Fact Sheet 116
Collection Agencies and Identity Theft

How to Effectively Clear Identity Theft Accounts from Collection Agency Records   

This fact sheet is broken into five sections:

• General advice about corresponding with creditors and collection agencies
• A step-by-step guide to stopping and correcting the collection process 
• Possible solutions for “worse-case scenarios”
• Resource numbers and websites

For Your Debt Collection Rights, please read Fact Sheet 116A.
For Letter Forms, please refer to Letter Form 116

Many victims first find out about a case of identity theft when a credit issuer or a collection agency contacts them to collect money. It is distressing to receive a call or letter from a collection agency when the debt was created by an identity theft criminal. Further, many people become fearful that their financial reputation will be ruined for a long time. Fortunately, collection agencies are regulated by a number of laws.They do not want to affect the wrong person’s credit or attempt to collect from someone who does not owe a valid debt.

In cases of identity theft, the consumer, creditor and collection agencies are all victims of the crime. Creditors and collection agencies are not going to get paid by a victim of identity theft. Unfortunately, there are individuals who claim identity theft but in reality are trying to avoid paying a bill they actually did incur. This makes it even harder for collection agencies, creditors and the true victims of identity theft.
 

Even though, the federal and state laws that guide collection agencies have been updated considerably, proper education on the behalf of consumers and creditors continues to be an important factor clearing your name.  For now, giving the creditor and collection agency sufficient information to prove the claim of identity theft is the key to getting the matter resolved.

General advice – please refer to Fact Sheet 106 for more detail

1. Always keep a detailed log of all communication with the creditor or collection agency, both written and by phone.
    
2. Send the proper documentation supporting your Identity Theft case (Police report, FTC Affidavit of Identity Theft, etc.).   Ask for a written statement confirming any agreements or decisions told to you either in person or by phone.   If the creditor or collection agency refuses, send them a “Conversation Confirmation.” This is a letter outlining with whom you spoke, the date/time and a summary of the conversation.   You should include the following line: “Unless a written statement is sent from your company by (a date about 20 days from day of conversation) disagreeing with my representation of the conversion, I will proceed in reliance on our verbal understanding.”
    
3. Send your correspondence to a collection agency, creditor or business by certified, return receipt requested mail.   Keep a copy of all correspondence for your records.
    
4. Maintain a professional demeanor when speaking with a creditor or collection agency.   Losing your temper is counterproductive and frequently causes people to stop listening.
    
5. If the creditor or collection agency has a routine procedure to handle identity theft cases, it is much easier to efficiently process your request.  When possible, speak with a fraud investigator or supervisor at the creditor or collection agency.
    
6. Do not tell the collection representative that you “dispute the account.” When a collection agency hears the word “dispute,” you become someone who is arguing the price requested by the creditor, the quality of the services rendered, the quality of the product, or making an excuse for not paying the bill.   Instead, clearly state this is a case of identity theft and why this is true.   For example: you either never opened the account, the charges on the account or accounts were not authorized, or other factual statements showing the identity theft.
    
7. As with the credit industry, once you claim this is not your account, you may be considered a third party and not privy to certain information.   The collection industry continues to develop identity theft protocol.   Please check this sheet for revisions which will reflect new policies as they are created.

Preliminary steps to stopping and correcting the collection process

1. A collection agency must send you written notice of a collection within 5 business days of first contacting you by phone.   You should respond within 30 days.
   
   If you didn’t get the name and number of the contact person during the first call, you may wish to reconnect with the agency now.   Let them know this is a case of identity theft and request the following:
   • Name, address, email address, phone and fax numbers of the agency and your contact there who will be working with you
   • Name, address and phone number of the referring credit issuer or merchant, preferably the fraud division
   • Account number as recorded by the referring credit issuer or merchant
   • The amount of the debt
   • The dates of charges, the date the account was first opened, any transaction or application information the collection agency may have
   • Their affiliation with the referring credit issuer or merchant - For example, are they a collection agency assigned the debt, the law firm that represents the creditor, or are they the finance or collection department of the creditor?
   • The steps you must take and the information needed by the creditor or collection agency to support your claim of identity theft so the this account can be marked as “fraudulent”
2. If this person is unable to answer any of the above questions, politely thank them for his/her time and ask for a supervisor or fraud specialist.Remember, this is not the time to vent your frustration.You need someone to help you.
    
3. Contact the three Credit Report Agencies listed in Section D. Request copies of your report and place a fraud alert with each one.  As a victim of fraud, there is not a charge for these reports. We do not recommend requesting this initial report over the Internet.  You will get a more comprehensive report by calling. ( see ITRC/Debix message ) 
    
4. Once you receive your reports, go over them carefully. Look for any inaccuracies in the heading (name, address, date of birth, Social Security number), any accounts you may not have opened, and any applications currently pending that you did not initiate.
    
5. Contact the police or sheriff where you live. Report you are a victim of identity theft.   Request police report of an identity theft crime. An investigation number is not sufficient. Keep the original and make copies to send along with your fraud affidavits.
    
