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September 03, 2009

LifeLock is trying to put a positive spin on its loss to Experian

LifeLock, fresh off a defeat at the hands of Experian regarding its illegal fraud alerts, is trying to regain momentum by touting new ways for it to scam its customers.  Here's LifeLock's propaganda:
"LifeLock Inc. over the weekend rolled out plans to implement a new identity theft protection program in the wake of a judge’s ruling that it’s fraud alerts are not allowed.

The company said the new system will use technology, scientific modeling and data mining to protect its 1.5 million subscribers from identity theft, and can begin to identify possibilities before the thefts occur.

'The implementation of our new identity protection system reflects LifeLock’s unyielding commitment to innovation, consumer protection and industry-leading best practices,' said LifeLock CEO Todd Davis. 'Criminals are devising increasingly complex schemes to defraud consumers. Our services must constantly evolve so we are not one, but two, steps ahead.'

The company said it developed new algorithms to spot identity theft, that would look at pattern recognition, and mine for more data sources than credit bureaus, including retailers, banks, mortgage lenders and auto lenders.

The new system will replace the company’s fraud alert system, which was dealt a blow on Friday, when U.S. District Court Judge Andrew Guilford upheld a preliminary ruling in a case brought against LifeLock by Experian Information Solutions Inc., one of the three main credit reporting bureaus.

Experian filed the lawsuit saying the Fair Credit Reporting Act does not allow companies to place fraud alerts for people and that the practice is anti-competitive.

LifeLock General Counsel Clarissa Cerda said there is nothing in the ruling that indicates what LifeLock had done was illegal, but considered it an 'unfair business practice.'

'Although the media has reported that a California judge has ruled that LifeLock’s placing of fraud alerts is illegal, there indeed was no finding in that order that LifeLock’s placing of fraud alerts on behalf of its members was illegal or that such placement violated FCRA or (Fair and Accurate Credit Transactions Act),' she said.

'Instead, the California judge ruled that our practice was an ‘unfair business practice’ to Experian under the California Unfair Competition Law. While we respectfully disagree with the judge’s ruling, noting that no other court in the country has agreed with Judge Guilford’s reasoning that this type of competition could be an unfair business practice under the California Unfair Competition Law, and intend to appeal such ruling, we will respect the judge’s order. We are confident about LifeLock’s future, and intend to remain the industry leader in the provision of identity theft solutions to consumers.'

LifeLock will roll out its new method of identity theft protections in the coming weeks. Guilford has not yet issued an injunction barring LifeLock from placing the fraud alerts, but had been asked by Experian to do so."
Gee, where do I start?  Lets see ... "algorithms to spot identity theft"?  What good is that going to do consumers?  Other than taking some common sense precautions, identity theft is completely random and unpredictable.  There is no way LifeLock can predict who its going to happen to or when.  Thus its "algorithms" will only be good after the fact in letting consumers know their identity has been stolen.  However, there are plenty of products already available for monitoring your credit, so why use LifeLock?

I like the comment about how the CA judge is the only one in the nation to rule the way he did.  LifeLock fails to mention that no other judge has had this issue before them.  LifeLock would have you think there are tons of other judges that agree with its "unfair business practices".  Yet, that's not the case.  As far as I know, no other judge has ever ruled on this issue.  So LifeLock is winless on this issue.

And, last but not least, LifeLock tries to draw some distinction between an "illegal" act and its "unfair business practice".  LifeLock claims that the Court never said it did anything illegal.  Well, guess what LifeLock, an unfair business practice is a tort, which means it is illegal.  Its just not a criminal act but a civil wrong, which is still against the law and thus "illegal".  But why would I expect LifeLock, whose whole business model was based on claiming all its customers were fraud victims regardless of whether anyone ever claimed they were a fraud victim, to know what is or is not illegal.

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