November's Top Ethics Complaint: Continued Contact After Notification of Identity Theft

Published: Friday, December 16, 2005

The top ethic complaint received by ACA in November pertained to identity theft. Specifically, complaints of agencies continuing to attempt to collect on debts after being notified the debt was the result of identity theft. While a collector may not necessarily be prohibited from collecting on an account a consumer claims is fraudulent, an agency should have policies and procedures in place for addressing such claims.

Under the Fair Credit Reporting Act (FCRA), all data furnishers must have in place reasonable procedures to respond to notifications from consumer reporting agencies that information furnished is the result of identity theft, and to prevent refurnishing the information.

Under the FCRA, a data furnisher may not furnish information that a consumer has identified as resulting from identity theft unless the data furnisher knows or is informed by the consumer that the information is correct. If a data furnisher learns that it has reported inaccurate information due to identity theft, it must notify each consumer reporting agency of the correct information and thereafter only report complete and accurate information. The FCRA also requires that a debt collector notify relevant parties (i.e. creditor) that the information may be the result of identity theft.

Moreover, when any furnisher of information is notified pursuant to the procedures set forth in Section 605B that a debt has resulted from identity theft, the furnisher may not sell, transfer, or place for collection the debt except in certain limited circumstances. For additional information regarding blocking of information please see E-Compliance Document #33.

The Fair Debt Collection Practices Act (FDCPA) requires that if a consumer disputes a debt, in writing within the 30-day validation period, the debt collector shall cease collection of the debt, until the debt collector obtains verification and mails such verification to the consumer. This would also apply to claims of identity theft.

When an agency receives a dispute, the agency is allowed to request from the consumer any documents the agency believes is necessary to effectively investigate the claim and come to a conclusion on the validity of the claim. However, the consumer is not required to provide any of the documents the agency requests.

If the consumer refuses to provide the agency with documents to assist in the investigation and the agency is unable to determine if there is in fact an issue of fraud, or that the collection agency is in fact collecting from the wrong consumer, the agency is able to resume collection efforts on the account in question; however, the agency would still be required to report the account as disputed. Information that can be required of a consumer to prove fraud in this situation can be any or all of the following: identity theft/fraud report filed with local law enforcement; additional information/documentation such as a social security number, date of birth.

The amount of documentation needing to be provided by the consumer will vary according to the circumstance at hand. Based on the information provided, the agency must make a reasonable determination based on the claim of the consumer as to whether or not they desire to pursue collection.

This article is provided by ACA International's Legal and Government Affairs Department.