The United States Military Academy at West Point: 

Identity Theft and the Fair Credit Reporting Act

March 9, 2016

Adam G. SingerLaw Office of Adam G. Singer, PLLC

NYC:  60 E. 42nd Street, Suite 4600, New York, NY 10165Rockland: 254 S. Main Street, Suite 516, New City, NY 10956

Westchester: 445 Hamilton Avenue, Suite 1102, White Plains, NY 10601T: 212.842.2428F: 212.658.9682

E: asinger2@alumni.law.upenn.edu L: www.linkedin.com/in/adamgsinger

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Identity Theft

Quick Poll:1. How many

attorneys have counseled clients on ID theft?

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Quick Poll continued

2. How common do you believe the problem to be within the military?

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I. Statistics on ID Theft

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Identity Theft and Military • In 2014 the Consumer Sentinel Network received 87,400

complaints across all military branches, 48% being from the U.S. Army and 21% from the U.S. Navy: Source: FTC 2015

• Military Retirees/Veterans filed the most complaints to the

FTC, followed by Active Duty Service Members and Dependent Spouses of Services Members: Source: FTC 2015

• 27 % of complaints among Military members pertained to Identity Theft while 26 % related to Impostor Scams Source: FTC 2015

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Identity Theft and Military • Enlisted Military consumers account for 23% of Identity Theft

complaints Source: FTC 2015

• Officer Military consumers account for 27 % of Identity Theft complaints Source: FTC 2015

• The most common types of Identity Thefts reported include Government Documents/Benefits Fraud 44.7% and Credit Card Fraud 16.7% Source: FTC 2015

• Debt resulting from Identity Theft contributed towards 41% of Debt Collection Complaints Source: CFPB Report 2015

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Identity Theft and New York• Identity Theft Complaints Count from New

York Victims = 15,959 Source: FTC 2015

• NY state is ranked 17th nationally in terms of Identity Theft complaints Source: FTC 2014

• Identity Theft Types Reported include Government Documents/Benefits Fraud 31% and Credit Card Fraud 24% Source: FTC 2015

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Identity Theft and Credit Reports

• 1.4 % of victims discovered Identity Theft through credit report/credit monitoring service

• Source: Bureau of Justice Statistics, National Crime Victimization Survey, Identity Theft Supplement, 2014

• Of the 8% of identity theft victims who contacted a credit bureau, 68 % placed a fraud alert on their credit report, while 18% provided a police report to the credit bureau

• Source: Bureau of Justice Statistics, National Crime Victimization Survey, Identity Theft Supplement, 2014

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More Information About Statistics on ID Theft

• Substantially more detail is available at the original FTC and CFBP sources:

• https://www.ftc.gov/enforcement/consumer-sentinel-network/reports

• http://files.consumerfinance.gov/f/201403_cfpb_snapshot-report_complaints-received-servicemembers.pdf

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II. Identity Theft Basics

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A. How ID Theft happens

Identity thieves commit their crime in several ways:

• Steal credit card payments and other outgoing mail from private, curbside mailboxes.

• Dig through garbage cans or communal dumpsters in search of cancelled checks, credit card and bank statements, and preapproved credit card offers.

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How ID Theft happens (cont’d)

• Hack into computers that contain personal records and steal the data.

• File a change of address form in the victim’s name to divert mail and gather personal and financial data.

• Source: National Crime Prevention Council

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B. Obtaining ID Theft Documents

1. Pursuant to FCRA 609e: • Victim is entitled to copies of transaction records

related to theft of identity, such as applications for credit; and

• Victim can also authorize law enforcement to receive records directly, without need for subpoena.

