Money for Nothing

The phone call from the collection agency back in May should've been expected.

The caller was looking for Todd Davis, the CEO of one of the nation's fastest-growing anti-identity-theft companies, Tempe-based LifeLock. When Davis picked up the phone, the collection agency told him he had failed to pay back a $500 loan he took out in Texas.

Davis, who lives in Chandler, probably knew at once he was a victim of identity theft.

But how could he be a victim? His company boasts it can protect people from identity theft, and Davis was, naturally, one of its first customers.

Yet there's no doubt it was identity theft, says Lieutenant Dean Sullivan of the Fort Worth Police Department. The suspect took out a loan under Davis' name using a check as collateral.

"How they came about his information, I don't know," Sullivan says.

There's an easy answer for that.

Davis gives out his Social Security number — 457-55-5462 — in the company's ads.

Davis states on LifeLock's Web site, "Just like we have with mine, LifeLock will make your personal information useless to a criminal."

But LifeLock couldn't really make it useless. Like other aspects of LifeLock's marketing campaign, Davis' statement just isn't true.

Despite LifeLock's service, the thief found Davis' information plenty useful. The check that the thief used to take out the loan was from his or her own bank, and police found the suspect's home address. So far, no arrest has been made.

The story won't make a good testimonial for LifeLock. It's a perfect example of how the firm's primary service — placing fraud alerts on customers' credit reports — failed to stop identity theft from occurring.

Other companies offer that service, as well, even though it's free and extremely simple for people to do themselves. Dozens of firms offering anti-identity-theft services have built a multimillion-dollar industry in the past few years.

Consumer advocates say they're a rip-off.

Companies like LifeLock can try to prevent only one kind of identity theft, new-account fraud, and Davis' case proves they can't always do that, either.

Initial details of the case were first published June 11 by blogger Kim Zetter of Wired.com. Zetter said she received a tip from a reader about the crime after another blog post about LifeLock.

Zetter and other bloggers were writing a lot about LifeLock that week because of a May 31 New Times story, which detailed how the company's founder, Robert J. Maynard Jr., lied repeatedly to the public that he was a victim of identity theft, according to information provided by Nevada authorities.

Maynard claims — and he's sticking to the story, despite overwhelming evidence to the contrary — that he was falsely arrested by Valley authorities in 2003 and held for a week in jail because of a Las Vegas gambling debt that he didn't owe. The experience gave him the idea to start LifeLock, he has told newspapers and TV news stations. He and Davis use the story as a horrific example of why people need their company's services.

But Clark County, Nevada, prosecutor Bernard Zadrowski told New Times the roughly $16,000 debt to the Mirage casino had, in fact, been Maynard's. Nevada treats unpaid casino markers like bad checks, and felony charges against Maynard Jr. were dropped after he paid the debt, Zadrowski said.

The New Times story also detailed how Maynard Jr. was one of the heads of a credit-repair company shut down by the government in the mid-1990s, leaving him permanently banned from the credit-repair business, and how his own father accuses him of identity theft. Dr. Robert Maynard Sr., a Valley optometrist, said his personal data was used by his son to order an American Express card in Maynard Sr.'s name and make about $150,000 in charges — all without Maynard Sr.'s consent.

Less than two weeks after the story ran, LifeLock announced that Robert J. Maynard Jr. had resigned from the company.

The Los Angeles Times wrote about his resignation in a June 12 article and mentioned the scam against Davis prominently, saying that even as the company was acting to distance itself from problems exposed about its founder, "new questions arose about its marketing claims." The Times also said the incident could affect Davis' credit rating.

Davis said he's still "upset" over the May 31 story, and he wouldn't agree to an interview for this article. But New Times sent him several questions, which he answered by e-mail with the help of the company's new public relations consultant, spin artist Jason Rose, known for taking on clients with image problems, including Maricopa County Sheriff Joe Arpaio and Pink Taco restaurant.

In one e-mail, Rose and Davis say the fact that Davis was victimized was not an embarrassment to the company; rather, it showed how well the company works. The e-mail explains that when the system fails, as it did in this case, LifeLock will spend time and, if necessary, up to $1 million to help its customers.