A coerced debt collection bill has been introduced in the Maryland legislature that would create a new legal framework for how creditors and collectors must respond when a consumer claims a debt was incurred through identity theft or coercion. The proposal would give consumers a formal process to dispute alleged identity theft debt, require creditors to pause collection activity while an investigation is conducted, and expose creditors to damages and attorney’s fees if they fail to follow the required procedures.
At a high level, the bill would allow a consumer to send written notice to a creditor alleging that all or part of a debt resulted from identity theft. The notice must include supporting evidence such as a police report, an Federal Trade Commission identity theft report, or documentation from law enforcement or a consumer protection office. Once that notice is received, the creditor would be required to halt collection activity related to the subject debt while conducting a reasonable investigation. The investigation must be completed within 30 days, and the creditor must notify the consumer of the outcome in writing.
If the creditor determines the debt is identity theft debt, the bill would require permanent cessation of collection activity. This includes dismissing any pending litigation, terminating collection placements with third parties, and notifying consumer reporting agencies to delete or modify any reporting related to the debt. If the creditor determines the debt is not identity theft debt, it must provide the consumer with written notice explaining the conclusion and supply copies of the records that formed the basis for that determination.
The legislation also creates a private right of action. Consumers could file suit in circuit court alleging that the debt is identity theft debt or that the creditor failed to comply with the investigation and notice requirements. The bill authorizes damages, court costs, and reasonable attorney’s fees, with enhanced damages available if a creditor is found to have knowingly failed to comply. The proposal further establishes an affirmative defense for creditors if the consumer agreed to incur the debt or knowingly received the benefit of it, along with a rebuttable presumption tied to criminal identity theft findings.
If enacted, the law would take effect October 1, 2026 and would apply to any party claiming the right to collect a debt in the state.
