LifeLock has been sued by Experian a London, England based corporation who is one of the big three American credit bureaus. Experian is alleging that the service provided by LifeLock violates the Fair and Accurate Credit Transactions (FACT) Act passed by Congress in 2003. The FACT Act states a fraud alert can be placed
“by a consumer, or an individual acting on behalf of or as a personal representative of a consumer, who asserts in good faith a suspicion that the consumer has been or is about to become a victim of identity theft.”
Experian is alleging that LifeLock’s identity theft protection service has no right to place fraud alerts on behalf of consumers as they are not an individual. Furthermore, they allege that Life Locks perpetual renewing of the fraud alert and in some cases their initial placing of the fraud alert violates the condition that a reasonable suspicion of being or becoming an identity theft victim must exist. We believe that 210 million exposed personal records in the last three years and over 20 million identity theft victims gives every American a reasonable suspicion.
LifeLock CEO Todd Davis called the lawsuit baseless and felt that Experian was reacting to Lifelock’s success in penetrating their market and challenging their business model. Experian also points out in the lawsuit that fraud alerts only protect you from financial identity theft and don’t do anything to protect you from other types such as employment fraud. Do they not realize that people know this and that the fact someone is already using your SSN for employment gives you another reason to believe you might become a victim of financial fraud. Also the part about a perpetual renewal being illegal is nonsense, how can anyone know that they are going to become an identity theft victim within 90 days or not at all. The fact of the matter is that fraud alerts prevent credit bureaus from providing open access to your credit information and limits their ability to sell your information which is one of their main sources of income. This lawsuit is all about money and Experian would be the last company looking out for consumer interests.
Like a typical lawsuit Experian alleges everything else under the sun including misleading advertising and that LifeLock is not open about the fact that fraud alerts can be placed for free at any of the credit bureaus. Besides Identity Theft Labs, LifeLock.com is one of the only websites we know of that actually does say that you can place fraud alerts for free. We also found the misleading advertising accusation comical since it comes from a company who was mandated by Congress to provide free credit reports in an open manner and yet they own and run a website at www.freecreditreport.com that competes with the legitimate website www.annualcreditrepot.com. They advertised on the radio, T.V. and in newspapers not the legitimate site but their competing one. Their competing website then illegally enrolled consumers automatically in to a $80.00 credit monitoring package. Eventually the FTC put an end to this practice and charges were settled with Experian paying $950,000.
Speaking of the FTC it is important to note that they have not said anything about the placing of fraud alerts by LifeLock, or any other identity protection company, even though it falls within their mandate to do so.
Another interesting point is that Experian sued LifeLock but none of the other identity theft protection companies. LoudSiren, Debix, TrustedID, Identity Guard and about a half dozen other companies all provide the same fraud alerts on behalf of consumers. Do they have separate deals with Experian or is Experian just targeting the market leader and hoping the other identity protection companies will fall in line. We believe it is the latter. Experian hopes to use the LifeLock lawsuit to cut a deal and receive compensation for their role in placing fraud alerts. They will then use that deal as the basis for future deals with LoudSiren, Debix, TrustedId and the rest. Even if Experian were to win a legal battle against LifeLock it is likely the Government will step in and allow them to continue placing fraud alerts because consumers are demanding that this service be allowed.
The old draconian days of the credit bureaus having complete control over our information is over. The Fact Act was passed because Congressman realized that the old system did not work and that identity theft had become to big a concern to ignore. They put some power back in consumers hands, giving us some measure of control over our credit and personal information, and regardless of how we execute this control, whether it be by ourselves or through an identity protection service, it will be difficult to take this away. Over one million Americans are already enrolled in identity protection plans provided by LifeLock and their competitors, and at least another million will enroll before a lawsuit is settled, so it is very unlikely that Congress would go against the wishes of that many voters. We advise consumers to protect their identity and credit using whatever means and/or service they prefer and to leave the legal posturing to the lawyers.