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Identity Theft Not As Bad As You Think

Identity Theft Not As Bad As You Think

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Identity Theft Not As Bad As You Think

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  1. Identity TheftNot As Bad As You Think Ron Gore

  2. Major Topics • Credit Reporting and Identity Theft Laws • Texas • Federal • What to do if you are an identity theft victim • How to prevent identity theft • Identity theft services

  3. Identity Theft and Credit Reporting LawTexas Statutes • Credit file security freeze • ID theft prohibition • Security breach warning • Court order declaring a victim of ID theft

  4. Security FreezeCredit File Security Freeze • A consumer may request a CRA to prevent access to credit file by credit grantors • Must include proper ID and a valid police report

  5. Security FreezeCRA Responsibilities • The CRA must tell you how to • Place a freeze, • Remove a freeze, • temporarily lift a freeze • allow access for a specific requester or period • The CRA must send written confirmation and a PIN within 10 business days of the request • The CRA may charge an $8 fee, with a yearly CPI adjustment (covers all functions of the freeze)

  6. Security FreezeCRA Responsibilities • Users trying to access your report receive a notice of security freeze • CRAs must notify consumers in writing within 30 days of any material change to the • name • date of birth • social security number or • address

  7. Security FreezeRemoval and Lifting • CRAs have 3 business days to remove the freeze after a request with proper ID and PIN • Upon request, CRAs must temporarily lift the freeze for • a designated period, or • a designated user

  8. Security FreezeFreeze Exceptions—Government Uses • a state or local governmental entity • a child support agency • the Texas Health and Human Services Commission • the Texas comptroller investigating delinquent sales or franchise taxes • a tax assessor-collector collecting delinquent ad valorem taxes

  9. Security FreezeFreeze Exceptions—User Purposes • prescreening purposes • account review • a check service or fraud prevention service • a deposit account information service • a CRA that only resells information

  10. Security FreezeFreeze Exceptions—Consumer Uses • the administrator of a credit file monitoring subscription • a user to provide the report to the consumer at the consumer’s request

  11. Texas Law ProhibitionIdentity Theft Prohibition Illegal to • obtain, possess, transfer, or use • personal identifying information of another • without consent • and with the intent to obtain a good, service, or anything of value

  12. Security BreachesSecurity Breach Notice • Businesses that own or license data with sensitive personal information • must disclose any breach of system security • to any Texas resident whose information was or is reasonably believed to have been • acquired by an unauthorized person

  13. Court OrderIdentity Theft Victim Order The court must enter the order, including • any known information about the violator • the specific identifying information and any related document used to commit the theft • identification of financial accounts affected by the violation, including • the name of the financial institution • any relevant account numbers • the dollar amount of the account • the date of the violation

  14. Court OrderReleasing the Order • The order is sealed, but may be released for a civil case brought by or against the victim • The order may be released to the victim to • prove that a transaction resulted from ID theft • to correct any record that contains false information as a result of the theft

  15. Federal LawCRA Access Compliance • CRAs must maintain reasonable policies to limit access to consumer reports to permissible purposes • CRAs must require prospective users to • identify themselves • certify the purposes for which they want reports • certify that the reports will be used for no other purpose

  16. Federal LawChoicePoint • The ChoicePoint breach involved 163,000 consumers’ records • ChoicePoint agreed to pay a $10 million civil penalty and $5 million in consumer redress • At least 800 cases of ID theft resulted from the breach • ChoicePoint provided consumer reports to users who posed as legitimate businesses

  17. Federal LawCredit File Alerts Several credit file alerts were required by FACTA in an attempt to prevent ID theft • Initial alerts • Extended alerts • Military duty alerts

  18. Federal Law—Fraud AlertsInitial Fraud Alerts • Initial fraud alert is placed the consumer’s file and provided with all credit reports for 90 days • You must have in good faith a suspicion of identity theft

  19. Federal Law—Fraud AlertsExtended Fraud Alerts If you submit appropriate ID and an ID theft report the CRA must • include a fraud alert in your credit file for seven years from date of the request • exclude you from prescreening lists provided for firm offers of credit for five years

