Credit referencing agency Experian has filed a lawsuit against LifeLock - which operates an ID theft prevention service - for allegedly placing fraud alerts illegally on customer credit files it maintains.
The complaint, which was filed in the US District Court for the Central District of California, accuses LifeLock of "engaging in deceptive and fraudulent behaviour" and violating the US Fair Credit Reporting (FCR) Act by adding 90-day fraud alerts to 600,000 customer records contained in Experian databases.
LifeLock charges $10 a month for its service, which involves setting 90-day fraud alerts on customer records and removing names from direct mailing lists.
However Experian argues that under the FCR Act, the 90-day alerts are intended for customers who believe fraud has occurred or is imminent.
Furthermore, by law initial fraud alerts are available for free to consumers, says Experian. The act also stipulates that only customers or representatives - such as a parent - can sign up for the fraud alerts.
Experian argues that by continuously enrolling its customers in fraud alerts, LifeLock's actions "will degrade the effectiveness of legitimate fraud alerts over time".
"Credit grantors will lose the ability to distinguish between fraud alerts added by consumers who legitimately believe that identity theft is imminent and those added by LifeLock," says Experian in a statement. "Credit grantors will have reason to doubt the credibility of all fraud alerts and their effectiveness for consumers legitimately impacted by fraud and identity theft will be severely compromised."
The suit also alleges that LifeLock's activities constitute "false and misleading advertising and fraud", which Experian claims has caused damage to itself and consumers.
LifeLock has not yet commented on the suit.