I. BLOCKING OF INFORMATION
Effective December 1, 2004, § 152 of the FACT Act provides that consumer reporting agencies are to block further reports of information to users (e.g., financial institutions) of such reports that are the result of identity theft contained in a consumer’s credit file. Once the consumer reporting agency receives a copy of an Identity Theft Report, proof of identity of the consumer and a statement by the consumer that the information is not information relating to any transaction by the consumer, the information must be blocked within four business days. The consumer reporting agency is to promptly notify the furnisher of the information that: the information may be the result of identity theft, that an Identity Theft Report has been filed, that a block has been requested under § 152 of the FACT Act and of the effective dates of the block.
A consumer reporting agency may either decline or rescind a block of information if it reasonably determines that the information was blocked in error or requested by the consumer in error, there was material misrepresentation of fact by the consumer regarding the request to block or the consumer obtained possession of goods, services or money as a result of the blocked transactions(s). The declination or rescission of a block requires that the consumer be promptly notified in the same manner as reinsertion of information under existing error resolution procedures.
Should a financial institution be notified that a block has been placed on a consumer’s information, then the repollution procedures outlined below would be applicable.
II. PREVENTION OF REPOLLUTION
Also effective December 1, 2004, is § 154(a) of the FACT Act, which requires that if a financial institution is notified by a consumer reporting agency that information previously furnished the consumer reporting agency is the result of identity theft, the bank shall have procedures to prevent the refurnishing (i.e., repollution) of the information to the consumer reporting agency that is found to be inaccurate, incomplete or unverifiable after reinvestigation of the information.
A financial institution may not furnish credit information to a consumer reporting agency once the institution receives an Identity Theft Report from a customer that indicates that such credit information is the result of identity theft. Should the information is found to be correct at a later date, such information may be reported to the consumer reporting agency.
III. SALE, TRANSFER OR COLLECTION OF DEBT PROHIBITED
Section 154(b) of the FACT Act also prohibits a financial institution from the sale, transfer or collection of a debt in which the financial institution has been notified to be the result of identity theft.
IV. CONCLUSION
In order to prevent repollution of credit reports and to prevent the sale, transfer or collection of a debt that have resulted from identity theft, financial institutions must develop procedures to ensure that once information about an identity theft claim of a customer is received from a consumer reporting agency or is the result of an Identity Theft Report received from a customer directly, the bank may investigate or confirm the identity theft assertion, verify the customer’s identity claiming identity theft, prevent the reporting or re-reporting of credit information resulting from identity theft and ensure that a debt result from identity theft is not sent for collection or transferred to another entity.