Identity theft and debt collection: Know your rights!

By Jessica Lowy
Stuttgart Law Center

Identity theft is a serious crime, measured by both the amount of money that is taken fraudulently, and the amount of time and energy victims have to spend to clean up the mess caused by wrongdoers. ID theft victims may be denied credit, but they can also miss out on job opportunities because of adverse issues on their credit report or even find themselves indebted for purchases or transactions they did not make.

Victims of identity theft are not without options.There are several avenues to take in rectifying the situation, starting with detecting the crime. There are several signs one can look for in bank accounts or in credit reports that may indicate fraudulent activity. Those who notice signs of fraudulent activity on a credit report should take action immediately.

If you spot fraudulent activity

File an online complaint with the Federal Trade Commission. Take the completed complaint, also called an FTC Affidavit, to local police or the police where the theft occurred and file a police report. Keep a copy of the police report for personal records. If the police are reluctant to take a report, check with your state attorney general’s office, as state law may require the police to issue a report. Overseas service members, civilians and family members who are unsure which police agency they should report a crime can contact their local Military Police station for more information.

Victims should also report identity theft to at least one of the credit reporting agencies. The agency will put a fraud alert on the report and alert the other two agencies. An initial fraud report will last 90 days. Victims should also request credit reports from all three agencies.

Credit reporting agencies can report negative information such as late payments or accounts in default for seven years, and bankruptcy information for 10 years. Information about a lawsuit or unpaid judgment can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting criminal convictions, information reported in response to applications for a job paying more than $75,000 per year, and information reported because of applications for $150,000 or more of credit or life insurance.

Know your rights

Under the Fair Credit Reporting Act, consumers have the right to know what is in their credit file. Consumers are entitled to a free file disclosure if: an organization or business entity has taken adverse action against them because of information in a credit report; the consumer is the victim of identity theft and places a fraud alert in the file; the file contains inaccurate information as a result of fraud; the consumer is on public welfare assistance; or they are unemployed but expect to apply for employment within 60 days.

Consumers also have the right to request a credit score, a numerical summary of credit worthiness based on the information the three credit reporting agencies have. Most of the time there is a charge to obtain a credit score, unless it’s a situation where a lender has obtained the score and shares that information.

What if I find inaccurate information in my credit file?

The Fair Credit Reporting Act allows reports of inaccurate information in a credit file. A person who finds inaccurate information on his or her credit report should write a letter to the credit reporting agency immediately. When possible, include copies of documents that support the claim. Provide a complete name and address, clearly specify what is being disputed, and request it be removed or corrected. Send the letter via certified mail, return receipt requested, to verify the date the agency received the dispute. The FTC website offers a sample letter for disputing errors.

The credit reporting agency is required to investigate claims and either correct or delete inaccurate, incomplete or unverifiable information within 30 days. It must forward all relevant information to the creditor organization. That creditor must then investigate and report the results back to the consumer reporting agency. If the creditor finds the disputed information is in fact inaccurate or simply cannot verify the information, it must notify all three consumer reporting agencies to correct the information.

Once the investigation is completed, the agency must report the results to the requestor in writing and provide a free copy of a credit report if the dispute results in a change. If an item is changed or deleted, the agency cannot put the disputed information back on the report unless the creditor verifies the information is accurate.
Be aware that an investigation will not always result in a resolution of the dispute. In this situation, ask that a statement of the dispute be included with all future credit reports. To read more about disputing inaccurate information, visit the FTC website.

In addition, consumers can write a letter to the creditor responsible for the inaccurate information. Again, whenever possible, provide copies of documents that verify the claim. The creditor must then include a copy of the dispute in all future reports to consumer reporting agencies. In the case of a successful dispute, the creditor may not report the inaccurate information again.

Even those who do not suspect fraudulent activity on their credit reports should still check them at least once per year. The Fair and Accurate Credit Transactions Act allows consumers to get one free credit report from each of the credit reporting agencies once every 12 months. Log on to www.annualcreditreport.com to verify that information is accurate with all three consumer reporting agencies. Reports from all three agencies can be checked at the same time or at different times throughout the year to monitor the report over time.

Additional protections are available to help service members minimize risk of identity theft. When deploying, always place an active duty alert on all credit reports. The alert requires creditors to take extra steps to verify identity. Although active duty alerts expire after one year, the alert requires credit reporting companies to remove the consumer’s name from their marketing lists for prescreened credit card offers for two years. Remember to keep track of the dates of any telephone calls or letters sent to the credit reporting agencies.

Some other useful information about the FCRA:
►Consumers must give consent, usually in writing, to employer or potential employer to be able to access credit reports.
►Consumers may opt out of “prescreened” offers of credit and insurance. Unsolicited prescreened offers of credit and insurance must include a toll-free telephone number to call if you choose to remove your name from the lists these offers come from. Consumers may also opt out with the credit reporting agencies by calling 1-888-567-8688.
►In some cases, if use of a credit report results in a violation of the FCRA, consumers may be able to sue for damages.

To minimize risk of future identity theft:
►Use websites that protect financial information with encryption. An encrypted website has “https” at the beginning of the address.
►When using a public Wi-Fi network, don’t send information to any website that isn’t fully encrypted.
►Install anti-virus and anti-spyware software, and a firewall on computers, and set the computer’s operating system, web browser and security system to update automatically.

What if the debt collector is calling?

Whether a debt that is being collected is legitimate or not, consumers have rights under the Fair Debt Collection Practices Act. The FDCPA prohibits debt collectors from using harassing techniques, making false statements or engaging in unfair practices in attempting to collect a debt. Consumers can write a letter to the collection agency demanding them to stop contact. Once the agency receives the letter, it may not contact the consumer again unless to notify them that the creditor intends to take some specific legal action, or to notify the consumer that there will be no further contact.

It is important to know this law does not erase any legitimate debt owed, but it does prevent certain unfair and deceptive practices some debt collection agencies use. For example, a collection agent may not call before 8 a.m. or after 9 p.m.; use obscene language; threaten physical violence or damage to property; or imply that nonpayment of the debt will result in arrest or the seizure, garnishment, or sale of property or wages, unless such action is lawful.

Consumers who believe they are not responsible for the debt a collection agency claims is owed can write the agency a letter requesting verification of the debt. This letter is similar to a letter to a credit bureau to dispute errors: The consumer asks the entity that furnished the negative information to verify the accuracy of its information. That agency must cease contact with the consumer until it provides proof of the debt.

If the debt is legitimate and more than one debt is owed, the consumer must indicate to which debt that payments should be applied. The debt collector must follow these instructions. In addition, when a consumer makes payments on a legitimate debt, a debt collector may not apply those payments to a debt in dispute.

If a debt collector is suspected of violating these standards, report any problems to the state attorney general’s office and the FTC, which enters complaints into a centralized database used by hundreds of civil and criminal law enforcement agencies. In addition to rights under federal law, state laws may offer additional protection.

Victim of ID theft?

Notify a credit bureau and place a fraud alert on your credit report.

Equifax
P.O. Box 740241, Atlanta GA 30374
800-685-1111 (to request a free credit report)
888-766-0008 (to put a fraud alert on a credit report)
800-525-6285 (fraud assistance)

Experian
P.O. Box 4500, Allen TX 75013
866-200-6020 (to request a free credit report)
888-397-3742 (fraud assistance)

TransUnion
P.O. Box 2000, Chester PA 19022
877-322-8228 (to request a free credit report)
800-916-8800 (credit disputes)
800-680-7289 (fraud alerts and identify theft)