ID fraud alert firm settles with FTC


POSTED: Wednesday, March 10, 2010

The co-founder of LifeLock, an identity theft protection company that was fined $12 million for exaggerating the value of its services, has a history of failed entrepreneurial ventures, including a floating ocean recreational center planned for the waters off Waikiki last year.

The Federal Trade Commission announced yesterday that LifeLock agreed to pay $11 million to settle claims with its customers and $1 million to 35 states, including Hawaii.

Hawaii will get $15,000, to be deposited in the state's complaint resolution fund, which will be administered by the Department of Commerce and Consumer Affairs and used for consumer protection purposes, said Stephen Levins, executive director of the Office of Consumer Protection.

The FTC said in a news release that it sent letters to current and former customers of LifeLock who might be eligible for refunds under the settlement, along with instructions for applying. Customers do not have to contact the FTC to be eligible for refunds. Up-to-date information about the redress program can be found at (202) 326-3757 and at

“;While LifeLock promised consumers complete protection against all types of identity theft, in truth the protection it actually provided left enough holes that you could drive a truck through it,”; said FTC Chairman Jon Leibowitz in a news release.

LifeLock was started in 2005 by entrepreneur Robert J. Maynard Jr., who also unsuccessfully tried to start an offshore ocean recreation activity center in Waikiki aboard the 98-ton steel catamaran called Kandoo!Island. However, the company, plagued by financial and other problems, never left Pier 9 and closed in August.

; The settlement bars the company, based in Tempe, Ariz., and its principals from deceptive advertising and requires them to adopt stricter safeguards to protect the personal information they collect from customers.

“;There is no 100 percent guarantee that you won't be the victim of identity theft,”; Illinois Attorney General Lisa Madigan said in announcing the settlement. “;It was the volume of their advertising as well as the claims they made that led many people to think they had greater protection than they really did.”;

LifeLock's chief executive officer and co-founder, Todd Davis, had advertised the company's effectiveness by posting his own Social Security number in ads and on the side of a truck.

Since 2006, LifeLock's ads have claimed that it could prevent identity theft for consumers willing to sign up for its $10-a-month service.

The FTC said that LifeLock falsely claimed that it would prevent unauthorized changes to customers' address information, that it constantly monitored activity on customer credit reports and that it would ensure that a customer always would receive a telephone call from a potential creditor before a new account was opened.

The FTC further charged that LifeLock's data was not encrypted, and sensitive consumer information was not shared only on a “;need to know”; basis. In fact, the agency charged, the company's data system was vulnerable and could have been exploited by those seeking customer information.

Phoenix-born Maynard, 47, and company President Dale R. Smith said they planned to invest $7 million in the Hawaii ocean recreation activities company — called Kandoo!Oahu — and hire more than 200 people.

To lure customers, KanDoo! gave away free personal watercraft rides to people who book other Waikiki activities with the company, from snorkeling to yachting or parasailing.

Two earlier businesses Maynard created also failed, including his first venture, a credit-repair business, called National Credit Foundation, that also was closed by the Federal Trade Commission. The other, Dotsafe Inc., a filtering service to “;civilize the Internet,”; died for lack of customers.

However, Maynard's Houston-based Internet America, an online service provider, is still in business.

He resigned from LifeLock in 2007 after published reports highlighted past troubles, including an allegation that he had used his father's identity to obtain an American Express card. Robert Maynard Sr. has dismissed that claim, saying they had taken the card out together.

Maynard was jailed for a week in 2003 after running up a $16,080 tab at a Las Vegas casino. He paid the debt two months later.