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Identity theft and debt collection

Identity theft can ruin a credit score. After the thief steals an identity, they will use the stolen identity to make purchases on credit and then disappear. The victim is left to deal with the debt collectors and the consequences.

            Debt collectors should cease collection efforts after they receive notice that the debt results from identity theft. Click here to learn how to send that notice. Smart debt collectors stop not just because it is the right thing but also because continuing to collect such debts might violate federal law.

            Victims of identity theft rarely legally owe the debts the thief racked up. When a debt collector has been informed that the debt results from identity theft and continues to try to collect, they are attempting to collect money not owed. In legalese, they are “making a false representation of the amount of the debt.” That violates the Fair Debt Collection Practices Act (FDCPA) and the Texas Debt Collection Act.

            The FDCPA also prohibits communicating credit information which is known or should be known to be false. A debt collector cannot just stick their head in the sand and ignore a consumer telling them the debt is not owed.

            To avoid liability under the FDCPA for an error, a debt collector must show they have procedures designed to avoid that specific error. It is exceedingly difficult to convincingly argue that a debt collector has reasonable procedures to avoid an error, like collecting money not owed, when they persist in making the error after being informed of it.

            Debt collectors must operate their business in compliance with the law. When they choose not to operate lawfully, consumers have powerful tools under state and federal law to force compliance and recover damages.