The Governor of California has signed a debt collection bill into law that will adjust how collectors address situations where an individual claims a debt is fraudulent as a result of identity theft. There was no effective date written into the statute, which means the law is likely going to take effect on January 1, 2022.
Debt collectors will be required to cease collection activity if an individual submits either a copy of a police report or an identity theft report from the Federal Trade Commission, as well as a written statement from the debtor. Previously, collectors were only allowed to cease collection activity when a copy of a police report was filed.
AB430 was introduced earlier this year by Assemblymember Tim Grayson, a Democrat. His intention was to enact a “common sense measure that balances the sensitive needs of identity theft victims” by allowing them to submit the FTC’s report in lieu of a police report, Grayson said in a tweet that he published when the legislature passed his bill earlier this month.
Along with ceasing collection activity upon receipt of an FTC’s report, the bill also makes changes to the requirements when an individual has been sued for a debt that may have been incurred as a result of identity theft, and provides consumers with recourse when seeking to recover damages or attorney’s fees in situations where their identities have been stolen.
Under the new law, the definition of “victim of identity theft” has also been changed to include individuals who submit FTC identity theft reports. FTC identity theft reports must be submitted when initiating an action or filing a cross-complaint, and individuals do not have to file a police report or investigative report from the Department of Motor Vehicles if the FTC report has been submitted.
