United States: California Amends Identity Theft Requirements For Debt Collectors

Last Updated: October 22 2016
Article by Le Duong

The California legislature has amended the existing requirements for debt collectors who receive consumer claims of identity theft with the Identity Theft Resolution Act ("Act"). See AB 1723; Cal. Civ. Code § 1785.16.2.[1]  The Act does not take effect until January 1, 2017, but creditors should immediately start implementing new policies and procedures for debt collectors to follow to ensure that the creditor's interest is protected under the amendments.

Under the Act, the time frame for reviewing claims of identity theft has been dramatically reduced for debt collectors. Once the debt collector receives the police report, written statement, and other information required under the law, it will have 10 business days to start an investigation of the dispute.  After concluding its review, the debt collector must send the results of its investigation to the consumer within 10 business days.  The timeframe under the Act is in stark contrast to current law, which sets no time frame for when a debt collector must investigate a consumer's claim of identity theft, or when the debt collector must notify the creditor associated with the account or any consumer reporting agency ("CRA") to which the debt has been reported.  Current law only requires a debt collector to cease collection of a debt upon receipt of a police report filed by a consumer and a written statement alleging identity theft regarding the debt at issue.

While investigating the debtor's claim of identity theft, the debt collector must review and consider all of the information provided by the debtor as well as information available to the debt collector in its file or from the creditor. The debt collector may apply common sense.  For example, if the debtor has previously affirmed the debt or acknowledged it, that fact can be considered in determining whether the claim of identity theft is valid or made in good faith. The debt collector should document all communications and provide a clear explanation if it is decided that the claim is not valid.  As mentioned above, once the debt collector concludes its review, it must send its decision to the debtor within 10 business days, notifying the debtor in writing  that he or she is still responsible for the debt, as well as the basis for that determination.  The debt collector may recommence collection activities only after making a good faith determination that the evidence presented does not establish the debtor is not responsible for that specific debt.

For CRA's, if the debt collector determines that it will not recommence collection activities based on a valid identity theft claim and the debt collector previously provided information to the CRA, it must notify the CRA to delete that information no later than 10 business days after making the determination to stop collection activity.

For creditors, if the debt collector does not recommence collection activities based on the debtor's valid claim of identity theft, the debt collector must notify the creditor no later than 10 business days after making such determination. The law prohibits a creditor from selling the debt if the creditor has received notice that the debt collector has terminated debt collection activities due to claims of identity theft.  While the Act does not address a creditor's remedy if the creditor believes that the consumer's police report for the claim is false, California law holds that the creditor's remedy in this instance is to seek a criminal trial to determine the truth of the police report.  See  Cal. Civ. Code  § 47; see also Johnson v. Symantec Corp., 58 F.Supp.2d 1107, 1113 (1999) (holding that the communications privilege under California Civil Code section 47 applies to police reports, even false ones, and therefore the appropriate forum for determining the truth of a police report is a criminal trial).  Many creditors, however, will find it impracticable to enter a police station to file a police report to determine the validity of the police report.

As such, we recommend that creditors immediately implement policies and guidelines for the debt collectors that it retains to collect the debts. Specifically, creditors should require all debt collectors to immediately notify the creditor once it has received a claim of identity theft so that the parties can investigate the validity of the identity theft claim together.  In addition to ensuring that this will help protect the creditor's interest, this will also equip the debt collector with additional comprehensive and reliable information that will result in a more accurate determination of the validity of the identity theft claim.


[1] The California legislature did not define "debt collector" in the Act, and it is ambiguous as to whether the definition of "debt collector" under the California Rosenthal Fair Debt Collection Practices Act, California Civil Code §§ 1788 et seq., which includes "creditors" should apply to the Act. While the Act does not separately define "debt collector," the  Act cites to the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S. Code § 1692a, to define "debt collector."  See Cal. Civ. Code § 1785.16.2(a).  Under the FDCPA, a "debt collector" is "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another."  The FDCPA also separately defines "creditor" as "any person who offers or extends credit creating a debt or to whom a debt is owed."  Consistent with distinguishing "debt collector" from "creditor," the FDCPA has the "originator exclusion" under its definition for a "debt collector," which states that excluded from the definition of debt collector is any person attempting to collect a debt that concerns a debt that was originated by that person.  As such, original creditors would not fall under the FDCPA's definition of "debt collector" absent some behavior from the creditor that may lead the Court to conclude that they are also a debt collector.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Schnader Harrison Segal & Lewis LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Schnader Harrison Segal & Lewis LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions