It’s a Lock: Arizona’s LifeLock Acquires San Diego’s ID Analytics

LifeLock, a Tempe, AZ-based startup that offers identity theft protection services to consumers, has tied the knot with ID Analytics, a San Diego-based company that uses sophisticated computer technology to analyze consumer transactions for signs of fraud.

Financial terms of the deal were not disclosed. In a statement released yesterday, Lifelock says it raised more than $100 million in new preferred equity to complete the transaction. Lifelock also took on an additional $70 million in senior secured debut, according to U-T San Diego reporter Mike Freeman. Lifelock CEO Todd David told Freeman that not all of the debt was needed to close the deal, however.

A group of executive expatriates from San Diego’s HNC Software founded ID Analytics in 2002 to develop predictive analytics software. In the decade since it was founded, ID Analytics raised a total of $35.2 million from Trinity Ventures, Canaan Partners, Mission Ventures, and Investor Growth Capital, according to CrunchBase.

ID Analytics provides technology services to major banks, credit cards, wireless service providers, and other big companies, analyzing credit card purchases and consumer credit applications for telltale signs of fraud. The software uses pattern-recognition technology to almost instantaneously assess the likelihood that any given transaction is fraudulent by determining if it can find correlations with previously fraudulent transactions.

LifeLock was founded in 2005. CrunchBase says the company has raised a total of $178 million in venture capital from Bessemer Venture Partners, Goldman, Sachs, Kleiner Perkins Caufield & Byers, Symantec, River Street Management, Industry Ventures, Institutional Venture Partners, Keating Capital, and Wasatch Advisors’ venture capital arm, Cross Creek Capital.

LifeLock plans to continue to operate ID Analytics as an independent, but wholly owned subsidiary of LifeLock. Bruce Hansen, ID Analytics’ co-founder, chairman, and CEO, will continue as the company’s CEO, and will report to LifeLock CEO Todd Davis.

LifeLock’s Davis gained fame—and notoriety—by posting his own social security number in LifeLock ads that promoted the company’s $10 monthly identity theft protection services for consumers. The company also offered a $1 million guarantee for customer losses incurred after signing up for LifeLock’s service.

The Federal Trade Commission said in 2010 that LifeLock’s claims were bogus, and levied a $12 million fine against LifeLock for deceptive business practices and for failing to secure sensitive customer data stored on its own networks. “In truth, the protection they provided left such a large hole … that you could drive that truck through it,” said FTC Chairman Jon Leibowitz.

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.