LifeLock, Inc.: Information from Answers.com

Company Perspectives
Many people compare us to credit monitoring services, like those provided by the credit bureaus. We're not like credit monitoring, we are the next generation. Which would you rather have, a lock on your door keeping the thieves out, or an alarm telling you after the thief has ripped you off? We think most people would prefer to keep the thief out in the first place. And that's what we do. As our name states, we're the lock, and you hold the key.
Key Dates
2005: Robert Maynard, Jr., and Tom Davis form LifeLock.
2006: The company receives $6 million in funding from Bessemer Venture Partners and launches a memorable marketing campaign.
2007: Maynard resigns from the company, giving up his post as chief marketing officer.

Type: Private Company
Address: 6515 South Rural Road, Suite 104, Tempe, Arizona, 85283, U.S.A.
Telephone: (480) 6825100
Toll Free: (877) 543-3562
Fax: (480) 682-5130
Web: http://www.lifelock.com
Employees: 80
Sales: $40 million (2006 est.)
Incorporated: 2005
NAIC: 519190 All Other Information Services

LifeLock, Inc., offers services to help protect consumers from identity theft. The company serves an estimated 150,000 subscribers in the United States, Puerto Rico, and the U.S. Virgin Islands. LifeLock charges a monthly fee of $10 or an annual fee of $110 to guard against new-account fraud. The company is financially backed by Bessemer Venture Partners, a venture capital firm based in California.

Origins

In a story often repeated by company officials, the inspiration for LifeLock was drawn from the misfortune of Robert Maynard, Jr.--the "real" Robert Maynard, Jr., not the two-time murderer who posed as Robert Maynard, Jr. Maynard, according to one version of the story, first learned his identity had been stolen when he applied to be a court-appointed special advocate for children. Once authorities performed a background check on Maynard, the horrors of identity theft were unleashed. "They saw felony warrants for my arrest," Maynard explained in a July 29, 2005, interview with the Business Journal of Phoenix, "and I ended up spending a week in jail because I was a fugitive from justice." His troubles did not end once he was released from jail: Maynard's ersatz doppelgänger had run up a $16,000 debt at a Las Vegas casino, leaving him with the lengthy and costly chore of clearing his name and cleaning up his credit. In a September 13, 2005, interview with the Mesa, Arizona, Tribune, Maynard summarized his reaction to the debacle and the train of thought that led to the formation of LifeLock: "I was confused and quickly became frustrated," he said. "Then I got angry because I began having to fight the bureaucracy at the Arizona Department of Transportation Motor Vehicle Division. I just filed the incident away, but as the issue became more topical, I realized that so many people were facing this. I thought that there had to be a way to stop the problem in the first place. Taking proactive measures always made the most sense to me. I'd rather keep the barn doors locked than watch the horses running off, if you get my meaning."

Maynard's calamity involved a crime that was becoming increasingly familiar to American consumers. As LifeLock started out, the increase in the number of identity thefts in the country was outpaced only by the increase in the public's fear of identity thefts. Labeled as the fastest-growing crime in the United States, identity theft rose in notoriety during the first years of the 21st century, lifted upward in a swirl of media hype and fear fueled by millions of reported incidents, some as painful as Maynard's experience. Maynard and a former Dell Computer salesman, Todd Davis, wanted to tap into the need for identity protection, choosing to base their start-up venture in Arizona, the state with the most identity thefts per capita in the United States. To add prestige and managerial expertise to their entrepreneurial effort, Maynard and Davis enlisted the help of several seasoned executives. Luke Helms, the former vice-chairman of Bank of America, was appointed chairman of LifeLock. Inder P. Singh, the former global chief information officer at VISA International, was selected as an adviser to the board of directors. Seats on LifeLock's board of directors were handed to Chini Krishnan, the founder and chief executive officer of Vimo, Inc., and Jim Greener, the founder and retired chief executive officer of Medtronic, Inc. When LifeLock was incorporated in April 2005, Davis took the title of chief executive officer, a position that cast him as the leading spokesman for the company. Maynard assumed the duties of chief operating officer, a title he would later exchange for chief marketing officer.

