Suit charges illegal business practices by LifeLock

A lawsuit alleges Tempe-based LifeLock defrauds customers by offering identity-theft protection services it cannot legally perform and promoting a $1 million guarantee that it alleges is “wildly misleading.”

The suit was filed Friday in U.S. District Court for the District of Arizona and claims LifeLock violated Arizona’s Consumer Fraud Act and the Arizona Insurance Code, and seeks to have all members’ fees refunded because of the “illegality of the contract and LifeLock’s misrepresentations about its service.”

The charges were denied by LifeLock, which claims to offer subscribers protection from having their personal information used by identity thieves to steal their money.

“We are puzzled by this lawsuit because the origin and intent clearly have nothing to do with protecting consumers. There is only evidence of the great benefit LifeLock provides to its members,” the company said in a statement.

The company said its protection is so effective that only 68 out of 850,000 members have needed to utilized the guarantee, and “all 68 had their good names completely restored.”

LifeLock officials declined to comment further.

The suit’s plaintiff is Byrl Lane, a Mesa-based attorney who handles medical negligence litigation and who purchased LifeLock membership in October 2007 after he lost personal documents when his car was stolen.

The suit was filed by Hagens Berman Sobol Shapiro, a Seattle-based law firm that has been involved in numerous high-profile class action suits. Rob Carey is the lead counsel, and former Arizona Attorney General Grant Woods is co-counsel.

Lane hopes to have the court certify the suit as a class action because “what happened to Mr. Lane is exactly what happened to everybody else because it’s an advertisement,” Carey said.

“What we’re seeking is for LifeLock not to profit off misleading and deceptive statements about their product,” Carey said.

According to LifeLock, the company’s service “helps consumers to render their personal information useless to thieves, backing up its service with a $1 million service guarantee.” Todd Davis, LifeLock’s CEO, has given out his Social Security number in advertising and national press to show his confidence in the company’s service.

The suit alleges LifeLock does not actually cover damages resulting from identity theft. It alleges the guarantee is limited to fixing failures or defects in the LifeLock services and paying other professionals to attempt to restore losses.

According to the suit, LifeLock’s alleged practice of placing and renewing fraud alerts under consumers’ names with credit bureaus is illegal. “It was a realization that Mr. Lane doesn’t have the package protections that he thought he did,” Carey said.