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Identity Theft
One of the frustrations faced by victims of identity
theft is that the creditors who have been tricked by the identity thief
attempt to collect their damages from the innocent victim of the
identity theft. For example, an identity thief may purchase equipment
and the vendor will attempt to collect the payment from the innocent
victim. Effective January 1, 2002, newly enacted California Civil Code
provisions allow a consumer who is a victim of identity theft to better
defend themselves against these claims from creditors.
Under the new law if the creditor has already brought an
action to recover on its claim against the identity theft victim, the
victim may file a cross-complaint to establish that he or she is a
victim of identity theft in connection with the claim.
The victim must establish that he or she is a victim of
identity theft. If the victim has met the burden of proof, the victim is
entitled to a judgment providing the following, as applicable: (1) a
declaration that he or she is not obligated to the creditor on the
claim; (2) a declaration that any security interest or other interest
obtained by the creditor is void and unenforceable; (3) an injunction
against collection or enforcement of the claim; (4) dismissal of the
claim (if the consumer filed a cross-complaint); and (5) if the court
deems appropriate, actual damages, attorneys’ fees, and equitable
relief.
A civil penalty of up to $30,000 may be imposed if it is
proven by clear and convincing evidence that: (1) at least 30 days
before filing of the action or the cross-complaint, the consumer
provided notice to the claimant that a situation of identity theft might
exist and explained the basis of that belief and provides a copy of a
police report where the victim has asserted he or she has been a victim
of identity theft; (2) the creditor failed to diligently investigate the
consumer's notification as a possible theft; and (3) the creditor
continued to pursue its claim against the consumer after the creditor
was presented with facts that were later held to entitle the consumer to
a judgment.
A word to the wise, if you think you have been a victim
of identity theft, file a police report as soon as possible and obtain a
copy of the report. By giving a copy of the report to a creditor, you
may be able to convince the creditor to stop its collection action and
if the creditor insists on pursuing a collection action the victim maybe
able to claim damages form the creditor. Since the creditor may be
subject to damages and attorneys’ fees the creditor is less likely to
commence a legal action if the consumer can show them a police report.
Some related identity theft legislation also affects the
use of consumer credit reporting information. Any person who uses a
consumer credit report in connection with a credit transaction, and who
discovers that the address of the credit report does not match the
address of the consumer requesting or being offered credit, must take
reasonable steps to verify the accuracy of the consumer's address. The
user of the consumer credit report must contact the consumer by
telephone, or write the consumer, to confirm that the credit transaction
is not the result of identity theft.
Also, any person who uses a consumer credit report in
connection with a credit transaction, and who receives a clearly
identifiable notification from a consumer credit reporting agency that
information in that report has been blocked as a result of identity
theft, must not lend money or extend credit without taking reasonable
steps to verify the consumer's identity and to confirm that the credit
transaction is not the result of identity theft.
The damages for the above violations in the uses of
consumer credit information include actual damages, court costs,
attorney fees, and punitive damages of not more than $30,000 for each
violation, as the court deems appropriate.
Using Social Security Numbers (SSN) in a manner where
this information will be available to the public is also restricted.
Effective July 1, 2002, a person or entity (excluding a state or local
agency) is prohibited from using an individual's SSN number in the
following ways :
- Publicly posting or publicly displaying the number in
any manner.
- Printing the number on any card required for the
individual to access products or services provided by that vendor.
- Requiring the individual to transmit his or her SSN
over the Internet unless the connection is secure or the SSN is
encrypted.
- Requiring the individual to use his or her SSN to
access an Internet website, unless a password or other unique identifier
is also required to access the website.
- Printing the number on any material that is mailed to
the individual, unless state or federal law requires the number to be on
the document to be mailed. An exception is provided for applications and
forms sent by mail.
However, if the SSN was being used in a now prohibited
way before July 1, this use can continue as long as the customers are
notified annually that they have the right to stop the use of their SSN
in the prohibited manner. A written request by an individual to stop the
use of his or her SSN in the prohibited manner must be honored within 30
days of receipt of the request. A person or entity may not deny services
to an individual because the individual made the written request.
Identity theft is a rapidly growing crime and one which
is receiving increased attention. We should expect to see additional
legislation in this area.
Caveat:
This is general information and is not intended to be legal advice to
the reader. Any person interested in understanding the effect of the new
law or its application should consult with appropriate legal counsel.
About the author: Gordon Eng is a lawyer in Torrance, CA. He is a business lawyer and his practice includes start ups, joint ventures, established companies as well as commercial real estate transactions. He can be reached at 310-527-7781.
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