Quite often the first inkling an identity theft victim has that their personal information is being used by fraudsters is when they get a call from a collection agency trying to collect a debt that someone has run up in their name.
You can imagine the response that call engenders. "I never heard of that company you say I owe money to." "That debt is not mine." "I must be the victim of identity theft!"
I'm sure you wouldn't be surprised at how often collection agencies hear this response, and how they respond. The identity theft victim is considered guilty until proven innocent, and the collection effort continues.
Now another state legislature is trying to enact a law that would offer the identity theft victim a shield from collection efforts.
The New Jersey Assembly Consumer Affairs Committee has passed onto the Assembly floor, by a 5-0 vote, a bill (A-3005) that would establish — at least in the state of New Jersey — a process for a victim of identity theft to notify a debt collector of their status as a victim of identity theft, and the proposed law then requires the debt collector to cease collection activities until a determination is made by the debt collector as to whether the consumer is in fact responsible for the debt in question.
"Repairing your life and credit after you have been victimized by this crime is a long battle against creditors and collectors to prove your identity," said Assemblyman Gordon Johnson, the primary sponsor of the proposed legislation. "While you are putting the pieces together, you should not be held liable for a debt you did not accrue. All collections and charges should cease until the true damage — meaning unauthorized charges — are assessed and proven."
As you can imagine, the debt collection industry is not happy with this proposed bill. They argue they are simply not set up — or have the ability — to determine the validity of someone who claims they are an identity theft victim.
One common sense compromise might be that debt collection activities would stop their pursuit while the victim goes through the identity theft process and procedure with the company that says the money is owed, and with the FTC and local law enforcement.
Utah is a state that has been proactive in this regard. Under its consumer protection laws it advises any victim to tell the collection agency that you are a victim of identity theft and that you are disputing the debt. The state advises the victim to ask the collection agency what they — or the original creditor — requires to support a claim of identity theft. A fraud affidavit is typically required. Utah advises the victim to ask the collection agency if they will accept a generic affidavit, or if they require their own.
Under Utah's Consumer Credit Protection Act, within five days after you are first contacted, the collection agency must send you a written notice telling you:
- the amount of the debt;
- the name of the creditor to whom the debt is owed;
- a statement that unless the consumer, within 30 days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;
- a statement that if the consumer notifies the debt collector in writing within the 30-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and
- a statement that, upon the consumer's written request within the 30-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
Other states would be wise to copy Utah's procedure.