Davis and Maynard set up LifeLock to provide the nation's first service to prevent identity theft. Their service differed from its closest relative, the service provided by credit monitoring firms, by taking a proactive stance against fraud. Credit monitoring tools were reactionary, signaling changes in a consumer's credit report after they occurred, after fraud was committed. The consumer, after his or her credit report was tarnished, invoked the credit monitoring firm's insurance policy and attempted to recover the money lost, taking sole responsibility for navigating through the maze of paperwork required to clear one's name, a byzantine process that could take years to complete. The LifeLock Identity Theft Service touted by Davis and Maynard offered something credit monitoring tools did not: protection. LifeLock promised to stop the crime before it happened by placing fraud alerts with the three, national credit-reporting agencies, Experian, TransUnion, and Equifax, as well as ChexSystems, which worked with depository accounts. Fraud alerts, which remained active for 90 days, served as red flags for creditors accessing a consumer's credit file, indicating the creditor should contact the consumer to validate the authenticity of a request for credit. LifeLock, for a monthly fee of $10 or an annual fee of $110, offered to place fraud alerts every 90 days, send the customer an annual credit report, and remove the customer's name from preapproved credit card and junk mail lists. The services offered by LifeLock amounted to chores performed for a fee, an offer of convenience likened to paying for a car wash. Each of the services--fraud alerts, annual credit reports, and registration on opt-out mailing lists--could be completed by a consumer free of charge via telephone. "It's a very profitable business," an industry observer said in a June 8, 2007, interview with the Kansas City Star, "because for the most part the services that are being provided cost them virtually nothing, and generally they are things you can do for yourself at little or no cost."

Davis and Maynard pinned their hopes for a successful business on the belief consumers would pay them for their diligence. LifeLock Identity Theft Service offered peace of mind without the hassle of placing fraud alerts every 90 days. The founders offered more though, backing their service with guarantees that no do-it-yourself consumer enjoyed. If a LifeLock client suffered from identity theft, the company promised to come to the client's aid to rectify the situation. "If you need lawyers, we're going to hire the best we can find," LifeLock's web site proclaimed. "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." LifeLock guaranteed to spend up to $1 million to compensate a client for damages incurred from identity theft, a promise that proved to be an effective marketing tool, but not one that the company expected to honor with any regularity. In 2003, a Federal Trade Commission (FTC) survey found that 50 percent of the victims of new-account fraud, the type protected by fraud alerts, reported they suffered no out-of-pocket expenses. Of the half that did report financial damages, the average expense was $1,200.

Marketing Takes Precedence from the Start

Identity theft, as Davis and Maynard started out, was a genuine threat, but it still needed the power of marketing to convince consumers to pay for protection. Guarantees of $1 million in financial backing, numerous local and national television segments on identity theft, and statistics (during LifeLock's first year in business, four million identities were compromised) did much to fan interest in the company's service, but the founders, Davis in particular, did not sit back and wait for customers to come in the door. Davis led the cry for identity-theft protection, aggressively promoting LifeLock's cause. He mixed marketing with altruism, offering LifeLock's service for a free, 90-day trial to groups of individuals who were particularly vulnerable to identity theft. In September 2005, when LifeLock's client base neared 75,000 subscribers, Davis offered the company's service to victims of Hurricane Katrina, waiving the monthly fee for a three-month period. In May 2006, after more than 100 tornadoes tore through sections of the United States, Davis offered free service to all tornado victims. That same month, a thief broke into the home of a Department of Veterans Affairs employee, stealing the personal information of 26.5 million veterans. Davis ran to the rescue, offering 90 days of free service to veterans and their families. Davis also forged partnerships to raise awareness of his company's service, offering discounts aimed at building LifeLock's subscriber base. In June 2006, the company offered a discount to the 2,000 members of the College Sports Information Directors of America. The following month, LifeLock service was offered at a discount to fans of RWI Racing, a NASCAR racing team owned by Rusty Wallace. Davis also offered LifeLock's service at a discount to college campuses, reaching agreements with administrative officials at the University of Oklahoma and Bowling Green State University. Financially, the company's prospects brightened when it received its first round of venture capital in November 2006. Silicon Valley-based Bessemer Venture Partners invested $6 million in LifeLock, giving the company the financial resources to pay for its marketing programs.

Davis's efforts to promote LifeLock manifested in several directions, including easily the most spectacular example of thrusting the company into the spotlight. After hiring Giles Communications LLC, a New York-based public relations firm, at the beginning of 2006, Davis served as the pitchman for a marketing campaign that could not fail to attract attention. In an audacious attempt to promote LifeLock, Davis began revealing his Social Security number, freely disseminating the nine-digit number coveted by identity thieves. Panel trucks emblazoned with Davis's Social Security number on each side meandered through city streets, leaflets bearing his number were handed out to pedestrians, radio, television, and print interviews invariably included Davis's Social Security number. The digits were posted on the home page of LifeLock's web site. Maynard followed suit, posting his Social Security number on the Internet. Some security experts deemed the stunt reckless, but few could deny that the publicity ploy attracted attention.

