LifeLock 2013 Annual Report Download - page 6

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
We believe that there is a significant, underpenetrated market opportunity for proactive identity theft protection services for consumers and fraud and
risk solutions for enterprises. Based on our research indicating that two-thirds of U.S. adults are concerned about identity theft, we believe the total
addressable market for our consumer identity theft protection services is approximately 148 million adults in the United States alone. We focus our efforts on
adults with a household income in excess of $50,000 per year and who are concerned about identity theft, of which we estimate there are approximately
78 million in the United States. Additionally, international markets could provide substantial opportunities for us in the future. We believe the total
addressable market for our enterprise fraud and risk solutions includes approximately 2.5 billion transactions per year, based on our analysis of industry
research, public filings, industry trade publications, and U.S. government studies.

We are a leading provider of proactive identity theft protection services for consumers and fraud and risk solutions for enterprises. The foundation of
our differentiated services is the LifeLock ecosystem that combines large and constantly expanding data repositories of personally identifiable information and
consumer transactions that we collect from our enterprise customers, members, and third-party fulfillment pa rtners; proprietary predictive analytics; and a
highly scalable technology platform that allows us to interact with our customers and to proactively deliver actionable alerts to, and receive feedback from, our
members and enterprise customers about potentially suspicious activity. Each day, we collect and analyze millions of data elements impacting personally
identifiable information, factor in responses from our customer base to determine risk-based metrics, and enable our customers to proactively protect against
identity theft and significantly reduce the risk of identity fraud. The strength of the LifeLock ecosystem, as depicted in the diagram below, and the
effectiveness of our services are enhanced with every actionable alert and transaction that we process and every new data element that we acquire.
In our consumer business, we protect our members by proactively monitoring identity-related events, such as new account openings and credit-related
applications, that may present a risk of identity theft. If we detect that a member’s personally identifiable information is being used, we send notifications and
alerts, including proactive, near real-time, actionable alerts, to the member via text message, phone call, or e-mail through our LifeLock Identity Al ert system
that allows the member to confirm valid or unauthorized identity use. However, we only issue phone alerts between 9 am and 9 pm in order to be respectful of
our members. Phone alerts that would otherwise be sent after 9 pm are sent at 9 am the following morning. If the member confirms that the use of his or her
identity is unauthorized, we can proactively take actions designed to protect the member’s identity. Member responses to our alerts provide information that
enhance the member’s profile in the LifeLock ecosystem, which helps improve the identity protection we can provide that member in the future. In addition, we
notify our members of events or potential threats and exposures related to their personally identifiable information, such as a change of a member’s address or
the appearance of a member’s personally identifiable information on a known criminal website or a peer-to-peer network. In the event that an identity theft
actually occurs, we utilize our extensive expertise to actively help the member remediate the impact of the identity theft event. This includes our $1 million
service guarantee, which is backed by an identity theft insurance policy, under which we will spend up to $1 million to cover certain third-party expenses
incurred in connection with the remediation, such as legal and investigatory fees. This insurance
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