Credit Crads

Identity Theft

How the Credit Reporting Law Can Help

In 2003, Congress passed a law updating the federal Fair Credit Reporting Act. It contains an entire section of requirements to make it easier for fraud victims to resolve their case. Here are some of the highlights.

Identity Theft Fraud Alerts

If you think you may have been, or are about to be, a victim of identity theft, credit reporting agencies must place a fraud alert on your credit report if you request it. There will be a system in place so that you should only have to make one phone call to initiate this. You will have to fill out a fraud affidavit and provide proof of your identity.

Members of the military on active duty may request an alert placed on their file indicating they are on active duty.

For those with fraud alerts on their credit files, creditors will have to take reasonable steps to make sure they verify a consumer’s identity.

Identity Theft Prevention

Federal banking agencies, the National Credit Union Administration, and the Federal Trade Commission will work together to develop guidelines for creditors and others that use credit report information to prevent identity theft. They will also require financial institutions or users of credit reports to notify the Federal Trade Commission if there has been a security breach of consumer information. They will also establish rules so that when a card issuer receives a request for a new or replacement card from a consumer less than 30 days after receiving a change of address, the issuer will have to take additional steps to verify that the request is valid.

You’ll also be able to ask the credit bureaus not to disclose the first five digits of your social security number when they supply your credit report.

If Your Identity Has Been Stolen

If you do become a victim of identity theft, you’ll be able to request a copy of any application and transaction records related to any business transaction that was made by the imposter. For example, you can request copies of the application from a card company that opened an account for the thief in your name. You’ll have to provide proof of your identity and, if the business requests it, a copy of a police report and an identity theft affidavit. The business will have to supply this information within 20 days.

Within four business days of notifying a credit reporting agency of identity theft, the bureau must block the information that the consumer reports is fraudulent and notify the creditor reporting the information that the consumer believes it’s fraudulent. (By the way, there are safeguards built in the law so that consumers can’t use this provision to fraudulently boost their credit.)

Identity theft victims can get two free credit reports in the year, as well as have their file blocked from prescreened credit offers.

Creditors will also be required to follow certain procedures to make sure that information that has been blocked or removed, can’t be resubmitted to the credit bureau again. The goal is to keep information legitimately related to identity theft off the consumer’s report. Creditors also generally can’t sell or transfer accounts that consumers claim are due to identity theft — most importantly to collection agencies.

Debt collectors who are notified that a debt may be related to identity theft must notify the creditor from whom they received the debt that it may be fraudulent and provide information required by law.

You’ll have up to two years after you discover that you’ve been a victim of identity theft, but no longer than five years from when it occurred, to bring a lawsuit related to this law.

Additional Resources

Several websites provide additional helpful information for both preventing and dealing with identity theft:

Federal Trade Commission:
www.consumer.gov/idtheft/

Identity Theft Resource Center:
www.idtheftcenter.org

Privacy Rights Center:
www.privacyrights.org