A US judge has ruled that LifeLock - which operates an ID theft prevention service - has been employing unfair business practices by placing fraud alerts on customer credit files it maintains.
US District Judge Andrew Guilford of California's central district backed the claim of credit referencing agency Experian in a lawsuit filed against LifeLock last year.
As part of its $10 a month service, LifeLock requests that Experian, and other agencies, places fraud alerts on customers under the US Fair Credit Reporting Act (FCRA). It also renews the request every 90 days, when the alerts expire.
Experian argued that under the act, companies like LifeLock cannot request alerts on behalf of customers.
The judge agreed and granted the Experian motion, stating: "Under the clear terms of the legislative history, any request for a fraud alert "must" be made by "an individual," and not by a company like LifeLock."
In its suit Experian said that by placing hundreds of thousands of alerts, even when there was no suspicion of fraud, LifeLock was costing the agency millions of dollars a year.
The judge also agreed with this, stating: "The Court also finds that no genuine issue of material fact exists as to whether Experian has suffered an injury in fact and lost money or property due to LifeLock's unfair business practice. Experian clearly incurs costs each time it must process a fraud alert made by LifeLock."
LifeLock CEO Todd Davis told reporters the company will no longer file fraud alerts with Experian, but would continue to do so with its main rivals Trans Union and Equifax.