BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1723


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1723 (Dodd)


          As Amended  August 8, 2016


          Majority vote


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          |ASSEMBLY:  |77-0  |(April 28,     |SENATE: |38-0  |(August 15,      |
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          Original Committee Reference:  B. & F.




          SUMMARY:  Requires a debt collector that has reported adverse  
          information about a debtor to a consumer credit reporting agency  
          (CCRA), upon receipt of a police report and written statement by  
          a debtor in which the debtor claims to be a victim of identity  
          theft, to notify the CCRA that the account is disputed and  
          initiate a review within 10 business days.  Specifically, this  
          bill:  


          1)Provides that a debt collector shall send notice of its  
            determination to the debtor no later than 10 business days  
            after concluding the review.


          2)Specifies that if the debt collector has furnished adverse  
            information to a CCRA the debt collector shall notify the CCRA  








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            to delete the information no later than 10 business days after  
            making its determination.


          3)Provides that a creditor shall not pursue further collections,  
            or sell a consumer debt once debt collection activities have  
            been terminated based upon the debtor's claim of identity  
            theft.


          The Senate amendments made technical and clarifying changes.


          EXISTING LAW:  Provides under Civil Code Section 1788.18:


          1)Upon receipt from a debtor all of the following, a debt  
            collector shall cease collection activities until completion  
            of a review as specified:
             a)   A copy of a police report filed by the debtor alleging  
               that the debtor is the victim of an identity theft crime,  
               including, but not limited to, a violation of Penal Code  
               Section (PEN) 530.5, for the specific debt being collected  
               by the debt collector.
             b)   The debtor's written statement that the debtor claims to  
               be the victim of identity theft with respect to the  
               specific debt being collected by the debt collector.


          2)The written statement shall consist of any of the following:
             a)   A Federal Trade Commission's Affidavit of Identity  
               Theft.
             b)   A written statement that contains the content of the  
               Identity Theft Victim's Fraudulent Account Information  
               Request offered to the public by the California Office of  
               Privacy Protection.


             c)   A written statement that certifies that the  
               representations are true, correct, and contain no material  
               omissions of fact to the best knowledge and belief of the  
               person submitting the certification.  The statement shall  








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               contain or be accompanied by the following, to the extent  
               that an item listed below is relevant to the debtor's  
               allegation of identity theft with respect to the debt in  
               question.


             d)   A statement that the debtor is a victim of identity  
               theft.


             e)   A copy of the debtor's driver's license or  
               identification card, as issued by the state.


             f)   Any other identification document that supports the  
               statement of identity theft.


             g)   Specific facts supporting the claim of identity theft,  
               if available.


             h)   Any explanation showing that the debtor did not incur  
               the debt.


             i)   Any available correspondence disputing the debt after  
               transaction information has been provided to the debtor.


             j)   Documentation of the residence of the debtor at the time  
               of the alleged debt.  This may include copies of bills and  
               statements, such as utility bills, tax statements, or other  
               statements from businesses sent to the debtor, showing that  
               the debtor lived at another residence at the time the debt  
               was incurred.


             aa)  A telephone number for contacting the debtor concerning  
               any additional information or questions, or direction that  
               further communications to the debtor be in writing only,  
               with the mailing address specified in the statement.








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             bb)  To the extent the debtor has information concerning who  
               may have incurred the debt, the identification of any  
               person whom the debtor believes is responsible.


             cc)  An express statement that the debtor did not authorize  
               the use of the debtor's name or personal information for  
               incurring the debt.


          3)After receipt of the complete statement and information  
            described the debt collector shall review and consider all of  
            the information provided by the debtor and other information  
            available to the debt collector in its file or from the  
            creditor. 
          4)The debt collector may 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.  The debt  
            collector shall notify the debtor in writing of that  
            determination and the basis for that determination before  
            proceeding with any further collection activities.  The debt  
            collector's determination shall be based on all of the  
            information provided by the debtor and other information  
            available to the debt collector in its file or from the  
            creditor.


          5)No inference or presumption that the debt is valid or invalid,  
            or that the debtor is liable or not liable for the debt, shall  
            arise if the debt collector decides after the review described  
            in subdivision (d) to cease or recommence the debt collection  
            activities.  The exercise or non-exercise of rights under this  
            section is not a waiver of any other right or defense of the  
            debtor or debt collector.


          6)A debt collector who ceases collection activities under this  
            section and does not recommence those collection activities  
            shall do all of the following:








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             a)   If the debt collector has furnished adverse information  
               to a consumer credit reporting agency, notify the agency to  
               delete that information.
          7)Notify the creditor that debt collection activities have been  
            terminated based upon the debtor's claim of identity theft.
          8)A debt collector who has possession of documents that the  
            debtor is entitled to request from a creditor pursuant to PEN  
            530.8 is authorized to provide those documents to the debtor.


          9)A "debtor" means a natural person, firm, association,  
            organization, partnership, business trust, company,  
            corporation, or limited liability company from which a debt  
            collector seeks to collect a debt that is due and owing or  
            alleged to be due and owing from the person or entity.  The  
            remedies provided by this title shall apply equally to  
            violations of this section.


          FISCAL EFFECT:  None


          COMMENTS:  Existing law does not include prescribed time frames  
          for debt collectors to investigate or provide notice of  
          investigations concerning accounts connected to identity theft.   
          Creditors are also not prevented from selling a disputed debt  
          even with notification that a CCRA has blocked reporting of the  
          debt because it resulted from identity theft.  Often, the crime  
          of identity theft takes months to detect and by that time a  
          fraudulent account or charge may already be in the collections  
          process.


          This bill requires debt collectors when informed by a debtor  
          that a debt is the result of fraud or identity theft to engage  
          in necessary due diligence to make a determination of whether  
          the debt actually belongs to the debtor.  It also requires that  
          within 10 days of receiving information from the debtor that the  
          debt is disputed the debt collector must notify a CCRA that the  
          debt is disputed and send the debtor notice of its determination  








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          no later than 10 business days after concluding its review.


          According to the Javelin Strategy & Research "2015 Identity  
          Fraud Report", released in March 2015 there were 12.7 million  
          United States adult victims in 2014, or nearly one victim every  
          2.5 seconds. That figure represents 4% of United States adults,  
          including over a 1.5 million Californians.  The number of  
          victims declined slightly from 13.1 million in 2013.


          Identity theft is also expensive.  The total cost of identity  
          theft to victims and businesses in 2014 was $16 million, down  
          from $18 million in 2013.  The decrease continues to be the  
          result of a greater share of fraud involving existing  
          credit/debit card accounts, which is less costly than other  
          forms of identity theft.




          Analysis Prepared by:                                             
          Mark Farouk / B. & F. / (916) 319-3081FN:0003923