving the identity theft was because of a defect. Why do I say that? Read on.

Would any of these instances causing your identity theft be a result of a “defect” in their service?

  • Your wallet is stolen
  • A computer at your bank is hacked
  • Someone steals your trash with personal information in it
  • There’s a fraud alert on your credit report, but a company issuing a credit card in your name decides not to check your credit report when someone is applying for their card

You can see that none of those situations is LifeLock’s fault, but they can all lead to someone ruining your credit. Your ruined credit is what LifeLock wants you to think they’ll fix. But I don’t think they will. Not in these situations. (And if I’m wrong about this, I’m sure LifeLock will immediately issue a press release clarifying that the $1 million guarantee applies to stolen wallets and such.)

What might be a “defect” in the LifeLock service?

  • LifeLock forgetting to put a fraud alert on your credit file
  • LifeLock not opting you out of pre-approved credit offers

But do any of those cause identity theft? No. That pre-approved credit offer coming to your house when you didn’t want it to doesn’t cause identity theft. But the naughty man stealing it out of your mailbox is the cause of identity theft. Good luck arguing with LifeLock about whether or not that naughty man is a “defect” in their service.

I stand by my opinion: LifeLock sucks. And the company is really interested in getting people like me to be quiet about our negative opinions of LifeLock. Go figure.

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Comments (7)

  • Chad Bordeaux

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    Any word on that Press Release?

    I went on their website and didn’t see one. I would agree that this whole service guarantee looks fairly suspect. I am just confused as to what it is that they actually do for their customers.

    I went to the Press Release section of their website and saw that AAA Carolinas (for which I am a member) has partnered with them. The opening paragraph of the Press Release states “More than 8,000 reports of identity theft in the Carolinas during 2006 has led AAA Carolinas to partner with an identity theft-prevention company that offers a one million dollar service guarantee your identity won’t be stolen.”

    Based on the terms I read above (and on their website), there is no guarantee that your identity will not be stolen. Only that if it is stolen, they have enough “outs” to not pay anything under the guarantee. I sure would like to see a revised Terms and Conditions from LifeLock or at least a public explanation.

    Reply

  • Tracy Coenen

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    LOL – I don’t think that press release will be coming anytime soon. Too bad that even AAA doesn’t even know what they’re buying.

    Reply

  • Joe Stafford

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    Open your mind folks. LifeLock is a service that protects your indentity is doesn’t guarantee that it won’t be stolen. What they say is that if it is they guarantee to spend up to $1,000,000 to correct the problem.
    It seems that a day doesn’t go by when some financial institution doesn’t report that they have for some reason or other lost control of private information that should have remained secure. If LifeLock guaranteed that this would not or could not happen would be foolish, mis-leading and probably fraud.
    Insurance fraud happens everyday at every level. It shouldn’t come as a surprise to anyone that the company has taken reasonable steps to protect itself from theives of this nature.
    It’s easy to be critical and make snide comments when you don’t have anyone to answer to. What is does, to anyone with any degree of reasonable intelligence, is demonstrate how close minded the writer really is.

    Reply

  • Tracy Coenen

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    Joe – I’d like to invite you to explain exactly what LifeLock does to “protect your identity.” (I already know the answer – Almost nothing.) The service is worthless.

    Reply

  • Joe Green

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    Thank You for the information about Life-Lock. I will not be recomending them anymore!

    Reply

  • tdejoria

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    Yes, Lifelock is a HUGE moneymaking sham. I’ve been in security since the early 90s. I followed these guys since their beginning. initially in one of those “gosh I could have, should have done that”. There are millions of gullible people out there. Lifelock plays on their fears. But offers no value other than what one can do on their own for free with Credit freezes and fraud alerts. But those millions of gullible people add up to huge revenues/profits, much of which gets plowed back into marketing dollars to again play on gullible people’s fears for even more profits.

    Also to clarify, Joe, the guarantee has a very big caveat. They will only spend “up to a million” to correct the problem if your identity is stolen BECAUSE OF SOME FAILURE OR DEFECT IN THEIR SERVICE. That is not only extremely unlikely, it would be nearly impossible to prove. So what would invoke that? instead of scanning databases and finding your personal data, they send out your personal data. That guarantee should be a very obvious sign as to why people should do business with them. Its one thing to offer a service guarantee, but to sell it as something more than it is, is flat our wrong.

    And we have proof that that is what they are doing by Joe’s response above. There is a clear consumer misinterpretation.

    Reply

  • Rachel

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    My id was stolen; I then put an alert on the credit agencies and then paid for LifeLock. I notified ALL my credit cards and debit cards, made a police report and even KNOW who stole my ID but nothing done by Police.
    After paying for LifeLock the thief started using my SS number to open accounts in my name, some online and some with in person applications.
    LifeLock DID NOTHING………no matter all the time and effort I have expended stopping these fraudulent accounts, LifeLock does nothing even after I notify them because I got the fraudulent accounts cancelled before any charges were made.
    A TOTAL WASTE OF MONEY AND TIME WITH LIFELOCK. DECEPTIVE, FALSE AND AN ABUSE…………

    Reply

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