Prevent Identity Theft From Affecting Lives and Livelihoods (PITFALL) Act

108th CONGRESS
1st Session

S. 1749

To amend various provisions of the Consumer Credit Protection Act to provide relief for victims of identity theft, and for other purposes.

IN THE SENATE OF THE UNITED STATES

October 16, 2003

Mr. SPECTER introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To amend various provisions of the Consumer Credit Protection Act to provide relief for victims of identity theft, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Prevent Identity Theft From Affecting Lives and Livelihoods (PITFALL) Act'.

SEC. 2. RELIEF FOR IDENTITY THEFT VICTIMS FROM CREDITORS.

(a) IN GENERAL- The Truth in Lending Act is amended by inserting after section 133 (15 U.S.C. 1643) the following new section:

`Sec. 133A. Nonliability of identity theft victims

`(a) IN GENERAL- If--

`(1) a State maintains a procedure that provides for the investigation by the chief law enforcement officer of the State, or an official or agency designated by the State, of a police report by any person alleging identity theft; and

`(2) the officer, official, or agency issues a no-fault letter upon completion of the investigation stating that such person was the victim of identity theft with respect to any creditor,

such person shall not be liable for any credit extended in connection with the actions that such officer, official, or agency has determined to be involved in the identity theft, except as otherwise provided in this section.

`(b) DUTIES OF CREDITOR- Upon receiving a copy of a no-fault letter described in subsection (a)(2) with respect to any person, the creditor, or any transferee, assignee, or agent of the creditor--

`(1) may not attempt to collect any credit extended in the name of such person which the no-fault letter identifies as having resulted from identity theft and shall hold such person harmless for the obligation (including any real or personal property of such person in which the terms of any contract or agreement involved in the identity theft purport to create a security interest for such credit);

`(2) may not furnish any information to a consumer reporting agency that identifies such credit as an obligation of such person;

`(3) shall provide a copy of the no-fault letter (and such other information as may be appropriate to indicate that the person is not liable under this section for the obligation) to--

`(A) any consumer reporting agency to which the creditor had furnished any such information before the receipt of a copy of the no-fault letter; and

`(B) any office in which any such security interest was recorded;

`(4) may not transfer or assign the credit to any other person, including a debt collector (as defined in section 803), unless the creditor clearly states that the person in whose name the credit was extended is not liable for such obligation under this section;

`(5) shall provide a copy of the no-fault letter (and such other information as may be appropriate to indicate that the person is not liable under this section for the obligation) to any transferee or assignee, including a debt collector (as defined in section 803), to which the creditor had transferred or assigned the obligation before the receipt of the no-fault letter, or any agent acting on behalf of the creditor;

`(6) shall remove any lien filed against any real or personal property of such person to secure the repayment of any such credit obligation by such person; and

`(7) shall comply with any requirement the Board and the Federal Trade Commission may jointly prescribe under this section.

`(c) SCOPE OF PROVISION- The exemptions provided in section 104 shall not apply to this section.

`(d) ADMINISTRATIVE AND JUDICIAL REVIEW- Any creditor adversely affected by the determination by the chief law enforcement officer of any State, or an official or agency designated by the State, that is the basis for a no-fault letter described in subsection (a)(2) with respect to any person may--

`(1) seek any administrative review of such determination that is available under the law of such State;

`(2) provide such officer, official, or agency with additional relevant information and request further investigation of the facts and circumstances involved in the alleged identity theft and a de novo review of the prior determination on the basis of any relevant information not taken into account in making the original determination; or

`(3) bring an action in any appropriate State court in such State to determine the validity of any claim by the creditor against such person with respect to any obligation to which the no-fault letter applies.

`(e) EFFECTIVE PERIOD- This section shall cease to apply with respect to any credit extended to any person as of the earlier of--

`(1) the date that any determination, pursuant to an administrative review or redetermination under paragraph (1) or (2) of subsection (d), that such person was not the victim of identity theft becomes final; or

`(2) the date any decision of any Federal or State court that such person is obligated for such credit becomes final.

`(f) DEFINITIONS- For purposes of this section, the following definitions shall apply:

`(1) IDENTITY THEFT- The term `identity theft' means a fraud committed using another

person's identifying information, subject to such further definition as the Board and the Federal Trade Commission may prescribe, jointly, by regulation.

`(2) POLICE REPORT- The term `police report' means a copy of any official valid report filed by a person with any appropriate Federal, State, or local government law enforcement agency, or any comparable official government document that the Board and the Federal Trade Commission shall jointly prescribe in regulations, that is subject to a criminal penalty for false statements.'.

(b) STATE ENFORCEMENT AUTHORITY- Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is amended by inserting `or section 133A' after section 129'.

