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, |
| | |2016) | | |2016) |
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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