If you have been following the Law Suit filed by Experian against LifeLock, a Tempe-based ID theft Prevention Company, then you know that in May of this year the federal judge ruled that LifeLock’s fraud alert setting practice on behalf of the consumers is illegal. Recently, LifeLock filed a motion to challenge the judge’s decision.
The bottom line in this whole ordeal is the fact that Experian is losing “mucho deniro”. Experian, one of the 3 major credit reporting agencies, has claimed that it has lost millions of dollars, because when the fraud alert is set, it must notify the other credit reporting agencies and send out notices to the consumers. They also claim the effectiveness of the alerts set by LifeLock and that the system is clogged with false alerts.
On May 19th, Judge Guilford ruled in favor of Experian’s claim that the Fair Credit Reporting Act (FCRA) does not permit for a corporation to set up fraud alerts on behalf of the consumers. §605A. of FCRA states the following:
Upon the direct request of a consumer, or an individual acting on behalf of or as a personal representative of a consumer, who asserts in good faith a suspicion that the consumer has been or is about to become a victim of fraud or related crime, including identity theft, a consumer reporting agency described in section 603(p) that maintains a file on the consumer and has received appropriate proof of the identity of the requester shall—
(A) include a fraud alert in the file of that consumer, and also provide that alert along with any credit score generated in using that file, for a period of not less than 90 days, beginning on the date of such request, unless the consumer or such representative requests that such fraud alert be removed before the end of such period, and the agency has received appropriate proof of the identity of the requester for such purpose; and
(B) refer the information regarding the fraud alert under this paragraph to each of the other consumer reporting agencies described in section 603(p), in accordance with procedures developed under section 621(f).
It is clearly stated “an individual acting on behalf of or as a personal representative or a consumer”, which to me sounds like anyone can place a fraud alert on behalf of the consumer with proper permission.
Experian makes money by gathering and storing information about pretty much every consumer and sells this data for marketing purposes to the companies who have interest in it. Every single file is a potential revenue stream for the CRAs. When someone places a fraud alert on a credit file, the consumer is automatically opted-out from all offers, meaning the CRA cannot sell information on the consumer with a fraud alert to anyone. Hence, they cannot make any profit on that particular file.
LifeLock has millions of customers and all of them have fraud alerts set up. Let’s see, Experian has electronic communication with the other agencies, so it does not cost much to communicate the fraud alert with them; to sent a notice to the consumer they pay for the postage, paper, ink, and minimal labor. It may cost them approximately $1-$2 to do so. This is a cost of doing business, tax write-off. Experian sells each record for about $0.50 over and over again. Do the math: Experian sells one record for $0.50 to 10 different companies-it makes $5.00, but they sell your records every day to hundreds of interested companies. Are they really worried about $1-$2 they are “losing” or are they worried about the profits they cannot generate with the files which have fraud alerts set up? What is Experian really worried about?
Experian is greedy and worries about its own profits-nothing else. Experian does make a lot of money, wants to make more money, but it wants to have it easy. Experian is lazy when it comes to the consumer. Not only they are the worst out of the three, but they are also very arrogant. In my ordeal with my case, Experian was, still is, the last one to respond, the least one to investigate your disputes, and the most obvious one not to have your interest at heart (none of them do, but the other ones are not as bad). It seems Experian will go to any length and spend millions of dollars to save $1.00 and set an example. What this law suit means is that by defeating LifeLock in court, all companies similar to LifeLock will have to change their practices (most of them offer fraud alert placement). So, to Experian, they beat one company, they do not have to worry about any other one. Experian does offer credit monitoring services www.consumerinfo.com, but it only alerts a consumer of any new entries. It does not prevent anyone from opening new accounts, fraud alert does. Besides, no one is 100% safe from ID theft; therefore, everyone should have reasons to believe they are about to become an ID theft victim. Security breaches happen every day, files go missing every day, disgruntle employees steal and sell data-you name it!
In my personal opinion, although LifeLock is not perfect, it does provide consumers with a valuable service that is very convenient for those who are busy or who do not have the knowledge or the patience to deal with ID theft prevention. LifeLock does have millions of satisfied customers. Experian works for the corporations, LifeLock works for the rest of us.
Since Experian is being so greedy and LifeLock is being so useful and should be able to continue its service, why don’t they just come to an amicable solution? Since it is all about money, why doesn’t LifeLock just give Experian or any other CRA $1.50 to cover the cost? This cost is what Experian is worried about, isn’t?
Read more about Fraud Alert and other steps to take for prevention and resolution of ID theft HERE.