The recently enacted California Identity Theft Resolution Act sets strict
time limits for reviewing claims of identity theft in place of existing law
that had no time frame for an investigation or notification to creditors. The
legislation is intended to enhance protections for victims who may be subjected
to collection activities based on fraudulent debt. The law (Ch. 376) takes effect Jan. 1,
2017.
The legislation amends the state’s Consumer Credit Reporting
Agencies Act and the Rosenthal Fair Debt Collection Practices Act to mandate
that debt collectors engage in necessary due diligence to determine that a debt
actually belongs to the named debtor.
The amended law requires a debt collector to notify a credit
reporting agency (CRA) that a debt is disputed within 10 days of receiving that
information from the debtor. The debt collector must additionally send the
results of its investigation to the consumer within 10 business days after
concluding the review.
A debt collector may recommence debt collection activities
only after completion of a review and upon making a good faith determination
that the information does not establish that the debtor is not responsible for
the specific debt in question.
A debt collector that does not recommence collection
activities must notify the creditor, no later than 10 business days after
making its determination, and if it furnished adverse information to a CRA, the
collector must notify the CRA to delete that information no later than 10
business days after making its determination. The legislation also prohibits a
creditor from selling a consumer debt to a debt collector if the creditor has
received notice that the debt collector has terminated debt collection
activities.
Current law. Under the state’s existing laws, a debt
collector must stop collecting a debt if the alleged debtor provides the
collector with specified information showing that the debtor is a victim of
identity theft. However, there are no prescribed time frames for debt
collectors to investigate or provide notice of investigations concerning accounts
connected to identity theft.
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