Update: Defunct airport fast-pass program may be revived

Investment group plans to acquire air traveler service

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.

Henry Inc., an investment group based in Emeryville, Calif., has signed a letter of intent with Morgan Stanley, the defunct company's largest debt holder, to buy the assets of Verified Identity Pass Inc. (VIP) and restart the Clear fast-lane security service.

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.

Alison Townley, principal at Henry Inc., said the plan is to restart Clear "as soon as possible." Testifying at a House Committee on Homeland Security hearing on the future of the registered traveler program, Townley said her company is in talks with the TSA, the Department of Homeland Security and airport authorities to restart the program by the end of the year.

About 90% of Clear's customers have already indicated that they will continue the service if it is re-started, Townley told lawmakers.

While many were frustrated with its abrupt closure this summer, a vast majority of Clear's customers want the service back, Townley said. All Clear customers will be able to use their subscriptions at no additional cost under the new management, she said. Customers who choose not to participate will have their personal identifying destroyed data destroyed at a secure Lockheed Martin data storage facility, she said. Such customers, however, will not receive a refund from Clear for the unused portion of their subscriptions, she said.

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.

Copyright © 2009 IDG Communications, Inc.

Shop Tech Products at Amazon