6. If you are dealing with a collection agency, also contact the creditor or merchant who claims you owe the debt, preferably the fraud department, not customer service.   Tell them this is a case of identity theft and request copies of the application and transaction information for the account. Find out the steps and all forms they require to remove this account from your name and Social Security number (SSN).   Remember: this is not a “disputed account,” it is a case of identity theft.
    
7. Contact the fraud department of any additional credit issuer, merchant, or financial institution that has reported an account you did not open. Follow the information given in Fact Sheet 100 .
    
8. Follow phone conversations with letters or affidavits of fraud to each collection agency, credit issuer and merchant with whom you spoke.  Also send a list of accounts that are associated with the identity theft case to the credit reporting agencies.
    
9. Request a written confirmation that you do not owe the debt and:
   • That the account has been closed as fraudulent (by the creditor)
   • Your name and SSN has been removed from the account records
   • All three credit reporting agencies will be instructed to delete the fraudulent record.   
   • Keep this letter along with all other correspondence on this case in your files for at least 10 years.    
10. Check your credit reports again in about two months, allowing time to process the changes. It is also a good idea to check your credit report prior to making any major purchases on credit. Continue to monitor your reports periodically for the next five years to make sure that this account has not reappeared because it was sold or reopened for collection.

Note:   The Fair Credit Reporting Act prohibits companies from sending collection reports to the Credit Reporting Agencies when an account is "challenged" unless it is reported as disputed. Sec 623 (15 USC 1681s-2). It also imposes responsibilities on those who furnish information to a credit bureau. While this usually applies to a dispute, if you follow the proper protocol the collection agency still has a responsibility to clear any inaccurate information on your credit file once it has been investigated and determined to be a case of identity theft. In short, this section says that if the consumer provides the proper documentation, that the collection agency is to investigate and remove the inaccurate information from the (CRA) credit reporting agency.

FACTA states that a collection account deemed as fraudulent must be closed and marked as uncollectible unless new information indicates this may a true debt.   It may not be resold, transferred, or traded once assigned as fraudulent.

Complaints and Worse-Case Scenarios :

If you believe that a creditor or collector is breaking the law, you are unable to resolve the “claim of identity theft” with the agency, or your “closed” account has been resold to yet another collection agency, you may want to talk with the following groups:

1. The collector's manager or the agency's owner who may not be aware of the collector's actions.
    
2. The original credit issuer, as well as the new collection agency. In the case of a resold account, send the letter previously provided by the creditor showing it is a closed account. Request they immediately close the account and send you written verification of the action.
    
3. The American Collectors Association, P.O.   Box 39106, Minneapolis, MN 55439-0106, which has offered its assistance in resolving collection agency violations.   You might also want to contact the state level association that maintains programs to connect a consumer with the collection agency’s owner or manager. For example, in California, you can contact the California Association of Collectors at the Consumer Hotline number, 800 -316-2262
    
4. The Better Business Bureau in your area. They will take a complaint, can tell you about other complaints about that group, investigate and report unfair practices, and help to mediate a resolution.
    
5. The Federal Trade Commission, the federal agency with the regulatory and enforcement power over collection agencies
    
6. Your state Attorney General, especially if there has been a violation of state law.

Resources
Federal Law:   Fair Debt Collection Practices Act (15 U.S.C §§1692-1695) www4.law.cornell.edu/uscode/15/1692.html   

FTC Facts: Fair Debt Collection   http://www.ftc.gov/bcp/conline/pubs/credit/fdc.htm   

California law also includes the following: Civil Code 1785.16.2

(a)     No creditor may sell a consumer debt if the consumer’s file with the consumer reporting agency is blocked with respect to that debt pursuant to subdivision (k) of Section 1785.16 or if the consumer has provided the creditor with sufficient information in writing that the consumer is not obligated to pay the debt because he or she is a victim of identity theft, as defined in subdivision (d) of Section 1798.92 for the creditor to have reasonable ground to determine that consumer’s statement of identity theft is not frivolous.

Credit Reporting Agency contact information

• TransUnion: 800-680-7289
  TDD- 877-553-7803    
  Website: www.transunion.com
• Experian: 888-397-3742
  TDD- 800-972-0322
  Website: www.experian.com 
• Equifax: 800-525-6285
  Website: www.equifax.com
  Hearing impaired: Call 1-800-255-0056 AT&T hearing impaired line.       

Identity Theft Resource Center www.idtheftcenter.org   A nonprofit specializing in identity theft and victim assistance, 858-693-7935  

Federal Trade Commission   www.consumer.gov/idtheft or 877-IDTHEFT
California residents only: The Office of Privacy Protection (Dept. of Consumer Affairs) 866-785-9663. They also have summaries of the California Debt Collection Practices Law.

Created by ITRC and Robert Tavelli, California Collectors Association, Identity Theft Chair.
This fact sheet should not be used in lieu of legal advice.   Any requests to reproduce this material, other than by individual victims for their own use, should be directed to ITRC.