• however no private cause of action for damages if violated

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Obtaining ID Theft Documents (cont’d)

2. Also, standard civil subpoena should work

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C. Preventing ID Theft

• Extensive information in written materials and online about prevention

• Note: if a client has reason to suspect ID theft, visit this FTC site for detailed information tailored to the source of the theft (bank account, credit card, driver's license, etc.):– https://www.identitytheft.gov/Info-Lost-or-Stolen

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Preventing ID Theft (cont’d)

• highlight on Active Duty Alerts for Military Personnel– if deployed, place active duty alert on your credit report– will minimize the risk of identity theft– last for one year if the point is longer than one year,

renew the alert– only need to contact one credit reporting agency which

will then notify the other two national credit reporting agencies

– removal from prescreened credit card offers for two years

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III. Detecting or Suspecting ID Theft

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A. Red Flags for ID Theft• Collection letters / calls• Filing of lawsuit against client• Notice of a judgment even where client never received

notice of a lawsuit• A notice from the IRS someone used the client's Social

Security number• Mail, e-mail, or calls about your accounts or jobs in your

minor child's name• Businesses reject your checks• Unexpectedly turned down for a loan or a job

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B. Special Note About Credit Reports

• First, determine if it is it ID theft? – Not all unknown debts on a credit report indicate ID

theft.– Start by examining the credit report

• Well, what else could it be when unknown debts appear on a credit report?– vs. mixed file?

• Are there addresses not associated with this person? – If yes, it may be a mixed file

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C. What if a Family Member is the ID Thief? A Word of Caution

• Recognize that proceeding further presents a reasonable possibility of prosecution

• Be sure client wants to proceed knowing this• If family member is estranged or very bad

blood, it can be a good case so long as client is committed to seeing the process through

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IV. If it is ID Theft . . .

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A. Triage -- First Things First

1. Call creditors to close accounts2. Fraud alert– Contact one credit bureau who then will forward

the information to the other two national bureaus – Provide proof of identity– Fraud alert remains for 90 days and permits one

free copy of your credit report from each of the three national bureaus

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Triage (cont’d)3. Credit Report Freeze• Prevents potential creditors from accessing your credit report• Thus reduces the likelihood that an identity theft can open

new accounts under that name• In some states it is free; in others there is a small fee• Does not affect your credit score• May temporarily lift the freeze to apply for specific credit• Also may permanently thaw the freeze at any time

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Triage (cont’d)

4. Documents to prepare: The Identity Theft Report

Identity theft report =(identity theft affidavit + police report)

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Triage: Police Report• Police Report -- first and most important stepNY Executive Law § 646(2)Identity theft victims may file a complaint: • “In the county in which any part of the offense took place”; • “In the county in which the person who suffered financial loss

resided”; or • “In the county where the person whose personal identifying

information was used … resided.” • Also says the police: – “shall take a police report of the matter

and provide the complainant with a copy of such report free of charge.” Unfortunately, the police often apply other standards.

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Triage: Police Report (cont’d)At the precinct:• Write down the names and titles of all the officers you speak with. • Later write down brief notes about the interaction. In case you have difficulty

getting the police report, these notes will help with filing a complaint and documenting the issue.

If unsuccessful: • Ask to see the officer’s supervisor. • Try the same precinct at a different time of

day. • Try a different precinct and ask them to write up the report • and transfer it to the appropriate precinct for filing. • •Try going to the state police. • Ask to file a Miscellaneous Incident Report

instead of a police report. A police report number is not generated for this type of report as it is merely a record of non-criminal events (Last resort).

• Source: CLARO Clinic

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Triage: ID Theft Affidavit

ID complaint /affidavit form

• Available at: https://www.consumer.ftc.gov/articles/pdf-0094-identity- theft-affidavit.pdf

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Triage: Review Credit Reports

Obtain and review credit reports– Free at

annualcreditreport.com

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V. After Triage, Is it Time to Prosecute and Sue? Criminal and Civil Liability for ID Theft

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A. New York Laws

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1. Criminal Liability

165.15 Theft of services: A person is guilty of theft of services when:

He obtains or attempts to obtain a service, or induces or attempts to induce the supplier of a rendered service to agree to payment therefore on a credit basis, by the use of a credit card or debit card which he knows to be stolen.

A MISD

165.17 Unlawful use of credit card, debit card or public benefit card: A person is guilty of unlawful use of credit card, debit card or public benefit card when in the course of obtaining or attempting to obtain property or a service, he uses or displays a credit card, debit card or public benefit card which he knows to be revoked or cancelled.

