The Government Accountability Office reported that in 2008 the IRS had cataloged over 50,000 incidents of identity theft related refund fraud and employment fraud. Approximately 90% of those incidents were stopped before refunds were issued, with about 15 millions fraudulent refunds being sent out.
90% sounds good, but that's only including the incidents that the IRS recognized as fraud. The IRS does not know the amount of tax refund fraud that goes undetected. In 2008, the IRS implemented new initiatives to protect consumers from fraudulent activity, including utilizing an identity theft indicator that it places on victims' accounts so IRS personnel can more readily recognize the victim if future problems occur. They have also decentralized the fraud assistance process, making the area of the IRS that discovers the problem responsible for getting it corrected.
The IRS claims it is hampered in its efforts because of privacy concerns, which limits its ability to coordinate with other agencies.
The report from the GAO does not include the IRS' role in other instances of identity theft. For instance, I am currently represnting an identity theft victim whose identity thief obtained student loans using my client's name and SSN. When the student loan was not paid by the identity thief (or my client who had no idea there even was a student loan in his name), Sallie Mae, the servicer of the loan, assigned it to a collection agency for collection. My client was contacted and he repeatedly disputed the fraudulent student loan with Sallie Mae, the collection agency and the CRAs. Despite his disputes, Sallie Mae caused the IRS to seize my client's legitimate tax refund (approximately $3100). After disputed this some more, the IRS wrote him and told him the hold on future refunds was lifted, but it did not pay him the $3100 it had already seized. Then, the next year, the IRS again seized my client's tax refund and then, after the seizure, wrote another letter that the hold had been lifted.
I doubt the GAO's survey includes this particular type of fraud being committed on the IRS, fraud by Sallie Mae and its collection agencies. But something needs to be done about that to protect future consumers.
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Showing posts with label Sallie Mae. Show all posts
Showing posts with label Sallie Mae. Show all posts
October 13, 2009
August 20, 2009
New FCRA case - Josey v. Sallie Mae, Inc.
A new case came out of the United States District Court for the Southern District of New York (which I am happy to say I have had a case or two in) on August 17, 2009. The case is styled Yolanda Josey v. Sallie Mae, Inc. and U.S. Dept of Education. The case is yet another attempt by a pro se plaintiff that fails miserably. When will people learn not to try to represent themselves.
Josey believed that Sallie Mae imposed an improper interest rate under the Higher Education Act, failed to properly credit Josey's account for payments she has made, falsely and inaccurately reported the loan balance to the big 3 credit bureaus, and violated her rights under the Debt Collection Improvement Act of 1996, her constitutional Due Process rights, right to notice of debtor's rights, and congressionally mandated consumer protections notice of student loan borrowers rights to different payment options and exemptions. I will focus only on the attempt at alleging an FCRA claim but, suffice it say, all the claims failed thanks in part to the lack of legal training of the plaintiff.
Josey would have been well served had she carefully read 15 U.S.C. 1681s-2(b), which requires notice of a dispute to a consumer reporting agency that is then relayed to the furnisher before any duty of the furnisher is triggered under the FCRA.
The Court found that "Josey, however, lacks standing under § 1681s-2(b) because she did not plead in her complaint (or even in her opposition to the instant motion) that Sallie Mae received notification from a consumer reporting agency regarding the accuracy of information furnished by Sallie Mae, as required under the FCRA. See, e.g., Ostrander v. Unifund Corp., 2008 WL 850329 at *3-4 (“[T]he court finds that plaintiff has failed to allege facts to state a plausible claim for relief under FCRA § 1681s-2(b)” because plaintiff did not plead that defendant data furnisher “received notice of the disputed information from a consumer reporting agency.”); Prakash v. Homecomings Fin., 2006 WL 2570900 at *3, 4-5 (“[P]laintiff lacks standing to bring his claims under the Fair Credit Reporting Act” where “nowhere in the complaint or opposition to the instant motion does plaintiff allege that defendant [data furnisher] received notice of the dispute from a credit reporting agency.”).
