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Monday, June 1, 2009

LifeLock ordered to stop posting fraud alerts to consumers' Experian credit reports

LifeLock, who I posted about previously, has been ordered by a federal court in California to cease renewing fraud alerts for its customers with Experian, one of the big three credit reporting agencies.

In its lawsuit against LifeLock, Experian claims that LifeLock's automatic renewal of its customers' fraud alerts — which happens every 90 days, when the fraud alerts automatically expire — costs Experian millions of dollars in processing expenses. While I am not concerned about the cost to Experian, who profits millions every year by selling inaccurate information about consumers, I am concerned that LifeLock's practicing of requesting fraud alerts for customers who are not even claiming they are fraud victims is itself fraudulent. See my previous post about LifeLock at http://fcralawyer.blogspot.com/2009/05/lifelock-does-not-work.html.

U.S. District Judge Andrew Guilford, a federal judge in the Central District of California, agreed with Experian that the Fair Credit Reporting Act does not authorize LifeLock to set fraud alerts for consumers. Instead, Experian claimed and Judge Andrew Guilford ruled, the FCRA requires consumers to request fraud alerts themselves by contacting the credit bureaus directly. As a result, Judge Guilford granted Experian's motion for summary judgment, finding that LifeLock's requests for fraud alerts violated the Fair Credit Reporting Act. Judge Guilford's also ordered LifeLock to stop requesting fraud alerts on behalf of its customers.

In response to this ruling, at least one identity theft prevention service, Debix, announced it plans to drop fraud alerts and offer credit monitoring instead.

See the USA Today's full article about this ruling at http://www.usatoday.com/tech/news/2009-05-29-id-theft_N.htm?csp=27&RM_Exclude=Juno

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