SEC. 3. TREATMENT OF CREDIT AND OTHER INFORMATION IN CASES OF IDENTITY THEFT.

(a) IN GENERAL- The Fair Credit Reporting Act is amended by inserting after section 605 (15 U.S.C. 1681c) the following new section:

`Sec. 605A. Treatment of credit and other information in cases of identity theft

`(a) IN GENERAL- If--

`(2) the officer, official, or agency issues a no-fault letter upon completion of the investigation stating that such person was the victim of identity theft,

no information concerning any transaction involved in the identity theft with respect to such person may be included or maintained by a consumer reporting agency in any file of such person, except as otherwise provided in this section or taken into account in connection with preparing or providing any credit scores or any other risk scores or predictors relating to the person.

`(b) DUTIES OF CONSUMER REPORTING AGENCY- Upon receiving a copy of a no-fault letter described in subsection (a)(2) with respect to any person, the consumer reporting agency--

`(1) shall remove any reference to any information described in subsection (a) that is covered by the no-fault letter from the file of such person;

`(2) may not provide any such information to any person, whether or not the information is included in a consumer report, for any purpose;

`(3) shall notify any user to which the consumer reporting agency had furnished any such information before the receipt of a copy of the no-fault letter that--

`(A) such information may not be used by the user for any purpose; and

`(B) under section 133A or 910A, the person is not liable for any obligation covered by the no-fault letter;

`(4) shall provide a copy of the no-fault letter (and such other information as may be appropriate to indicate that the person is not liable under section 133A or 910A for the obligation) to the furnisher of such information to the consumer reporting agency (unless the no-fault letter was supplied by the furnisher); and

`(5) shall comply with any requirement the Board and the Federal Trade Commission may jointly prescribe under this section.

`(c) EFFECTIVE PERIOD- This section shall cease to apply with respect to any information concerning any person that was covered by a no-fault letter described in subsection (a) as of the earlier of--

`(1) the date that any determination, pursuant to an administrative review or redetermination that such person was not the victim of identity theft becomes final; or

`(2) the date any decision of any Federal or State court that such person is liable on the obligation to which such information refers becomes final.

`(d) DEFINITIONS- For purposes of this section (and sections 616, 617, 619, 620, 621, and 624 with respect to information and duties covered by this section), the following definitions shall apply:

`(1) CONSUMER REPORTING AGENCY- The term `consumer reporting agency' includes any person which--

`(A) for monetary fees or dues, or on a cooperative basis, regularly engages in whole or in part in the practice of assembling or evaluating credit information or other information on any person for the purpose of furnishing, to third parties, any written, oral, or other communication of any information by a consumer reporting agency bearing on a person's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the person's eligibility for--

`(i) credit or insurance;

`(ii) employment purposes; or

`(iii) any other purpose authorized under section 604; and

`(B) uses any means or facility of interstate commerce for the purpose of preparing or furnishing such reports.

`(2) IDENTITY THEFT- The term `identity theft' means a fraud committed using another person's identifying information, subject to such further definition as the Board and the Federal Trade Commission may prescribe, jointly, by regulation.

`(3) POLICE REPORT- The term `police report' means a copy of any official valid report filed by a person with any appropriate Federal, State, or local government law enforcement agency, or any comparable official government document that the Board and the Federal Trade Commission shall jointly prescribe in regulations, that is subject to a criminal penalty for false statements.'.

(b) TECHNICAL AND CONFORMING AMENDMENTS- Section 623(a)(1)(A) of the Fair Credit Reporting Act (15 U.S.C. 1681s-2(a)(1)(A)) is amended--

(1) by striking `relating to any consumer' and inserting `relating to any person';

(2) by inserting before the period at the end `or if the person knows or has reason to know that the information relates to a transaction involving identity theft'; and

(3) by inserting after the period, the following new sentence: `For purposes of the preceding sentence, a person shall be deemed to know or have reason to know that information relates to a transaction involving identity theft if the person knows or reasonably should have known that the information or the transaction is described in a no-fault letter issued by the chief law enforcement officer of the State, or an official or agency designated by the State, in accordance with section 605A(a), as involving identity theft.'.

SEC. 4. DUTIES OF DEBT COLLECTORS IN CASES OF IDENTITY THEFT.

(a) IN GENERAL- The Fair Debt Collection Practices Act is amended by inserting after section 808 (15 U.S.C. 1692f) the following new section:

`Sec. 808A. Identity theft

`(a) IN GENERAL- If--

`(2) the officer, official, or agency issues a no-fault letter upon completion of the investigation stating that such person was the victim of identity theft,

no obligation that is identified in the no-fault letter as being involved in the identity theft with respect to such person shall be treated as a debt of such person by any debt collector.

