Tuesday, September 01, 2009

Lifelock to Experian: Thank You!

I've been asked recently about Friday's court ruling in favor of Experian's claim that Lifelock's practice of setting fraud alerts on behalf of its subscribers is an unfair competitive practice in California.

In 2003 Congress legislated that credit bureaus must apply fraud alerts at the consumer's request, so that creditors would take extra steps to validate the identity of a credit applicant. So as part of its identity theft protection service, Lifelock has been requesting these alerts on behalf of subscribers. Experian has never liked the fraud alert because it requires work on their part, it makes it harder to sell consumer data to pre-approved credit card lenders and junk mailers, and it makes their credit monitoring service less competitive. So they convinced a California judge that, based on a technicality in the law, companies can serve as our attorneys of record, as trustees, and as agents of all types except when it comes to requesting fraud alerts -- that such a practice is, literally, "unfair" to Experian.

The judge will likely follow up with some kind of injunction to cease the practice, which will make fraud alerts harder to get -- at least in California -- until the ruling has been fully appealed or until Congress clarifies the language.

The development is an unfortunate setback for consumers, but not so much for Lifelock. As we perceived the rising risk of such a ruling, we accelerated our usual pace of service innovation, successfully identifying and developing a new technology that replaces and improves upon fraud alerts. Our new proactive system monitors millions of data sources often in real time to identify and obstruct fraudulent credit applications while they are in process. Unlike fraud alerts, our new system does not slow down the credit application process in any way (unless, of course, you're a thief). While fraud alerts cover the credit bureaus, Lifelock's new system covers a much broader set of lenders including retail, healthcare, mortgages and utilities.

That's why I should really thank Experian for compelling Lifelock to develop this better service mechanism!

So now you have the background for yesterday's message from CEO Todd Davis to Lifelock's subscribers:

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