This move to offer no-cost ID theft protection puts LifeLock in a difficult position. Their complete business money-generating model is to get people to sign-up for ID theft protection on a monthly basis. This was fairly easy to do because there wasn’t any alternative out there for consumers. The introduction of the free identity theft protection has completely changed that. If a consumer is worried about identity theft and wants to get this type of protection, they now have a choice of paying $120 a year or getting it for free. Which one do you think the majority of consumers are going to choose?
The second problem is that LifeLock can’t really match the offer. Credit Sesame’s entire monetization strategy is to offer consumers free access to different areas of their credit, and then offer them a variety of credit tools from third parties which can help them save money. LifeLock has no such strategy in place. If they try to match what Credit Sesame has done, they directly undermine their entire revenue strategy.
The question becomes, how much of an game changer is free identity theft protection? Credit Sesame’s CEO, Adrian Nazari, believes that introducing this to consumers will be extremely disruptive to companies like LifeLock.
In a recent phone interview, Nazari said, “I think free ID theft protection is a game changer. A good analogy would be early access to the Internet. At first, consumers had to pay for Internet by the minute. A revolution took place when newer companies began to offer it on a monthly subscription basis which disrupted everything for the established Internet providers. Offering free ID theft protection instead of the standard pay-a-monthly-fee model has the potential to disrupt the ID protection industry in the same way.”
Nazari sees that his company’s new offer will appeal to the vast majority consumers. As he said, “We are offering a basic service for free that will satisfy the needs of most consumers. Sure, some will want something better. They will want a Cadillac instead of a Chevy, but that Chevy is going to be fine for most consumers. And if they want a Cadillac, we offer that too.”
The Cadillac that Nazari was referring to was the difference between the no-cost ID theft protection, which offers $50,000 in protection, and a premium identity theft protection which offers $1 million in protection, but comes with a $10 a month fee. Currently, LifeLock only offers a premium ID theft protection service, with no free ID theft protection service available. An e-mail for comment about whether or not LifeLock would be offering a no-cost service in the future went unanswered.
It’s important to point out that, despite its name, ID theft protection can’t stop identity theft from occurring. This is why you shouldn’t pay someone to protect your identity. ID theft protection can possibly help detect identity theft more quickly than if you weren’t keeping track of your credit closely on your own, and it can help you with the steps to solve the issues that come with identity theft after it has taken place. In the end, however, you’re the one that needs to take the measures that will reduce the chance of it happening.
(Photo courtesy of West Midlands Police)