Furthermore, although Josey alleges that she “sent several notices” and “made phone calls” to Sallie Mae demanding it provide “several copies of documents including the original promissory note, terms and conditions of agreement, payment history and invoices” ... such actions, even if interpreted to constitute receipt of notice of disputed credit information by Sallie Mae, do not establish standing under the FCRA. In order to establish a private right of action under § 1681s-2(b), Josey must allege, which she has not, that a consumer reporting agency notified Sallie Mae."
Josey never disputed the error directly to the credit bureau or, if she had taken this step, she failed to allege that she had taken this step. All it took was an allegation that she had disputed the alleged error to one or more of the credit bureaus (who then would have relayed the dispute to Sallie Mae) to trigger Sallie Mae's duty to perform a reasonable investigation of the dispute pursuant to 15 U.S.C. 1681s-2(b).
Once again, this bad result could have been avoided by some competent representation by an attorney. People, please, if you need representation, send me an e-mail. If you have a decent case, either I will take it or refer you to a consumer attorney in your state who can represent you. I pretty much know a good consumer lawyer in every state, even Hawaii (but not Alaska, at least not yet).
Josey believed that Sallie Mae imposed an improper interest rate under the Higher Education Act, failed to properly credit Josey's account for payments she has made, falsely and inaccurately reported the loan balance to the big 3 credit bureaus, and violated her rights under the Debt Collection Improvement Act of 1996, her constitutional Due Process rights, right to notice of debtor's rights, and congressionally mandated consumer protections notice of student loan borrowers rights to different payment options and exemptions. I will focus only on the attempt at alleging an FCRA claim but, suffice it say, all the claims failed thanks in part to the lack of legal training of the plaintiff.
Josey would have been well served had she carefully read 15 U.S.C. 1681s-2(b), which requires notice of a dispute to a consumer reporting agency that is then relayed to the furnisher before any duty of the furnisher is triggered under the FCRA.
The Court found that "Josey, however, lacks standing under § 1681s-2(b) because she did not plead in her complaint (or even in her opposition to the instant motion) that Sallie Mae received notification from a consumer reporting agency regarding the accuracy of information furnished by Sallie Mae, as required under the FCRA. See, e.g., Ostrander v. Unifund Corp., 2008 WL 850329 at *3-4 (“[T]he court finds that plaintiff has failed to allege facts to state a plausible claim for relief under FCRA § 1681s-2(b)” because plaintiff did not plead that defendant data furnisher “received notice of the disputed information from a consumer reporting agency.”); Prakash v. Homecomings Fin., 2006 WL 2570900 at *3, 4-5 (“[P]laintiff lacks standing to bring his claims under the Fair Credit Reporting Act” where “nowhere in the complaint or opposition to the instant motion does plaintiff allege that defendant [data furnisher] received notice of the dispute from a credit reporting agency.”).
Furthermore, although Josey alleges that she “sent several notices” and “made phone calls” to Sallie Mae demanding it provide “several copies of documents including the original promissory note, terms and conditions of agreement, payment history and invoices” ... such actions, even if interpreted to constitute receipt of notice of disputed credit information by Sallie Mae, do not establish standing under the FCRA. In order to establish a private right of action under § 1681s-2(b), Josey must allege, which she has not, that a consumer reporting agency notified Sallie Mae."
Josey never disputed the error directly to the credit bureau or, if she had taken this step, she failed to allege that she had taken this step. All it took was an allegation that she had disputed the alleged error to one or more of the credit bureaus (who then would have relayed the dispute to Sallie Mae) to trigger Sallie Mae's duty to perform a reasonable investigation of the dispute pursuant to 15 U.S.C. 1681s-2(b).
Once again, this bad result could have been avoided by some competent representation by an attorney. People, please, if you need representation, send me an e-mail. If you have a decent case, either I will take it or refer you to a consumer attorney in your state who can represent you. I pretty much know a good consumer lawyer in every state, even Hawaii (but not Alaska, at least not yet).
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