Scandal in 2007

Davis and Maynard exposed themselves to identity theft by widely publishing their Social Security numbers and they exposed themselves to greater scrutiny, making investigations into their personal lives all that much easier. It should have come as little surprise, consequently, when personal details they would have rather kept private became public. Bankruptcy court records showed that both Davis and Maynard had filed for protection from creditors, in Maynard's case, three times. Maynard's problems soon ran deeper. The May 31, 2007, edition of the Phoenix New Times reported that in a 1996 lawsuit, the FTC accused National Credit Foundation, a credit-repair company founded by Maynard, of misleading consumers into believing it could unconditionally remove negative information from credit reports, further stipulating that Maynard and his business partners "in numerous instances ... withdrew funds from consumers' checking accounts without authorization." Maynard agreed to settle the lawsuit without admitting to any of the charges, but a federal judge in Arizona permanently barred Maynard from "promoting, offering for sale, performing or distributing any product or service related to credit improvement services," as reported in the June 10, 2007, edition of the Cleveland Plain Dealer.

The Phoenix New Times article also called into question Maynard's identity theft saga, a story frequently recounted by Maynard, noting various and discrepant versions of the incident, as described by Maynard, existed. Depending on which newspaper or magazine article the story appeared in, Maynard's identity was stolen in either 1998, 2001, or 2003. Maynard did spend a week in jail in 2003, at a unit of the Maricopa County Jail, but the warrant for his arrest stemmed from his own $16,000 debt at the Mirage casino, which possessed a copy of the Arizona driver's license he used when he took out the marker. Maynard paid the debt without filing a police report for identity theft. "Not once did anybody ever suggest, in this particular case, that this was a case of stolen identity," Bernie Zadrowski, the chief deputy district attorney in Clark County, Nevada, said in an interview with the Phoenix New Times. Amid a storm of controversy, Maynard resigned in June 2007, but his troubles promised to endure. In 2005, American Express sued Maynard's father, Dr. Robert J. Maynard, Sr., a prominent eye doctor, for $154,000 in unpaid bills. The elder Maynard denied filling out an application for the card, which listed one of his son's former businesses as its billing address. When asked by the Phoenix New Times whether he believed his son had assumed the identity of his father to obtain the American Express card, Maynard, Sr., said, "I can't disagree with that."

June 2007 proved to be a difficult month for LifeLock's public relations department. The following month offered its own intriguing twist, presenting another potentially damaging blow to the company's reputation. In July 2007, reports surfaced that Daniel Keith Brown had walked into a check-cashing establishment in Fort Worth, Texas, and took out a $500 payday loan under the name "Todd Davis," using Davis's personal information to obtain the loan. The identity theft succeeded, according to Davis, because Teletrack, the subprime credit bureau used by the Fort Worth lender, did not receive fraud alerts from the three national credit bureaus. "Fraud alerts aren't always going to be bulletproof," Davis conceded in a July 24, 2007, interview with the Dallas Morning News. "There are areas where someone can still compromise your information." Davis was quick to point out that the identity theft had no effect on his credit report and he vowed to continue displaying his Social Security number. What others saw as a blight on LifeLock's reputation as a preventer of identity theft, Davis perceived as a marketing opportunity. He dispatched a film crew to the suspect's home and recorded Brown admitting his guilt and relating his story of the financial desperation that drove him to commit identity theft.

LifeLock experienced a dramatic start to its business life. Much in the press was made of the company's bold marketing maneuvers, the severely damaged credibility of one of its founders, and its chief executive officer falling victim to the crime he promised to prevent, but little attention was paid to LifeLock's performance results. During its first six months in business, the company signed up nearly 75,000 subscribers, at which point company officials projected a client base of ten million by 2008. By mid-2007, the company was well short of its goal, claiming to have 150,000 customers. Davis was ebullient, nonetheless, stating revenues increased 1,000 percent in 2006 to reach $40 million. He hoped that in the years ahead, as LifeLock settled into its role as a guardian for consumers, a growing subscriber base would be the news to grab headlines in the business press. The future of his company depended on the widespread embrace of preventive identity theft service.

Principal Competitors

TrueCredit; First Data Corporation; Experian Americas; Equifax Inc.

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