  20. Federal Law—Fraud AlertsActive Duty Alert Similar to the other alerts, it warns that consumer is on active duty • included in the credit file for 1 year • Excludes consumer from prescreening for 2 years

  21. Federal Law—Fraud AlertsAlert Referral Responsibilities • Nationwide CRAs must refer all alerts to other nationwide CRAs • Receiving CRA must follow the same procedures as the original CRA

  22. Federal Law—Fraud AlertsNo Credit without Contacting Consumer Initial and active duty alerts must notify users that the consumer does not authorize • new credit or extension of credit, other than a credit card charge • issuing an additional card on an existing account or • any increase in credit limit on an existing account

  23. Federal Law—Fraud AlertsReasonable Steps to Verify Consumer’s ID If the consumer requesting the alert specifies a telephone number to be used for ID verification, the user shall, before granting credit • contact the consumer at that telephone number or • take reasonable steps to verify the consumer’s ID and confirm that the application is not the result of ID theft

  24. Federal Law—Fraud AlertsInitial vs. extended alert • Extended alerts shall include • the same information as initial or military alerts plus • the consumer’s telephone number or other reasonable contact method • Extended alerts 7 years; initial alerts 90 days • You must include an ID theft police report for an extended alert

  25. Federal Law—Blocking Fraudulent InformationBlock of ID Theft Accounts Under FACTA, ID theft victims now have a separate process for resolving disputes—blocking ID theft-related accounts • circumvents the traditional dispute/response process • essentially reverses the credit bureau’s normal presumption that the creditor is correct • a much quicker and certain solution for clearing information resulting from ID theft

  26. Federal Law—Blocking Fraudulent Information Block Requirements A CRA must block information that the consumer identifies as resulting from ID theft not later than 4 days after the CRA receives: • appropriate proof of consumer’s ID • a copy of an ID theft report • identification of the information to be blocked and • the consumer’s statement that the information does not relate to a transaction by the consumer

  27. Federal Law—Blocking Fraudulent Information Notice of Block to Furnisher Upon blocking information due to a consumer request, the CRA must notify the furnisher • that information may be due to ID theft • that an ID theft report has been filed • that the consumer has requested a block • of the dates of the block

  28. Federal LawFurnisher duties on notice of ID theft • Furnishers must have reasonable procedures to prevent refurnishing information • If the consumer provide an ID theft report to a furnisher stating that information resulted from ID theft, the furnisher may not send it to any CRA unless • the furnisher subsequently knows or is informed by the consumer that the information is correct

  29. Federal Law Furnisher duties on notice of ID theft • A furnisher who receives a notice of block may not sell, transfer, or place the account for collection • The prohibition also applies to any collector attempting to collect the debt

  30. Federal LawDealing with collectors • A debt collector who is notified that a debt may be the result of ID theft must notify the creditor that referred the debt • If the ID theft victim requests, the debt collector must provide the consumer with all information that the consumer would be entitled if the consumer simply wished to dispute the debt with the debt collector

  31. Federal Law—Blocking Fraudulent Information Declining or Rescinding a Block A CRA may decline a block, if it reasonably determines that • the block or request was in error • the block or request was based on the consumer’s material misrepresentation of fact, or • the consumer obtained goods, services, or money as a result of the transaction

  32. Federal Law—Blocking Fraudulent Information Nationwide CRA Referrals Nationwide CRAs must refer to other nationwide CRAs all consumer complaints alleging ID theft, all requests for fraud alerts and all blocks

  33. Federal LawRecent Guidelines Issued The FTC has recently announced, to become effective November 1, 2008: • Regulations for credit card issuers receiving a request for an additional card within 30 days after receiving a notice of change of address • Regulations governing notices of address discrepancy • Red flag guidelines and regulations for lenders regarding ID theft

  34. Federal LawAddress Change Requests If the card issuer issues a new, additional or replacement credit card within 30 days of receiving a notice of change of address, it must • notify the cardholder at his former address, • notifying the cardholder of the request by other means previously agreed or • use other means to assess the validity of the address change request