A MISD

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Other Criminal Offenses190.77• Offenses involving theft of identity; definitions. 190.78• Identity theft in the third degree.• A MISD190.79• Identity theft in the second degree.• E FELONY190.80• Identity theft in the first degree.• D FELONY190.80-a• Aggravated identity theft.• D FELONY190.81• Unlawful possession of personal identification

information in the third degree.• A MISD

190.82Unlawful possession of personal identification information in the second degree.E FELONY190.83Unlawful possession of personal identification information in the first degree.D FELONY190.84Defenses. 190.85Unlawful possession of a skimmer device in the second degree.A MISD190.86Unlawful possession of a skimmer device in the first degree.E FELONY

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2. Civil Liability -- State Law Liability Re: Identity Theft

1. NYS Fair Credit Reporting Act (“NY FCRA”)2. N.Y. Gen. Bus. L. § 380 et seq. (includes NYS

Security Freeze Law)3. NYS Executive Law § 646(2) -- police reports4. New York General Business Law § 899-aa:

Notification;  person without valid authorization has acquired private information: Third party obligation to notify consumers about data breaches

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Civil Liability -- State Law Liability Re: Identity Theft (cont’d)

• Negligence– Like most negligence claims, to hold a bank or financial

institution liable, a consumer must prove: 1) The bank or credit agency committed some act that

enabled or helped the identity theft to occur; 2) That the bank or credit agency owed a duty to the

consumer whose identity was stolen; 3) That the bank or credit agency breached that duty; and 4) That the breach was the actual and proximate cause of

the consumer's injury.

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B. Civil Liability -- Federal Statutes Re: Credit Billing and Credit Reporting (Source, inter alia, CLARO)

EFTA• The Electronic Fund Transfer Act (EFTA), and

Regulation E, issued by the Board of Governors of the Federal Reserve, provide consumer protections for transactions involving ATM or debit cards and limit liability for unauthorized purchases or withdrawals using ATM or debit cards. 15 U.S.C. § 1693 et seq., 12 C.F.R. § 205.

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Civil Liability -- Federal Statutes Re: Credit Billing and Credit Reporting (Source, inter alia, CLARO)

• The EFTA sets forth three tiers of liability for unauthorized ATM or debit card uses:

• If the victim reports an ATM or debit card as lost or stolen within two business days after she realizes the card is missing, she will not be responsible for more than $50 total for unauthorized use. 12 C.F.R. § 205.6(b)(1).

• If the victim fails to report the lost or stolen card within two business days after realizing the card is missing or stolen, but does report its loss within 60 days after her statement is mailed to her, she could lose as much as $500 based on unauthorized transfers. 12 C.F.R. § 205.6(b)(2).

• If the victim fails to report an unauthorized transfer within 60 days after her statement is mailed, she risks unlimited loss and could lose all the money in her account and the unused portion of her maximum line of credit established for overdrafts. 12 C.F.R. § 205.6(b)(3).

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Civil Liability -- Federal Statutes Re: Credit Billing and Credit Reporting (Source, inter alia, CLARO)

CORRECTING ERRORS WITH ATM & DEBIT CARDS In the event of an error in the victim’s account because of a fraudulent transaction

or the unauthorized use of an ATM or debit card, she should: • promptly call the financial institution and point out the error, no later than 60

days after the statement containing the error was sent • follow-up in writing, by certified letter, return receipt requested, to prove the

institution received notice of the error

• After receiving notification of the problem, the financial institution has 10 days to investigate, must inform the victim of the results within three business days after completing the investigation, and must correct inaccurate information. 12 C.F.R. § 205.11(c).

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Civil Liability -- Federal Statutes Re: Credit Billing and Credit Reporting (Source, inter alia, CLARO)

FCBA: Fair Credit Billing Act (FCBA), 15 U.S.C. §§ 1606-1666a

• Identity thieves often make unauthorized charges on consumers’ credit card accounts.

• This may happen either when they steal the actual credit card or obtain the credit card number through other means.

