Internet-y as the next blogger, I’d like to point out how wired.com noticed that the Phoenix New Times figured out that LifeLock CEO Todd Davis (you know, Mr. 457-55-5462) who dares criminals to steal his identity has, in fact had his identity stolen at least 13 times. But in a repudiation of the Internet tendency to simply point at the findings of others and say “like he said, ” I’ll now explain how the identity thieves got away with it. Given that, as you know, LifeLock is “guaranteed. ”

What LifeLock does primarily when you subscribe is they put a fraud alert on your file at all three national credit monitoring agencies — Equifax, Experian, and Trans-Union. A fraud alert says “this person’s identity has been stolen, don’t approve any unusual expenditures without proper verification. ” So the cable bill you’ve been paying with a credit card for five years still goes through but any new request for credit or an unusual expenditure gets flagged. The problem with this is that the fraud alert isn’t real; there has been no fraud. You only signed-up with LifeLock, which is now screaming at the credit bureaus that you’ve been ripped-off when, in fact, you haven’t.

Credit bureaus hate LifeLock.

A fraud alert is like putting a chastity belt on your credit file, with the keys held only by three cranky eunuchs.

But wait, Todd Davis (Mr. 457-55-5462) was ripped-off 13 times despite being a member of LifeLock. With an fraud alert on his file, how was this even possible?

Because the frauds didn’t involve his credit file.

Worse still, Mr. 457-55-5462, didn’t even know his identity had been stolen 13 times, despite his LifeLock membership, until the bill collectors started calling. Maybe he should have applied for that $1 million insurance pay-off.

Oops. “Certain conditions apply.”

What happened to Mr. 457-44-5462 had nothing to do with the three national credit monitoring agencies and everything to do with the National Consumer Telecom & Utilities Exchange (NCTUE), a service managed by Equifax but completely separate from that company’s credit operation. The NCTUE is a sort of in-house credit-monitoring operation aimed solely at telephone, cable TV, gas, and electric customers. NCTUE came about because utilities and telcos have different needs than do banks or mortgage companies. Utilities specifically have lots of cash customers, their greatest exposure is to lost payment for a month or two of service, so they don’t really give a damn whether you are an illegal alien or not. All the NCTUE and its members’ care about is that you have an ID and a social security number, even if that number is borrowed. And, of course, they’d like you to pay your bill on time, please.

The NCTUE does a far superior job of monitoring creditworthiness than the bureaus if credit information is available given that it allows any of us to have multiple identities and thousands of people to share the same Social Security Number as long as they pay their bills.

LifeLock doesn’t have access to the NCTUE database so Mr. 457-44-5462 had no way of knowing that his identity had been used or is currently being used. The violations mainly involved Telco and utility accounts and none were for more than $1000. Furthermore often NCTUE is used as a stepping stone for creating false IDs in your actual credit file – but that can wait for another blog.

It turns out there are hundreds of such alternative databases, with the NCTUE being just the largest, and LifeLock doesn’t have access to any of them.

NCTUE is interesting not just because it is invisible to LifeLock but also because it isn’t (nor is it required to be) compliant with the Fair Credit Reporting Act (FCRA) which allows you to, for example, see your credit report for free if you’ve had a denial of credit and to contest any information you think is in error on the report.

Actually NCTUE is voluntarily FCRA compliant as far as it can be given the apples-and-oranges difference between what it does and what the credit bureaus do. If you work hard enough you can obtain a copy of your current file history and they will address and resolve issues.

NCTUE is currently in the middle of multi-year expansion that may actually eclipse the number of consumers in the credit file. Remember everyone has a cell phone even if they do not have a credit file or legal status to be in the USA.

Bummer for Lifelock, which has no access to this information.

Your NCTUE file today contains only negative information, by the way, because it isn’t a true credit rating. But it can still be used to steal your identity.

Just ask Mr. 457-55-5462.