The bill reduces the time frame for debt collection companies to investigate identity theft disputes.
The California Assembly unanimously passed the Identity Theft Resolution Act Monday. The bill, which the California Association of Collectors supported, outlines how consumers must dispute a debt thought to be the result of identity theft and next steps for debt collection companies.
According to the California Assembly’s Legislative Counsel’s Digest, “Existing law requires a debt collector that receives a copy of a police report filed by the debtor alleging that the debtor is the victim of an identity theft crime and a written statement in which the debtor claims to be the victim of identity theft to cease collection activities until completion of a review.” The Identity Theft Resolution Act lists the specific information consumers must include in that written statement to the debt collection company in order to stop collections on a debt that’s not owed due to identity theft.
Once the debt collection company receives this information, it will have 10 business days to start an investigation of the dispute. If the company provided information about the debt to a credit reporting agency, it must let the CRA know the account is disputed. After concluding its review, the debt collection company must then send the results of its investigation to the consumer within 10 business days.
“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 bill states.
The Act also forbids creditors from selling consumer debt to a third-party debt collector if the consumer is a victim of identity theft.
“Millions of Californians have fallen victim to identity theft, myself included,” said State Assemblymember Bill Dodd, who sponsored the bill, in a prepared statement to the press. “It’s an issue that transcends partisan politics, and that’s why my colleagues in the legislature voiced their unanimous support for this bill. Victims of identity theft deserve a transparent and speedy resolution process.”
The bill had previously passed the Assembly in a 74-0 vote, before being amended by the Senate, in May, ACA previously reported. Now that the version of the bill including Senate amendments has passed the Assembly, Gov. Jerry Brown is expected to sign it into law.
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