Thursday, March 18

Choosing Truth: LifeLock, Inc. Settlement

Last week, we shared four different versions of the $11 million settlement LifeLock, Inc. agreed to pay the Federal Trade Commission and $1 million to a group of 35 state attorneys general over deceptive advertising. We then asked readers to compare these truths, choosing the most likely truth.

There wasn't enough data to call this poll scientific, but there was enough to prove a point. When faced with four stories, the truth is often left behind and consumers are baffled.

LifeLock Poll Results

• 28.57 percent said they were most likely to believe the Federal Trade Commission.
• 28.57 percent were not inclined to believe any of the four stories released.
• 14.29 percent said they believed LifeLock worked with the FTC to set new standards.
• 14.29 percent were inclined to believe all of the stories, assuming each had some truth.
• 7.14 percent thought what CEO Todd Davis said in interviews was the most accurate.
• 7.14 percent believed investor David Cowen that the FTC was politically motivated.

Interestingly enough, poll participants do not match the greater online sentiment. Online coverage is overwhelmingly negative, with approximately 85 percent of the conversation centered on the FTC release, and only 15 percent accepting any version of the LifeLock story.

Sentiment is overwhelmingly influenced only by which release mainstream and new media decided to cover. However, based on cursory research, the FTC release, which dominated the conversation on March 7, seems like it will have a much shorter shelf life than LifeLock public relations efforts.

The Public Relations Lesson

With some certainty, LifeLock had an opportunity to move beyond the settlement and return to business as mostly usual, but the public relations message is largely inconsistent and overreaches, undermining its own attempt at damage control. In addition, Cowen would have better served the company if he had not offered his opinion. The best the company can hope for now is that the settlement issue will eventually fade into history.

It's very possible it will, given the company partners with the FBI Law Enforcement Executive Development Association on training programs. And, despite Nevada being one of the settling attorneys general offices, it is also hosting a cooperative identity theft town hall meeting.

Still, LifeLock is probably fortunate so far that the FTC has not sought to penalize the company in its handling of communication regarding the settlement, given the FTC barred LifeLock from overstating protection against all types of identity theft and the risk of identity theft to consumers. After all, LifeLock's settlement release clearly overstates its role in the settlement, which is ironic given the settlement was all about reigning in overstatement.

The Truth Lesson

While truth is not relative, the facts chosen by all parties seem somewhat selective. But most people will only be exposed to one of the four messages, which will shape their opinions about the company. And yet, none of those stories provide a full accounting of the truth.

Chances are that the truth resides somewhere in between everyone telling the truth and nobody telling the truth, depending on how you want to look at it. All of the releases seem to contain some truth and some spin, which prompted some poll participants to conclude all of them were true while others, given that a partial truth is not the truth, all not true.

For instance, Cowens' post is true in that the FTC is under greater scrutiny from the current administration, which may prompt it to pursue some cases that do not warrant it. It is also likely true that LifeLock accepted the settlement even if it felt it could win the case in the court of law because settlements seem cheaper (not always). His opinion, though, overreaches on speculation of a very specific agenda. It seems unlikely the ties are that tight, specific, and planned.

Still, the FTC release is heavy-handed. Usually, settlements come with some sense of resolution between the two parties, but this release is clearly punitive and doesn't provide a timeframe of when the deceptive advertising supposedly occurred. The FTC clearly wanted the settlement to be seen as a win, even if its own disclaimer admits that the settlement is no indication that the defendant violated the law.

Given the heavy-handedness, it seems painfully clear that LifeLock and the FTC were not cuddling up together in order to set new industry standards as LifeLock alleged in its release. And, at least one of the commissioners was not even interested in accepting the settlement. LifeLock also overstates that everything is business as usual as there are tighter guidelines in how it communicates its advertising messages in the future.

The message is further complicated by conflicting interview messages. Those messages seem to be closer to the truth but still overreach in communicating that the settlement did not have an impact on the company. That statement alone contradicts its claim to have set a new industry standard.

Another lesson here is how "he said, she said" journalism does little to get at the truth. When time-strapped reporters increasingly rely on reporting statements as opposed to investigating facts, nobody is served. It's especially par for the course for more complex subjects where topics like health care and TARP money give consumers the choice of believing the person who says the sky is "green" or the one who says the sky is "purple" while leaving "blue" out of the options all together.

In Conclusion

The real trouble spot for the FTC in this story is that there seems to be some dissent over whether such a service is needed. Based on the varied releases from attorneys general offices, identify theft is a problem, nothing is foolproof protection against it, and consumers can take steps to increase protection without such services (and thus companies like LifeLock are not needed).

However, such logic could lead one to conclude all sorts of services are unneeded, including everything from house cleaners and accountants to restaurants and pet groomers. Of course consumers can take measures into their own hands. However, if they want the convenience or peace of mind of having someone do some of it for them, then they might consider a service.

That aside, the FTC was right in taking this case but overzealous about periphery topics on wins that amounts to less than a 10 percent refund per consumer. LifeLock seems to have misrepresented its service by its own admission but seems unlikely to stop spinning the truth. And the decision whether or not a consumer chooses an identity theft protection service or does something on their own (none of which is 100 percent) amounts to nothing more than asking whether they want to clean the house or have someone do it for them. Ergo, everyone tried to be honest, but nobody was truthful. Not really. Case closed.

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