  35. Federal Law--CRA ResponsibilitiesNotice of address discrepancy • If the request for a consumer report includes a consumer address that is different from the address in the consumer’s credit file, and the CRA returns a file to the user, the CRA must notify the user of the discrepancy • Recent regulations require users to develop reasonable policies for responding to address discrepancy flags

  36. Identity Theft and Credit Reporting LawRed Flag Guidelines Require creditors who maintain accounts subject to the risk of identity theft to have an Identity Theft Prevention Program that will • detect • prevent, and • mitigate identity theft

  37. If you are an ID theft victimTop ten steps to take • Request an initial fraud alert • Obtain and review your credit report • File a police report • Request an extended fraud alert • Request a security freeze • Close any of your own affected accounts • Notify the CRAs of inaccuracies • Notify creditors who opened fraudulent accounts • Monitor your credit file regularly • Consider obtaining an ID theft victim order

  38. If you are an ID theft victimRequest an initial fraud alert • Request an initial fraud alert on the web or by phone from one of the nationwide CRA’s • Include a phone number for future creditors to call you before opening accounts • Alert will remain on file for 90 days • Will be referred to other nationwide CRAs

  39. If you are an ID theft victimObtain Your Credit Report for Free • You were denied credit • You are unemployed and intend to apply for employment within 60 days • You are a recipient of public welfare assistance • You have reason to believe that your credit report is inaccurate due to fraud • You request a fraud alert • You dispute information on your credit report and it is changed as a result • Free FACTA credit disclosure

  40. If you are an ID theft victimFACTA Free Annual Credit Report • https://www.annualcreditreport.com/cra/index.jsp • annualcreditreport.com will do • Other sites offering “free” credit reports almost always require another purchase • You may obtain one every 12 months (not “calendar year”) from each of the 3 nationwide bureaus under this site • You need not get all 3 at the same time

  41. If you are an ID theft victimCheck your credit report • Identifying information • Public records • Accounts • Inquiries

  42. If you are an ID theft victimFile a police report • Local police is best • Go to the FTC website and file an on-line ID theft report • Put all unknown accounts and inquiries from credit report on police report • Amend the police report if new instances of fraud occur • Get a copy of police report when filed and when amended

  43. If you are an ID theft victimRequest an extended fraud alert • In a written request, include a copy of police report and ID required by the CRA • Include a phone number for future creditors to call you before opening accounts • Alert will remain on file for 7 years • Exclusion from prescreening • Will be referred to other nationwide CRAs

  44. If you are an ID theft victimRequest a security freeze • Remember to send valid Identification and a copy of your police report • Receive a PIN and use it to unlock and refreeze • CRA should notify of any change to ID information • Remember exceptions to the freeze

  45. If you are an ID theft victimClose any of your affected accounts • Notify your current creditors of any accounts affected by identity theft • Have your creditors close the affected accounts • Include a copy of the police report

  46. If you are an ID theft victimNotify the CRA of inaccuracies • Send the CRA a copy of your police report along with a copy of your credit file with fraudulent accounts identified • Remember that this should circumvent the standard dispute process where CRA “verifies” accounts with the creditor reporting them • Be patient—you may need to do this a second or third time • Send to attention of president or general counsel

  47. If you are an ID theft victimNotify creditors of fraudulent accounts • Send creditors who have opened fraudulent accounts a copy of your police reports and state that you did not open the account • Request them to alter their records and to remove reports from credit bureaus • Call to follow up a few days after sending notice

  48. If you are an ID theft victimContinue to monitor your credit file • New fraudulent accounts may appear • Watch for public records and new inquiries • Check before applying for credit

  49. If you are an ID theft victimConsider an ID theft victim order Consider obtaining an order that you are the victim of identity theft if your situation involves: • Multiple fraudulent accounts • Collection lawsuits against you • Multiple victim episodes

  50. To prevent ID theftMonitor your credit report regularly • Protect your personal information • Stagger requests for free FACTA disclosure • If any report looks suspicious, use free requests to get other bureau’s reports • Place an initial fraud alert if anything unusual or suspicious shows up • Continue to dispute inaccurate information with CRAs