Filed under: Ripoffs and Scams

When I first heard about LifeLock last year, I was very intrigued by its service. I was especially interested in how it advertised the services: With the company’s CEO telling everyone his social security number.

The company “guarantees” that your identity will never be stolen, and it offers a “$1,000,000 Service Guarantee.” If you sign up for LifeLock, it will set up fraud alerts for you with each of the three credit bureaus. It will also have your name removed from pre-approved credit card offers and junk mail lists, and it has the credit bureaus each send you a credit report once a year.

LifeLock has a WalletLock service to help you if you lose your wallet. It will help cancel accounts and help you if your credit cards are used fraudulently. And if your identity is ever stolen while you’re using LifeLock, it states it will hire lawyers and investigators to help “recover your good name.”

Sounds good, right?

Here’s the main problem with this service: Most of what it offers can be accomplished on your own for free. All it takes is a few phone calls, and you’re done. Why would you pay a monthly fee of $10 for these things which you can do for free on your own? (The company recommends that customers like the convenience of having someone else do it for them.)

But there’s a more massive issue, and the plaintiff’s lawyers have gotten a hold of this one. The $1,000,000 guarantee isn’t exactly what it sounds like. The company says it will pay to you repair your credit if your identity is stolen, yet the class action suit says that the actual service guarantee says LifeLock will only pay for expenses resulting from a defect in its service.

The lawsuit also says that the LifeLock CEO’s identity is currently being used by about 20 identity thieves. If this is true, I have the ability to only suspect that it’s more lucrative to advertise his social security number than protect his identity. It’s apparently made him a lot of money.

The bottom line with this lawsuit? The attorneys say that the company is basically offering a worthless service with a worthless guarantee. And the more I look at what LifeLock is offering, the more I tend to agree.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Bookkeeping, and is the author of Essentials of Corporate Fraud.

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Filed under: Bad news, Industry, Exxon Mobil (XOM), Oil, Headline news

BBC news reported Saturday that militants in Nigeria have again sabotaged oil transfer infrastructure belonging to Royal Dutch Shell (NYSE: RDS A). This is the fifth incident of such attacks in recent weeks. The BBC report states: “Several previous ones have been blamed on supporters of the militant leader Henry Okah, who is currently awaiting trial on treason charges.”

A Shell Oil spokesperson is quoted as stating that multiple oil delivery lines are affected and that some amount of oil has spilled into the environment. The company is undertaking oil containment measures and production volume has been reduced. Reuters News Service reported: “…the rebel Movement for the Emancipation of the Niger Delta (MEND) … has already knocked 164,000 barrels a day off Shell’s production in Nigeria with a pipeline bombing last month.”

According to Reuters, local security forces are reporting that not just oil delivery lines have been affected. They claim that three oil wells and other equipment were also subjected to damage. Additionally, this news of sabotage comes on the heels of an eight day Nigerian labor strike against Exxon Mobil Corp. (NYSE: XOM). That strike ended this past Thursday and had temporarily cut that company’s Nigerian oil production in half. And of course, with oil supply problems and concerns, oil prices have increased.

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Filed under: Entrepreneurship, Ripoffs and Scams

Over on BloggingStocks, I’ve written about Barry Minkow’s allegations of fraud at multi-level marketing giant Herbalife.

Here on WalletPop, I thought it might be worth taking a look at Herbalife — especially its recruiting tactics — from the personal finance perspective.

On the Herbalife webpage, there’s a form you can fill out to receive more information about becoming an Herbalife distributor. Among the questions:

How much would you like to earn monthly?
An extra $500
An extra $1,000
An extra $2,000
The sky’s the limit!

Well who couldn’t use an extra $500 a month? But a better question is: What are your chances of earning an extra $500 each month as an Herbalife distributor? The company’s statement of average gross compensation (PDF) tells the story.

Only around 25% of Herbalife distributors reach the rank of “Supervisor” or higher, which qualifies them to earn commissions on their sales volume and the sales volume of those they sponsor. Of that 25% that reach “Supervisor” or higher, 87.5% are supervisors, with average annual earnings of $549. That’s $45.75 per month. Another 5.8% are at the “World Team” earnings level, with average annual earnings of $4,219. That’s getting superior, but still about $150 below the minimum amount you could check off under how much you’d like to earn monthly on Herbalife’s questionnaire.

Consider it: only 6.6% of “leaders” fall into a category reflecting average earnings of more than $500 per month. And only 25% of all distributors reach any of the “leader” categories. So the chances of a distributor earning “an extra $500″ per month are about 1.65%!

Is it misleading to make “an extra $500″ the lowest dollar level on the questionnaire when the chances of reaching that level are only slightly higher than the chances of any given newborn turning out to be a genius? It sure seems like it to me.

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Filed under: Ripoffs and Scams, Transportation

You don’t have to look very far to find instances of blatantly misleading but still legal advertising in the automotive industry. Even though most dealers clearly disclose how the deal works, the result is that vehicle ads are obfuscatory and require very careful reading.

My favorite (or least favorite) example of deliberately confusing car advertising is the ol’ “price reflects down payment and/or trade-in.”

Here’s an example of how this works in action. Sutherlin Nissan of Fort Myers advertises a 2003 Corvette priced at $24,988, with the caveat (in much smaller print) that “all prices are after your $2000 down payment.”

Consider that. This dealer (and many, many other dealers that use the same tactics) are telling you that the vehicle costs $24,988, not including another $2,000. Wouldn’t it be more forthright to just say that the car costs $26,988? To my knowledge, the vehicle industry is the only business that uses this tactic. Can you envision if the flyer for the grocery store advertised “99 CENT VITAMIN WATER!” with an asterisk indicating that “price advertised does not include the other 50 cents that you’ve to pay for the drink”?

I know that these companies aren’t doing anything illegal in their advertising. But to me, it’s misleading enough that I wouldn’t even think about buying from that dealer.

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