Fraud Alerts Under the Fair Credit Reporting Act Create Lawsuit
By Carmen Dellutri, Attorney at Law on Mar 3, 2008 in Consumer Protection, Credit Reporting, Personal Finance, Uncategorized
Under FACTA (Fair and Accurate Credit Transactions Act), a person who fears they are in imminent danger of having their identity stolen can put a fraud alert on their credit report with one or all of the big three credit reporting agencies ( www.experian.com, www.equifax.com and www.transunion.com).
Now, Experian has filed suit against LifeLock, Inc. alleging that LifeLock is illegally placing fraud alerts on credit files maintained by Experian. The lawsuit also alleges that the placing of fraud alerts for consumers for a fee constitutes false and misleading advertising and fraud. Naturally, Experian is claiming damages.
LifeLock, Inc. was founded in 2005 and has its headquarters in Tempe, Arizona. LifeLock has approximately 700,000 customers who pay $10 per month for LifeLock’s protection from identity theft. In essence, when a customer registers with LifeLock, LifeLock places a fraud alert every ninety (90) days on that consumer credit file with Experian.
Experian is alleging numerous wrongdoings. First, Experian alleges that the fraud alerts are being used in a manner not intended by Congress when it created the Fair Credit Reporting Act. Experian alleges that corporations like LifeLock are prohibited from offering this service. LifeLock’s CEO, Todd Davis, stated that the FACTA expressly allows third parties to help consumers who fear they are imminent danger of identity theft.
Here is a question: Who doesn’t think about identity theft in this day and age of computers, the internet, e-commerce, and electronic banking. At least once a month, you hear another story about some governmental agency or business losing social security numbers or names.
I believe that this lawsuit is about money. I believe that LifeLock in cutting into Experian’s profit margins. Credit Reporting Agencies, Experian, Equifax, and Transunion sell information about the individuals in their credit files. Fraud alerts create a roadblock for the credit industry because they now have to obtain a verbal authorization in order to sell the personal information. This additional layer costs money, and Experian doesn’t like spending its profits so another can profit. Experian has alleged that due to LifeLock’s practices, it has incurred millions of dollars in damages.
We are going to keep our eyes on this one and see where it goes.
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LadynRed | Mar 4, 2008 | Reply
Boo hoo for the CRA’s - that’s all I can say !
I signed up for LifeLock after a local county gov’t had some laptops stolen that contained hundreds of thousands of SSN’s and other personal data. I moved to protect myself and LifeLock offers a convenient service so that I don’t have to worry about constantly renewing the fraud alerts myself. However, there’s no deception going on and the $10/mo is not JUST for the fraud alerts. When you sign up with LifeLock you are agreeing to their terms and part of those terms is that you have reason to believe that your personal information is in jeopardy, and you have to state WHY you believe that.
If the CRA’s would only DO something to REALLY protect our information, or stop putting roadblocks in the way of people who spend years and LOTS of money cleaning up after identity theft, then they wouldn’t have to whine about companies like LifeLock. As you say, this is not about protecting consumers, it’s about MONEY.. and Experian’s profits.
Too bad, so sad, sorry — they’ll get no sympathy for me. At least I know that I have some measure of protection - something that the CRA’s won’t provide. Sure, I can apply a freeze, my state now has that law in place - the CRA’s fought that tooth and nail too !