Lawsuit claims Registered Traveler vendor committed fraud

Class-action effort also alleges breach of contract and negligence

Two law firms have filed a class-action lawsuit on behalf of customers of a private operator of Registered Traveler services that suddenly shut down on June 22.

The lawsuit was filed in the U.S. District Court for the Southern District of New York against Verified Identity Pass Inc., which operated the Clear designated lanes as part of Registered Traveler at 20 airports, according to a news release. About 165,000 people were enrolled in Clear, which was the largest Registered Traveler service provider, according to the House Homeland Security Committee.

Registered Traveler offers enrolled travelers who provide biographic information and fingerprints, undergo a prescreening and pay a fee to receive expedited security services at airports. It was co-sponsored by the Transportation Security Administration from 2005 to 2008, and the TSA continues to set requirements for the program.

On June 22, Verified Identity Pass abruptly stopped operation of its Clear lanes and said on its Web site that it is not offering refunds. The annual membership fee for participation in Clear was at least $199, according to the law firms’ July 2 news release.

The lawsuit claims that by ceasing operations and not offering refunds, Verified Identity Pass is guilty of fraud, breach of contract and negligence. The lead plaintiff in the lawsuit is Stephen Perkins of Indianapolis, Ind..

“In the weeks leading up to Verified Identity Pass’s shut down, it continued to both sell and renew extended Clear program memberships to consumers and businesses – monies that Verified Identity Pass now refuses to return,” said Todd Schneider, attorney with Schneider Wallace Cottrell Brayton Konecky LLP, of San Francisco, which is one of the two firms that filed the lawsuit. “This conduct is simply wrong. Businesses cannot simply take money from customers and then fail to perform the services for which they were paid without a refund. This type of corporate behavior needs to stop immediately”

The other law firm involved is Kaplan Fox & Kilsheimer LLP of New York City.

A recorded message at Verified’s offices states that the company stopped operating because it was unable to negotiate an agreement with its senior creditor. It also said refunds are not possible due to the company’s financial condition and refers further inquiries to the Web site.

On June 25, Rep. Bennie Thompson, D-Miss., chairman of the House Homeland Security Committee, and two other lawmakers wrote to the TSA expressing concern about the personal information held by Clear. The TSA said on June 30 it is drafting a response, and a spokesman for Thompson’s office said on July 6 no response had been received to date.

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

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