`(b) DUTIES OF DEBT COLLECTOR- Upon receiving a copy of a no-fault described in subsection (a)(2) with respect to any person, a debt collector--

`(1) may not take any action, or attempt to take any action, directly or indirectly, against such person to collect on any obligation that is subject to subsection (a);

`(2) may not take any action, or attempt to take any action, to enforce any purported interest in any real or personal property of such person that is securing any such obligation;

`(3) if the debt collector is acting as an agent of the creditor or any other person with respect to collecting any such obligation, shall promptly notify the creditor or other person of the prohibition under this section on collection and provide such creditor or other person with a copy of the no-fault letter; and

`(4) shall comply with any requirement the Board and the Federal Trade Commission may jointly prescribe under this section.

`(c) EFFECTIVE PERIOD- This section shall cease to apply with respect to any obligation of any person that was covered by a no-fault letter described in subsection (a) as of the earlier of--

`(1) the date that any determination, pursuant to an administrative review or redetermination that such person was not the victim of identity theft with respect to such obligation becomes final; or

`(2) the date any decision of any Federal or State court that such person is liable on the obligation becomes final.

`(d) DEFINITIONS- For purposes of this section (and sections 813 and 814 with respect to obligations and duties covered by this section), the following definitions shall apply:

`(1) DEBT- The term `debt' includes any obligation or alleged obligation of any person to pay money, whether or not such obligation has been reduced to judgment.

`(2) DEBT COLLECTOR- The term `debt collector' includes any person described in subparagraphs (A), (B), (C), (D), (E), or (F) of section 803(6).

`(3) IDENTITY THEFT- The term `identity theft' means a fraud committed using another person's identifying information, subject to such further definition as the Board and the Federal Trade Commission may prescribe, jointly, by regulation.

`(4) POLICE REPORT- The term `police report' means a copy of any official valid report filed by a person with any appropriate Federal, State, or local government law enforcement agency, or any comparable official government document that the Board and the Federal Trade Commission shall jointly prescribe in regulations, that is subject to a criminal penalty for false statements.'.

`(e) STATE ACTION FOR VIOLATIONS-

`(1) AUTHORITY OF STATES- In addition to such other remedies as are provided under State law, whenever the chief law enforcement officer of a State, or an official or agency designated by a State, has reason to believe that any person has violated or is violating this title, the State--

`(A) may bring an action to enjoin such violation;

`(B) may bring an action on behalf of its residents to recover damages for which the person is liable to such residents under section 813 as a result of the violation; and

`(C) in the case of any successful action under subparagraph (A) or (B), shall be awarded the costs of the action and reasonable attorney fees as determined by the court.

`(2) RIGHTS OF FEDERAL AGENCIES-

`(A) NOTICE TO FEDERAL AGENCY- The State shall serve prior written notice of any civil action under paragraph (1) upon the Federal agency responsible for enforcement under this section and provide such agency with a copy of its complaint, except in any case where such prior notice is not feasible, in which case the State shall serve such notice immediately upon instituting such action.

`(B) INTERVENTION- The Federal agency responsible for enforcement under this section shall have the right--

`(i) to intervene in any action referred to in subparagraph (A);

`(ii) upon so intervening, to be heard on all matters arising in the action; and

`(iii) to file petitions for appeal.

`(3) INVESTIGATORY POWERS- For purposes of bringing any action under this subsection, no provision of this subsection shall construed as preventing the chief law enforcement officer, or an official or agency designated by a State, from exercising the powers conferred on the chief law enforcement officer or such official by the laws of such State to conduct investigations or to administer oaths or affirmations or to compel the attendance of witnesses or the production of documentary and other evidence.

`(4) LIMITATION- Whenever the Federal agency responsible for enforcement under this section has instituted a civil action for violation of this title, no State may, during the pendency of such action, bring an action under this section against any defendant named in the complaint of such agency for any violation of this title that is alleged in that complaint.'.

(c) TECHNICAL AND CONFORMING AMENDMENT- Section 808 of the Fair Debt Collection Practices Act (15 U.S.C. 1692f) is amended by adding at the end the following new paragraphs:

`(9) Taking any action, or attempting to take any action, directly or indirectly, against any person to collect on any debt after the debt collector knows or has reason to believe that such person may be the victim of identity theft with regard to such debt.

`(10) Taking any action, attempting to take any action, or failing to remedy any prior action to enforce any purported interest in any real or personal property of a person that is securing any debt after the debt collector knows or has reason to believe that such person may be the victim of identity theft with regard to such debt.'.

SEC. 5. RELIEF FOR IDENTITY THEFT VICTIMS FROM FINANCIAL INSTITUTIONS.

