Defunct Airport Fast-Pass Program May Be Revived

Tens of thousands of subscribers to a registered air traveler program, who were left feeling scammed when the company offering the service abruptly went out of business, may soon get a break.

Tens of thousands of subscribers to a registered air traveler program, who were left feeling scammed when the company offering the service abruptly went out of business, may soon get a break.

A new investment group based in California has signed a letter of intent with Morgan Stanley, the defunct company's largest debt holder, according to the New York Times . Under a proposed plan, the investment firm will be allowed to buy the assets of Verified Identity Pass Inc. (VIP) and restart the Clear fast-lane security service, the Times reported, quoting the owner of the Emeryville, Calif.-based investment banking firm, Henry Inc.

Subscribers to the Clear service, some of whom had signed up for two years or more of service just before VIP went out of business, will be offered a chance to continue their subscriptions after the deal goes through. If an individual chooses not to, any personal data on that individual that had been collected by VIP for Clear, will be permanently destroyed, the Times said quoting the investment banker.

The news is likely to provide some comfort to thousands of customers of VIP who were left in the lurch when the company in June abruptly announced it could no longer offer the Clear service because it had run out of cash. VIP was one of seven companies approved by the Transportation Security Administration (TSA) to operate a registered traveler program, which lets air travelers get through airport security checks faster. It offered the service at 21 major airports, including New York's John F. Kennedy International Airport, La Guardia, Boston's Logan International and Atlanta's Hartsfield-Jackson airports. More than 200,000 customers had signed up for the service when the company went out of business.

To sign up for VIP's Clear service, customers had to submit to background checks and provide identifying information, including Social Security and credit card numbers, home address, date and place of birth, phone numbers and driver's license number. They also had to provide fingerprints, iris scans and digital images of their faces.

VIP's decsion to shut the service raised concerns about the fate of the data that had been collected by the company. The company made matters worse by hinting that it would sell the data it had collected to fulfill its debt obligations.

Many participants were left feeling scammed when VIP announced that it couldn't refund their subscriptions because it had run out of money.

Days after the company's closure, the chairman of the House Committee on Homeland Security asked the TSA to ensure that all information collected by VIP was properly protected and destroyed . In August, a federal judge in New York issued an injunction prohibiting VIP from selling, transferring or disclosing to any third-party the data it collected while operating the Clear service. The motion was in response to a lawsuit brought by concerned customers. The injunction, however, was later lifted on a technicality.

Todd Schneider, an attorney with Schneider, Wallace, Cottrell, Brayton, Konecky LLP, a San Francisco law firm representing one of the parties in the lawsuit, today said he was unclear on the ramifications of the reported purchase of VIPs assets by the investment banking firm. For the moment, the purchase does little to alleviate the major complaint in the lawsuit, which is that VIP's customers didn't get a refund from their subscriptions.

"That is something that they are entitled to regardless of whether or not other companies" purchase VIP, he said. A hearing in the case has been scheduled for Oct. 16, where Schneider plans to again ask the judge to bar VIP from selling its data assets to any third party.

News of the proposed purchase comes as the House Committee on Homeland Security is scheduled to hold a hearing today on the future of the registered air traveler program.

Copyright © 2009 IDG Communications, Inc.

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