The Lifelock Scam
Whenever I read a blog post where someone is pointing out the Lifelock scam there is always at least one comment that goes along the lines of:
“I am well aware it is possible to carry out the identity theft prevention measures myself thank you very much but as Lifelock only costs me a few dollars a week why should I?”
Well, the main reason is because you are not getting the service you think you are paying for but first lets consider those few dollars a week for a moment.
Lifelock charges $10 a month, which of course is $120 a year. For your $120 you get a fraud alert placed on your credit file and it gets renewed every 3 months on your behalf and you get your (free) annual credit report.
It takes 2 minutes to make the call (I know because I do my own) but lets be generous and say it takes 5. So we have someone making a 5 minute phone call on your behalf 3 times a year which equates to 15 minutes work per year for a total cost to you of $120
I don’t know you and for all I know you may well be comfortable paying rates of $480 an hour to someone for making a couple of toll free calls but I’m guessing that in today’s economic climate, you’re not.
Before we look at the finer details of what you get for your money, there is one other point for you to consider about the $10 a month Lifelock charge for their service and its this:
The average out of pocket cost for identity fraud victims is $422 so were you to sign up to Lifelock and fall a victim to the crime any time after your first 3 years, you would actually be out of pocket even if they were to reimburse you in full (more on the very dodgy Lifelock guarantee).
Cost of Lifelock for 4 years = $480. Cost of being a victim = $422.
So, if getting value for money is not your thing and you still consider Lifelock to be worth it, lets look at exactly what you get for your bucks.
Your Free Credit Report
Lifelock request on your behalf, your free credit report. You are entitled to 1 free copy a year from each of the 3 major credit bureaus and if you prefer you can get immediate access to your file online, again at no cost from www.annualcreditreport.com
Tip: Get one from each of the credit bureaus every 4 months rather than request all 3 at once so that you can spot any unusual activity sooner rather than later.
Your Fraud Alert
Lifelock place a fraud alert on your credit file so that (in theory anyway) should someone try and take out a new line of credit in your name the credit company should use what the law calls “reasonable policies and procedures” to verify your identity before they open a line of credit in your name. Though as Todd Davis, the CEO of Lifelock found out when someone took out a $500 payday loan out in his name, not all credit companies bother to act on the fraud alert as it slows down the whole process of making money.
Slowing down the loan process is one of the reasons Experian is currently suing Lifelock. They claim a fraud alert should only be placed if a person can show they are at risk from identity theft, ie. lost their wallet or purse. If successful in stopping Lifelock through the courts, Lifelock’s entire business model goes down the pan but that’s a story for another day.
Anyway, your fraud alert: Placing your own fraud alert takes a few minutes and costs nothing. You only have to place it with one of the bureaus as by law the one you place it with must inform the other 2.
To find out just how easy it is simply ring or write to either of the following credit bureaus to request a fraud alert to be placed on your credit file:
TransUnion: 1-800-680-7289; Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790
Equifax: 1-800-525-6285; P.O. Box 740241, Atlanta, GA 30374-0241
Experian: 1-888-EXPERIAN (397-3742); P.O. Box 9532, Allen, TX 75013
An ‘initial’ fraud alert is designed to be used if you feel you are at risk so if asked for a reason you might mention the wallet or purse that you lost or the ‘post that has been going missing.’
You are also entitled to a free copy of your credit report when placing a fraud alert so if you haven’t already, request one at the same time.
Your fraud alert lasts for 90 days and this is the only possible value to my mind that Lifelock offers: They renew it for you once the 90 days is up but nowadays every cell phone has a calendar built in as do all PC’s. Set a reminder for 90 days and then contact the next credit bureau in the list and place the alert again.
If you have been a victim of identity theft and have a police or other law enforcement agency report to prove it you can place an ‘extended’ fraud alert which stays on your file for 7 years and requires any credit company to contact you via phone and in person before opening any new line of credit.
That’s the bases just about covered. As you can see, you don’t get anything from Lifelock that is not available to you within a few minutes and for free. They use smart marketing methods and prey on people’s worries to get over a million Americans to pay them over $10 million a month for what is nothing more than a very expensive alarm clock.
Don’t fall for the Lifelock scam, instead of spending $120 a year for the rest of your life, take the 5 minutes it costs to do it yourself.
I don’t understand how investors would put up $25m to back up such a flawed and kindergatten business model. This looks worse than Webvan.
The clock is ticking for Life Lock; tick tack, tick tack……..