• Victims of identity theft then would have errors on their credit card statements caused by these unauthorized charges.

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Civil Liability -- Federal Statutes Re: Credit Billing and Credit Reporting (Source, inter alia, CLARO)

• The Fair Credit Billing Act, 15 U.S.C. § 1601, (FCBA) establishes procedures for resolving billing errors on consumer credit card accounts, including fraudulent charges on accounts that have been caused by identity theft. FCBA §§ 161-162, 15 U.S.C. §§ 1666-1666a.

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Civil Liability -- Federal Statutes Re: Credit Billing and Credit Reporting (Source, inter alia, CLARO)

• Note: The FCBA applies only to “open ended” credit accounts, such as credit cards and revolving charge accounts (e.g. department store accounts).

• It does not cover installment contracts, such as loans or extensions of credit that consumers repay on a fixed schedule.

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Civil Liability – Fair Credit Reporting Act

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Players in the Consumer Reporting Game

Creditor #1 

Pot. Creditor #2

 

 Consumer CRA

Cred

itor l

ends

Creditor reports Consumer applies

Potential creditor requests report from CRA

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Powerful Rights: Private Causes of Action Pursuant to FCRA

dfadfad

Choose Wisely:The FCRA Dispute Triangle(a.k.a. The Rabbit Hole)

Furnisher (Creditor)

Consumer CRA

Was

ting y

our T

ime

Valid Dispute: CRA Transmits Dispute

from Consumer to Creditor and

Creditor Responds to CRA

Valid Dispute: Consumer Disputes Directly with CRA andCRA Transmits Creditor’s Response to Consumer

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Dispute Letter

See handout • Redacted ID Theft Dispute Letter• Note:–The substance of the letter–Supporting documents–If the credit report errors are not fixed,

who does the client sue and why?

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Credit Report Fallout -- After the Urgent Issues . . .

Dispute Letter -- what to include pursuant to §1681c-2(a)

• Appropriate proof of the identity of the consumer• A copy of that identity theft report (police report +

affidavit)• Identification of such information by the consumer• Statement by the consumer that information is not

information relating to any transaction by the consumer

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I also include several handwriting samples

I, ID THEFT VICTIM, have presented my driver's license in person to the Notary Public listed below and now affix my signature before the same Notary Public:

______________________________ID THEFT VICTIM

Sworn to before me this _____ dayof ____________________, 2016 _______________________________(Notary Public)

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FCRA Referral to Private Attorney

State law issues• Motion to vacate default judgments obtained by

creditors• Debt defense in suits brought by creditors• Affirmative claims against ID thief • Affirmative claims against entity that failed to protect

confidential info

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FCRA Referral to Private Attorney

Causes of action against bureaus and creditors• 1681e(b) -- depending upon strength of ID theft• 1681c-2(a) -- if did not block info within 4 days of receipt

of police report• Reinvestigation claims -- 1681i and 1681s-2(b)• If you disputed it and included relevant info, then have a

good case against CRA• Through discovery, you will learn what they did and did

not do against furnishers, • FDCPA claims• Also possibly conversion law claim

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Defenses• Possible defenses

– They did a reasonable investigation– There was not really ID theft

• Thus, best to understand well the actual theft• Who did it is important, but the where it happened is

possibly more important• Spending spree within a short period of time / location?• Perhaps can get surveillance videos, etc.• Perhaps can show that this many transactions could not

have happened by one person (moving company case)

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Remember1. Prevent2. Investigate3. Contact Law Enforcement 4. Act Quickly5. Contact a Private Attorney if Not Resolved

Adam G. SingerLaw Office of Adam G. Singer, PLLCNYC:  60 E. 42nd Street, Suite 4600, New York, NY 10165Rockland: 254 S. Main Street, Suite 516, New City, NY 10956Westchester: 445 Hamilton Avenue, Suite 1102, White Plains, NY 10601T: 212.842.2428F: 212.658.9682E: asinger2@alumni.law.upenn.edu L: www.linkedin.com/in/adamgsinger