A new law sponsored by State Senator Charles J. Fuschillo, Jr., will stop debt collectors from trying to collect debt from consumers who are victims of identity theft, if the debt is a result of the victim’s stolen identity.
Senator Fuschillo (8th District), Chairman of the Senate Consumer Protection Committee, said, " This new law will protect identity theft victims from being harassed by debt collectors into paying debt that they know nothing about."
The new law (S. 7297) requires a debt collector to stop collecting if a consumer provides the collector with a copy of a valid police report alleging he or she is a victim of identity theft. In addition, the victim would need to provide a written statement that the specific debt being collected by the debt collector is a result of the identity theft.
The law allows the collector to recommence debt collection activity only after reviewing and considering all the information available about the suspected identity theft and making a good faith determination that the information does not establish that the debtor is responsible for the debt. The collector must notify the debtor of the determination in writing prior to recommencing the collection activity.
A collector who ceases collection activity, and who does not recommence that activity must delete any adverse information submitted to a consumer credit agency and notify the creditor that debt collection activities have been terminated due to identity theft.
Under the new law, the state Attorney General may seek civil penalties of between $500 and $1,000 from debt collectors for each violation.
The new law is supported by the New York State Collectors Association which, in a memo in support of the legislation, stated, "this bill strikes a balance between the interests of business and the consumer and is in the best interest of both."
The law (S. 7297) goes into effect on September 1st.
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