On February 13th, 2008, credit bureau Experian filed suit against the identity theft prevention company LifeLock, accusing it of deception and fraud in its advertising. Here is a summary of key points raised in a February 20th report published by msnbc.com.

From the files of msnbc.com 



In the lawsuit, Experian alleges that LifeLock's advertising is misleading and that the firm is breaking federal law in the way it goes about protecting consumers.  

Experian contends that LifeLock's chief ID theft prevention tool - the placing of continuous fraud alerts on consumers' credit file is illegal because, under the Fair Credit Reporting Act, fraud alerts can only be requested by the individual consumer or an individual acting on behalf of the consumer.

"The FCRA does not permit the placement of an initial fraud alert by corporations such as LifeLock," the lawsuit reads. "Despite this prohibition, LifeLock has surreptitiously placed hundreds of thousands of fraud alerts on Experian’s files by posing as the consumer." 
                            

The fraud alerts, which last for 90 days and warn companies checking a consumer's credit to be on alert for imposters, can only be placed when there is suspicion of imminent fraud, Experian says. Placement of fraud alerts by LifeLock for any consumer who requests one asks also runs counter to federal law, the firm says.

LifeLock’s service includes an automated request for a new fraud alert every 90 days, to create an indefinite fraud alert. Experian calls these "illegal fraud alerts."

Experian also claims that LifeLock’s advertising is deceptive to consumers. They allege that LifeLock is attempting to profit off a free service established by Congress in the Fair Credit Reporting Act.

Experian has also been the target of criticism that it sells a service that Congress mandated should be free. Its FreeCreditReport.com site has been targeted by the FTC, which expressed concern that the site could be confused with AnnualCreditReport.com. 


Doesn't stop all ID theft

According to the Experian lawsuit, LifeLock misrepresents the effectiveness of its identity theft prevention tools.

"LifeLock … creates the overall net impression that LifeLock can protect against all types of fraud including computer hacking and accessing a bank account using stolen passwords,” the lawsuit says. “Fraud alerts only are effective against fraud that requires accessing a credit report.”

In one ad cited in the lawsuit, LifeLock claims “you’ll find out how to lock down your identity, making it virtually impossible for identity thieves to wreak havoc on your good name.” But, Experian contends, the company’s tools provide no protection against identity theft that's already in progress, or against unauthorized use of a credit card.

LifeLock’s systems in many cases can’t stop an undocumented worker from using a consumer's Social Security number to obtain employment, one of the more common forms of identity theft.
                                  

Most services are free

In addition to continuous fraud alerts, LifeLock provides three other basic services to consumers: It helps them stop junk mail and the mailing of pre-approved credit card offers, and it offers a copy of their credit report.

All three services are free; so are fraud alerts, though few consumers would take the time to continually request fraud alerts every 90 days.

Experian also claims in the lawsuit that Lifelock is deceiving the credit bureaus. When it contacts a bureau and asks for fraud alert, LifeLock is “actively concealing that its requests are being submitted by a corporation.” Instead, LifeLock represents that it is the individual consumer, Experian says.

                             

LifeLock also utilizes AnnualCreditReport.com, a free site, to obtain credit reports on behalf of consumers, and then effectively charges for these reports by including them as part of LifeLock's monthly subscription service.

LifeLock consumers, unaware of this, then try to get their own credit reports from AnnualCreditReport and are denied because LifeLock has already used their once-a-year benefit, Experian says.

The flooding of Experian’s systems with thousands of fraud alert requests each month also presents a hazard to consumers, Experian argued, threatening to clog the system with stale, unnecessary alerts when LifeLock "cries wolf" on behalf of consumers.

The LifeLock fraud alerts cost Experian “millions of dollars,” the firm says. And its advertising creates among consumers a false impression that they must pay for fraud alerts, which are free, it adds.

Lifelock CEO Todd Davis called the lawsuit "baseless".