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June 12, 2008
A Contrarian Take on LifeLock
Bruce Schneier has an interesting and contrarian take on LifeLock, the identity theft protection service, which was recently the source of much schadenfreude when its CEO was reported to have had his identity stolen:
"In December 2003, as part of the Fair and Accurate Credit Transactions Act, or Facta (.pdf), credit bureaus were forced to allow you to put a fraud alert on their credit reports, requiring lenders to verify your identity before issuing a credit card in your name. This alert is temporary, and expires after 90 days. Several companies have sprung up -- LifeLock, Debix, LoudSiren, TrustedID -- that automatically renew these alerts and effectively make them permanent.
"This service pisses off the credit bureaus and their financial customers. The reason lenders don't routinely verify your identity before issuing you credit is that it takes time, costs money and is one more hurdle between you and another credit card. (Buy, buy, buy -- it's the American way.) So in the eyes of credit bureaus, LifeLock's customers are inferior goods; selling their data isn't as valuable. LifeLock also opts its customers out of pre-approved credit card offers, further making them less valuable in the eyes of credit bureaus.
"And, so began a smear campaign on the part of the credit bureaus. You can read their points of view in this New York Times article, written by a reporter who didn't do much more than regurgitate their talking points. And the class action lawsuits have piled on, accusing LifeLock of deceptive business practices, fraudulent advertising and so on. The biggest smear is that LifeLock didn't even protect Todd Davis, and that his identity was allegedly stolen.
"It wasn't."
Posted by mhall at 8:05 PM | Add Comment
Thanks for taking the time for publishing a thoughtful article on why LifeLock is being sued. The internet is swamped w/ articles that are simply people regurgitating (as you say) the same info. Most identity theft prevention companies place fraud alerts for you. LifeLock got sued because they are growing the fastest and have a more recognizable name from their advertising.
Here's another good article about that lawsuit: http://my.bloghi.com/2008/02/21/experian-s-bogus-lawsuit-against-lifelock.html