Consumer Rights Against Identity Theft

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Identity theft refers to the crime of stealing the personal information of another with the intent to gain access to their finances and credit score.   According to the Federal Trade Commission, identity theft costs consumers and businesses billions of dollars each year.  Of the 813,899 consumer credit complaints filed in 2007, approximately 258,427 (32%) were related to identity theft.

National Consumer Fraud Protection

Because of the prevalence of identity theft, over the past decade, various national consumer protection laws have been enacted.  The purpose of these national consumer protection laws is to protect consumers from identity theft and to protect the rights of those who have been the victims of identity theft.

  • Identity Theft and Assumption Deterrence Act of 1998 – This legislation makes identity theft a federal crime which carries a maximum sentence of 15 years in prison and fines of up to $250,000.  It also empowers the Secret Service, FBI, and other law enforcement agencies with the authority to combat identity theft crimes.  Under this law, the Federal Trade Commission became the central agency for investigating consumer credit complaints against creditors and credit reporting agencies.
  • Fair and Accurate Credit Transactions Act of 2003 (FACTA) – FACTA’s purpose is to help consumers fight identity theft.  FACTA contains provisions governing accuracy and privacy.  It also limits information sharing and gives consumers broader rights to disclosure.
  • Identity Theft Penalty Enhancement Act of 2004 – This law establishes the federal crime of aggravated identity theft and imposes mandatory penalties for those convicted of aggravated identity theft.   The Identity Theft Penalty Enhancement Act adds two years to prison sentences of criminals convicted of using stolen credit cards and other personal information to commit crimes.
  • Electronic Funds Transfer Act – This law provides consumer protection for transfers made with debit cards or via other electronic means.  It also limits the consumer's liability for unauthorized electronic transfers.
  • Red Flag Rules – These laws mandate that financial institutions and creditors implement measures to prevent, detect, and respond to identity theft.

Most states have enacted laws which specifically prohibit identity theft.  In those states that don't have identity theft laws, identity theft crimes are prosecuted under other applicable laws. 

Bank Consumer Protection

One of the most important sub-components of national consumer protection laws is bank consumer protection.  In recent months, there has been a national push for an agency that would oversee bank consumer protection.  Legislation has been proposed which would create a Consumer Financial Protection Agency which would be tasked with protecting consumers against abusive and unfair home loans, credit cards, and other financial products.  The proposed legislation would also impact the ability of banks to charge overdraft fees.

Credit Card Consumer Rights

On May 22, 2009, President Obama signed the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the Credit CARD Act) into law.  The Credit CARD Act prohibits previously accepted predatory practices in the credit card industry and specifically addresses credit card consumers rights.  Among other things the legislation prohibits:

  • Double cycle billing;
  • Interest rate increase during the first 12 months of opening a credit card;
  • Promotional rates which last less than 6 months; and
  • Interest rate increases on pre-existing balances.

This new credit card consumer rights law goes into effect on February 22, 2010. 

Getting Legal Help

There are a number of consumer protection associations that can assist you if you have been a victim of identity theft.  The Better Business Bureau and National Association of Consumer Advocates are consumer protection associations committed to assisting consumers who have been the victims of identity theft.

Victims of identity theft may also have a civil claim against the identity thief.  A consumer protection attorney can give you consumer law advice on the law in your state and determine whether you have a basis for suing the identity thief.

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