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Saturday, July 11, 2009

15 U.S.C. 1681c-2

Today, I start explaining 15 U.S.C. 1681c-2 of the Fair Credit Reporting Act.

"15 U.S.C. 1681c-2. Block of information resulting from identity theft.

(a) Block. Except as otherwise provided in this section, a consumer reporting agency shall block the reporting of any information in the file of a consumer that the consumer identifies as information that resulted from an alleged identity theft, not later than 4 business days after the date of receipt by such agency of --

(1) appropriate proof of the identity of the consumer;

(2) a copy of an identity theft report;

(3) the identification of such information by the consumer; and

(4) a statement by the consumer that the information is not information relating to any transaction by the consumer."

[This section was added in the most recent amendments to the FCRA and, upon first glance, seems to solve the identity theft problem as it relates to credit reporting. Unfortunately, nothing is that easy when dealing with the credit bureaus. I have had clients do the above but still not have the identity theft fraud accounts removed from their credit report. And many consumers do not know about this option, as it is not well advertised by the credit bureaus. And many consumers can not get a police report about the theft of their identity for whatever reason (i.e. because the crime occurred in a far away jurisdiction that requires police reports to be made in person) and do not know that police reports are just one kind of identity theft report. Identity theft reports can also be made via the postal inspector.

In theory, however, it should only take proof from the consumer as to his or her identity, an identity theft report, the consumer indicating which information on his or her credit report resulted from identity theft and a statement that the informaiton is not related to any transaction by the consumer.]

"(b) Notification. A consumer reporting agency shall promptly notify the furnisher of information identified by the consumer under subsection (a) --

(1) that the information may be a result of identity theft;

(2) that an identity theft report has been filed;

(3) that a block has been requested under this section; and

(4) of the effective dates of the block."

[This is what the CRA must do once the consumer provides the information in subsection (a), i.e. the CRA must tell the company that furnished the fraud information that the information may be a result of identity theft, that an identity theft report has been filed, that the consumer has requested that the identity theft information be blocked, and provide the effective dates of the block. What I do not understand is why there would be "effective dates" if it is fraudulent. It should simply come off the report forever.]

"(c) Authority to Decline or Rescind

(1) In general. A consumer reporting agency may decline to block, or may rescind any block, or information relating to a consumer under this section, if the consumer reporting agency reasonably determines that --

(A) the information was blocked in error or a block was requested by the consumer in error;

(B) the information was blocked, or a block was requested by the consumer, on the basis of a material misrepresentation of fact by the consumer relevant to the request to block; or

(C) the consumer obtained possession of goods, services, or money as a result of the blocked transaction or transactions."

[This section allows the CRA to refuse or remove a block on information if it was either requested or done in error (i.e. the CRA blocked the wrong thing), or if the consumer made a material misrepresentation to get the block (i.e. claiming identity theft when no such fraud occurred) or if the consumer obtained goods, services or money as a result of the blocked transactions (i.e. the consumer benefited by the alleged identity theft).]

(2) Notification to consumer. If a block of information is declined or rescinded under this subsection, the affected consumer shall be notified promptly, in the same manner as consumers are notified of the reinsertion of information under section 611(a)(5)(B).

[This section just means that the CRA must tell the consumer if the block is removed or denied.]

"(3) Significance of block. For purposes of this subsection, if a consumer reporting agency rescinds a block, the presence of information in the file of a consumer prior to the blocking of such information is not evidence of whether the consumer knew or should have known that the consumer obtained possession of any goods, services, or money as a result of the block."

[This just means that the consumer is not charged with knowledge that he or she obtained possession of any goods, services or money just because the block was rescinded.]

I will complete my explanation of 15 U.S.C. 1681c-2 in part 2.

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