[Infowarrior] - ‘Clear’ Security Service May Return at Airports

[Richard Forno]

September 30, 2009
‘Clear’ Security Service May Return at Airports
By BRAD STONE
http://www.nytimes.com/2009/09/30/technology/30clear.html?hpw=&pagewanted=print

Verified Identity Pass, a company founded by the entrepreneur Steven  
Brill, offered travelers a tempting proposition: pay up to $199 a  
year, submit to a fingerprint and iris scan, and skip to the front of  
interminable airport security lines.

But last June, the company left its roughly 200,000 paying customers  
stranded, saying that it was ceasing operations and did not have cash  
to offer refunds.

Now it appears those customers will get a break. Kurtis Fechtmeyer, an  
investment banker based in Emeryville, Calif., said on Tuesday that  
his new investment group, Henry Inc., had signed a letter of intent  
with Morgan Stanley, the defunct company’s largest debt holder, to buy  
its assets and reopen its fast-lane security service, called Clear.

Mr. Fechtmeyer said his group thought it could bring back the service  
as soon as this holiday season. It will offer former Clear members,  
some of whom had paid for years of the service in advance, the option  
of rejoining with their membership intact.

“People are still desperate for convenience at security checkpoints,  
and the government is very interested in having more registered  
travelers whose identities are verified,” he said. “There is still  
strong demand for this service.”

If the former members choose not to sign up, Mr. Fechtmeyer said,  
their personal information will be destroyed. The fate of that data  
had been a source of worry for some Clear customers.

Mr. Fechtmeyer, a former managing director of FBR Capital Markets, an  
investment bank, had been helping Clear secure extra financing before  
it shut down. His investment group is composed of family-owned funds  
in the Bay Area and elsewhere and at least one principal investor whom  
he declined to name because the deal was not yet completed.

Word of a possible new life for the Clear service surfaced ahead of a  
hearing that a House Homeland Security subcommittee will hold on  
Wednesday to discuss the future of the Transportation Security  
Administration’s registered traveler program. Mr. Fechtmeyer’s wife,  
Alison Townley, also a principal of Henry, will testify.

The vision for the Clear service was first laid out soon after the  
9/11 attacks in a Newsweek column by Mr. Brill, the founder of Court  
TV and American Lawyer magazine. He wrote that a private company could  
solve the problems of security and long lines in airports with a smart  
identification card, backed by biometric tests, that would allow  
members to pass through special lines at airports.

Verified Identity Pass, the New York-based company he created to  
pursue that idea, required people to go through a lengthy enrollment  
process, give up personal information and have an iris scan and  
fingerprints recorded. In return, they got to bypass security lines,  
accompanied by Clear “concierges” who were stationed at airports like  
Kennedy International.

In its four years of operation, V.I.P. raised $90 million in financing  
from the likes of Spark Capital, Baker Capital, Lockheed Martin,  
General Electric and Lehman Brothers. But it became known less for its  
service than for a string of controversies.

Mr. Brill was forced out of the company by investors earlier this year  
and later sued over breach of contract, winning a million-dollar  
judgment. Last year, a company laptop containing the personal  
information of some 33,000 customers was lost for a week at San  
Francisco International Airport (it was later found and the  
information had apparently not been accessed).

When the Clear service ceased operations over the summer, after  
backers could not agree on how to restructure its debt, some members  
filed a class-action lawsuit, accusing the company of fraud and of  
breaching its contracts.

But people involved with the company say it was near profitability  
when it shut down. That is one reason Mr. Fechtmeyer and Ms. Townley  
are optimistic that they can turn the Clear service into a successful  
business. They say they have already begun to meet with  
representatives from the Transportation Security Agency and Clear’s  
partner airports, some of which said “you cannot open soon enough,”  
according to Ms. Townley.

They also said that they conducted a survey of Clear customers over  
the summer, and that 70 percent said they would return to the service.  
Another 20 percent said they would return depending on which airports  
were included. The new buyers are developing ways to allow people to  
sign up for the service directly at the airport — presumably when they  
are confronted in person with a long, time-wasting security line.

Mr. Brill, who now runs Journalism Online, a venture developing ways  
for newspapers to charge for online access, was cautiously  
enthusiastic about a new life for Clear. “Assuming they comply with  
the privacy requirements of the program, I think it would be great,”  
he said. “The way the company got shut down was at best irresponsible.  
If someone is going to try to make it up to those customers, I think  
that’s a real good thing.”