Be Kind to LifeLock. It's Been a Tough Week

The ad campaign was one of the most memorable of the past couple of years -- a CEO with the temerity or stupidity to buy TV radio, and Outdoor listing his real social security number. So sure was he of the success of his service that he dared the world to try and beat it.

They also offer to spend up to $1MM to restore your credit if things go wrong. Apparently, 105 customers have had to invoke this, according to this article from the Phoenix Business Journal.

Hey, it worked on me. I had been a customer of one of the $6 a month notification services that tells you when new items appear on your credit. Though the problem with THAT is that the damage is done by the time you know.

So after I heard the ads a few times on GREEN 960 in SF, I went and signed up.

As I understand it the service automatically sends quarterly alerts to Trans Union, Equifax and Experian telling them to tell creditors to exercise caution on your account. It means they scrutinize the request for credit more thorough, greatly reducing the odds of someone opening a Platinum Amex and charging $125,000 before you even know what's happening. Here's how the Chicago Tribune describes it, in this article:

LifeLock arranges it so that you are notified for your approval if you or someone else is trying to open a new credit card, equity line, cell-phone contract, etc. It does this by putting "fraud alerts" on all your accounts, which have to be renewed every 90 days, and then monitoring them for any suspicious activity.

But as I said, it HAS been a bad week for LifeLock, because it was revealed that someone actually opened a loan for $500 using the CEO's social number. The press had a field day, saying that this was proof that the claim was BS.

There are two class action suits filed against the company essentially because their service is not perfect. Also, Experian is suing LifeLock because of the model that keeps a permanent fraud alert on your account. I would imagine that this is somewhat of a nuisance for them. To which I retort, 'well there'd be no need for the permanent fraud alert if the credit reporting agencies and the companies that buy their data exercised reasonable security measures. But they clearly DON'T!'

And a closer examination of the specific identity theft I mentioned above reveals that what happened was that the loan was opened by an org that did not check credit.

So LifeLock wasn't foiled -- at least in my view -- because the guy's credit is still AOK. I don't much care if some creditor is out $500 because they didn't bother to do a credit check. What I care about is whether something will cause my next mortgage rate to be 9 3/4% instead of 5 3/4% because my credit scores are shattered by the fraud.

So there you go. My two cents. I am still a happy customer of LifeLock. Though I will refrain from leaving my social here. Lifelock says that there were 88 fraud attempts on their CEO since the campaign began. One was successful, and this was because the lender didn't check credit.

Not too bad a record, at least in my book.