(a) IN GENERAL- The Electronic Fund Transfer Act is amended by inserting after section 910 (15 U.S.C. 1693h) the following new section:

`Sec. 910A. Nonliability of identity theft victims

`(a) IN GENERAL- If--

`(2) the officer, official, or agency issues a no-fault letter upon completion of the investigation stating that such person was the victim of identity theft with respect to any electronic fund transfer from an account of such person at a financial institution,

such person shall not be liable for any electronic fund transfer that such officer, official, or agency has determined resulted from an identity theft, except as otherwise provided in this section.

`(b) DUTIES OF FINANCIAL INSTITUTION- Upon receiving a copy of a no-fault letter described in subsection (a)(2) with respect to any person, a financial institution--

`(1) shall immediately recredit the person's account for the amount of the electronic fund transfer, together with any interest due on such amount;

`(2) shall reimburse the account of the person for any fees imposed on such account in connection with or as a result of the electronic fund transfer that resulted from identity theft; and

`(3) shall comply with any requirement the Board and the Federal Trade Commission may jointly prescribe under this section.

`(c) ADMINISTRATIVE AND JUDICIAL REVIEW- Any financial institution adversely affected by the determination by the chief law enforcement officer of any State, or an official or agency designated by the State, that is the basis for a no-fault letter described in subsection (a)(2) with respect to any person may--

`(1) seek any administrative review of such determination that is available under the law of such State;

`(d) EFFECTIVE PERIOD- This section shall cease to apply with respect to any electronic fund transfer extended to any person as of the earlier of--

`(1) the date that any determination, pursuant to an administrative review or redetermination under paragraph (1) or (2) of subsection (c), that such person was not the victim of identity theft becomes final; or

`(2) the date any decision of any Federal or State court that such person is obligated for such credit becomes final.

`(e) DEFINITIONS- For purposes of this section, the following definitions shall apply:

`(1) IDENTITY THEFT- The term `identity theft' means a fraud committed using another person's identifying information, subject to such further definition as the Board and the Federal Trade Commission may prescribe, jointly, by regulation.

jointly prescribe in regulations, that is subject to a criminal penalty for false statements.'.

(b) STATE ENFORCEMENT AUTHORITY- Section 917 of the Electronic Fund Transfer Act (15 U.S.C. 1693o) is amended by adding at the end the following new subsection:

`(d) STATE ACTION FOR VIOLATIONS-

`(A) may bring an action to enjoin such violation;

`(B) may bring an action on behalf of its residents to recover damages for which the person is liable to such residents under section 915 as a result of the violation; and

`(C) in the case of any successful action under subparagraph (A) or (B), shall be awarded the costs of the action and reasonable attorney fees as determined by the court.

`(2) RIGHTS OF FEDERAL AGENCIES-

`(B) INTERVENTION- The Federal agency responsible for enforcement under this section shall have the right--

`(i) to intervene in any action referred to in subparagraph (A);

`(ii) upon so intervening, to be heard on all matters arising in the action; and

`(iii) to file petitions for appeal.

SEC. 6. RULES OF CONSTRUCTION.

(a) MISTAKE OF FACT AND CONTRACT FORMATION- No provision of any amendment made by this Act shall be construed as implying that a contract involving identity theft (as defined in such amendments) is a valid and enforceable contract with respect to the victim of the identity theft.

(b) FRAUD- No provision of any amendment made by this Act shall be construed as implying that any attempt by any person to enforce, collect on, transfer, or assign a contract when such person knows or has reason to believe that a purported party to the contract is a victim of identity theft (as defined in such amendments) with respect to such contract is not itself a fraudulent or otherwise unlawful act under any Federal or State law.

(c) OTHER ACTION- No provision of any amendment made by this Act shall be construed as implying that a person has no obligation to take any action with respect to any alleged identity theft, including to correct any record and to absolve any victim of the identity theft for any liability arising from the theft, whether or not--

(1) a State has in effect any procedure described in section 133A(a), 605(a), 808A(a), or 910A(a) of the Consumer Credit Protection Act; or

(2) the chief law enforcement officer of any such State, or an official or agency designated by the State, has initiated any investigation or issued any no-fault letter or other statement pursuant to such procedure.

SEC. 7. CLERICAL AMENDMENTS.

The Consumer Credit Protection Act (15 U.S.C. 1601 et seq.) is amended--

(1) in the table of sections for chapter 2 of title I, by inserting after the item relating to section 133 the following new item:

`133A. Nonliability of identity theft victims.';

(2) in the table of sections for title VI, by inserting after the item relating to section 605 the following new item:

`605A. Treatment of credit and other information in cases of identity theft.';

(3) in the table of sections for title VIII, by inserting after the item relating to section 808 the following new item:

`808A. Identity theft.';

and

(4) in the table of sections for title IX, by inserting after the item relating to section 910 the following new item:

`910A. Nonliability of identity theft victims.'.

END