California Passes Bill Aimed at Protecting Identity Theft Victims from Debt Collectors

California Governor Gray Davis recently signed a bill giving consumers protection from debt collectors in the event of identity theft. Assembly Bill 1294 was introduced by Assemblywoman Patricia Wiggins, herself a victim of indentity theft.

The bill requires collection agencies to suspend action when a debtor can show he or she was the victim of identity theft. Under the bill, agencies could resume collection efforts to recover unpaid bills only when it is clear identity theft was not involved. The bill would also require debt collectors to notify consumer credit reporting agencies and creditors of specified information.

Recogizing the opportunity for both collector and consumer abuse, the California legislature created two misdemeanor charges associated with the new law. It will be a misdemeanor for a debt collector to continue collecting on an account once proper notification has been given by the victim of identity theft. Proper notifcation is defined as a copy of the filed police documents reporting the crime, a statement signed by the debtor asserting the debt is not theirs, and a Federal Trade Commission’s Affidavit of Identity Theft. The bill also creates a misdemeanor charge for the consumer should their claims of identity theft turn out to be false.