Victims of Identity Theft May Have Legal Recourse Against Creditors
Identity theft is a problem that keeps growing with the latest technology. Victims of identity theft not only find themselves dealing with emotional stress and insecurity, they can also experience a considerable drop to their credit score as well.
Often, victims of identity theft do not realize their identity has been stolen until creditors begin demanding payment for purchases on the victims’ accounts that were never authorized. A fight then ensues between the creditor, trying to collect the amounts owed, and the individual looking to erase the unauthorized debts from their credit history.
When the victim refuses to pay fraudulent debts, creditors notify the credit reporters, who in turn reduce the individual’s credit score for failure to pay debts. What many people do not know is that targets of identity theft may have legal recourse against creditors who refuse to acknowledge valid disputes brought by consumers.
Actions Creditors are Required to Take After Identity Theft
The Fair Credit Reporting Act (“FCRA”) imposes liability on creditors who negligently violate the statute by failing to correct and report valid credit disputes to credit reporting agencies.
Cease Reporting False Information
Pursuant to FCRA, a creditor shall not furnish information relating to a consumer to any credit reporting agency if the creditor knows, or has reasonable cause to know, that the information is inaccurate. Additionally, a creditor shall not furnish information relating to a consumer to any credit reporting agency if the consumer has notified the creditor that specific information is inaccurate, and the information is, in fact, inaccurate.
Correct False Information
The FCRA mandates that a creditor notify a credit reporting agency of any inaccurate information it provided to the reporting agency, and the creditor must then take active measures to correct the information by deleting the disputed item from the consumer’s credit history. Essentially this means that once a victim of identity theft puts a creditor on notice that information on the report is disputed, the duty then shifts to the creditor to ascertain the validity of the dispute. This duty does not require the creditor to take the consumer at their word, however, it does require an investigation into the specific information available to determine whether a reasonable person would have substantial doubts as to the accuracy of the information.
If a Creditor Fails to Comply, Individual is afforded a Legal Claim Against the Creditor
When a creditor fails to actively investigate consumer disputes, or knowingly fails to rectify any false information reported to a credit reporting agency, the individual is afforded a legal claim against the creditor. Pursuant to FCRA, a party asserting a claim against a creditor may be entitled to actual, statutory and punitive damages stemming from the creditor’s negligent, or intentional, failure to act in accordance with FCRA. Additionally, FCRA’s cost shifting provision allows a successful claimant to collect attorneys’ fees. Creditors must be diligent when faced with a consumer credit dispute in order to avoid any potential liability under FCRA. As such, creditors should consult an attorney to assist it in determining the validity of a consumer’s dispute and ensure it is operating in compliance with the law.
Have You Been a Victim of Identity Theft?
If you have been a victim of identity theft check out this resource. This website provides you with actions to take next.
1 15 U.S.C. § 1681s-2
2 15 U.S.C. § 1681s-2(a)(1)(A)
3 15 U.S.C. § 1681s-2(a)(1)(B)
4 15 U.S.C. § 1681s-2(a)(2)(B)
5 15 U.S.C. § 1681s-2(a)(1)(D)