Were You the Victim of Identity Theft? The FCRA is a Powerful Tool to Clear Your Good Name

By The Kim Law Firm, LLC

Unfortunately, identity theft is a severe problem. The AARP cites a study estimating that Americans lose nearly $50 billion each year to identity theft. Dealing with the aftermath of identity theft can be stressful, frustrating, and overwhelming.  

The Fair Credit Reporting Act (FCRA) is a powerful tool that you have to protect your financial interests and clear your good name. This article covers your rights and options under the FCRA after identity theft; the identity theft page covers how a claim works.

Identity Theft Can Cause Very Serious Damage to Your Credit

Identity theft is far more than a mere inconvenience—it can wreak havoc on your credit. Fraudulent accounts, missed payments for debts you never took out, and maxed-out credit lines can tank your credit score. It can make it harder for you to get loans, subject you to higher interest rates, make it more difficult to rent an apartment, and could even lead to a denial of employment. The frustration of dealing with creditors and credit bureaus can feel downright overwhelming. You do not have to face it alone: Legal options are available. The FCRA is a powerful tool for consumers. Identity theft on a credit report can and should be fixed. 

How the FCRA Protects Victims of Identity Theft

The FCRA is a federal law that protects consumers, including the victims of identity theft. Indeed, the law gives people powerful rights to correct fraudulent and inaccurate information on their credit reports. Under the FCRA, you have the following rights: 

• You can request a free copy of your credit report to identify unauthorized accounts and/or unauthorized transactions.
• You can dispute inaccurate information—challenging any effects of identity theft. 
• You can place a fraud alert or credit freeze to prevent further damage. 

Note: If credit bureaus or creditors fail to follow the law—meaning they fail to fix errors/fraud—you may be able to take legal action under the FCRA to recover compensation. 

Know the Steps to Take Under the FCRA to Correct Identity Theft

Were you harmed by identity theft? You need to fix your credit report. Here are four steps to take under the FCRA to exercise your rights to correct the harm caused by identity theft: 

1. Get a copy of your credit report from each of the three major credit reporting agencies; 
2. Gather and organize all relevant documents and financial records; 
3. Proactively dispute any inaccurate or fraudulent information; and
4. Consult with an experienced FCRA attorney as soon as possible. 

What I do with an identity-theft file

Identity theft cases turn on two documents: the identity theft report (the FTC report or a police report) and the block request you sent the bureau under the Act, with proof of delivery. Once a bureau has both, it must block the fraudulent items within four business days and tell the furnisher; a bureau that ignores the request, or a furnisher that keeps reporting an account after being told it came from identity theft, has violated a duty you can sue on. Keep those two documents, the reports before and after, every letter, and any denial that followed. An FCRA claim must be filed within two years of the day you discovered the violation, and never more than five years after it happened. I review the file at no cost and bring these cases on contingency: you pay nothing unless we win.

Admitted in Pennsylvania and New Jersey; available to appear pro hac vice in other federal courts.

Sources: 15 U.S.C. §§ 1681c-1, 1681c-2, 1681g(e), 1681i, 1681n, 1681o, 1681p and 1681s-2(a)(6) (United States Code); Federal Trade Commission, IdentityTheft.gov (the identity theft report).

Where fraudulent accounts tend to appear

Identity thieves do not open accounts at random. They go where approval is fast, where the application can be completed entirely online, and where a store or retail card can be issued and used within minutes. That is why the first fraudulent tradelines a victim finds are so often retail and subprime cards rather than mortgages, and why the same handful of issuing banks turn up again and again in identity theft files. Each of those issuers is a furnisher with its own obligation to investigate what you report as fraud.

• Synchrony Bank — issues store cards for a very large number of retail brands.
• Comenity Bank — another issuer behind branded retail credit programs.
• Credit One Bank — a subprime issuer with a fast online approval path.
• Capital One — a major issuer across the full range of credit tiers.
• Citibank — issues both its own cards and many co-branded programs.
• Barclays Bank Delaware — the issuing entity behind several partner card brands.

File an identity theft report and send it to each bureau along with a written dispute, because a properly documented report triggers blocking obligations that an ordinary dispute does not. Send the same package directly to every issuer whose name appears on a fraudulent account, since the furnisher has to stop reporting information it knows resulted from identity theft. Ask each issuer for the application records associated with the account, and keep the fraud alert or freeze in place while the reinvestigations run.