The State of California recently enacted the Identify Theft Resolution Act (the “Act”), amending debt collection requirements for debt collectors who receive consumer claims of identity theft. These provisions became effective January 1, 2017.
Prior to the Act’s enactment, debt collectors that received a police report filed by the debtor alleging that the debtor is an identity theft crime victim and a written statement in which the debtor claims to be an identity theft crime victim were required to cease collection activities until the completion of a review. The debt collector, in completing the review, was required to review and consider all information provided by the debtor as well as other available information, and was authorized to recommence debt collection activities only upon making a good faith determination that the information does not establish that the debtor is not responsible for the specific debt in question.
Under the Act, in addition to the foregoing, debt collectors must now, upon receipt of the police report and written statement described above, do the following: (1) if the debt collector furnished adverse information about the debtor to a consumer credit reporting agency (“CCRA”), notify the CCRA that the account is disputed within 10 business days of receiving the police report and written statement described above; (2) initiate a review within 10 business days of receiving the police report and written statement, and notify the debtor of the results within 10 business days of completion of the review; and (3) if the debt collector will not recommence collection activities, within 10 business days of making the determination, notify: (a) the CCRA, to delete adverse information furnished about the debt collector; and (b) the creditor, that the debt collection activities have been terminated based on the debtor’s false identity claim. Additionally, the Act prohibits creditors from selling the debt to a debt collector if the creditor has received notice that the debt collector has terminated debt collection activities as described above.
A copy of the amendments is available here: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB1723.