Oct 27 2009
Fraud alerts on your credit cards are one of those really useful tools that have been put in place by law, only to be neutered by the same law. They’re great in that they put a lock on your credit scores and let you know when anyone is trying to open an account in your name, but at the same time they’re incredibly hard to use because you have to fill out paperwork every three months. There is an extended fraud alert that will protect you for a period of seven years, but in order to qualify for that, you have to provide a police report proving that you’ve been targeted by identity theft. To top off the insult from the credit reporting companies, you have to file separate fraud alerts with each company and maintain them yourself if you want to be relatively safe.
Enter Lifelock; for a small monthly fee they would maintain your fraud alerts for you and even provide a number that creditors could call in order to unlock your credit ratings. This was great for consumers, it let them keep their credit scores locked so that it was that much harder for someone to open an account in your name or for the credit card companies to review your credit score and send your monthly junk mail offerings. This a big win for us, but it cuts into the major source of the big three credit scoring companies, Experian, TransUnion and Equifax. If too many people keep their credit scores hidden, the scoring companies can’t sell their big lists of names, or at least those lists lose some of their value. So in 2008, Experian sued LifeLock to block the practice and won. Experian and LifeLock have settled the lawsuit and LifeLock is forever forbidden from filing credit locks on behalf of consumers.
According to Experian and LifeLock, this is a positive for LifeLock, which it is. They get to move out of the shadow of a nasty lawsuit and rework their business model to find something else to do to help protect consumers. Experian and the other two credit scoring companies find this to be a huge win, since this sets precedence and makes it that much harder for any other company to provide a similar service. The big loser in this transaction is us, the consumer, since we now have to remember to reset our credit lock with all three credit scoring companies every three months if we want to protect ourselves. Thanks, Experian. You’ve made it perfectly clear what you’re really trying to protect: your revenue stream.