Lawmakers in the state of California recently voted unanimously to pass into law a new requirement that reduces the time frame for debt collection companies to investigate claims of identity theft. This bill, which was supported by the California Association of Collectors, is going to change the way that collection agencies operate.
In order to keep up with the new laws, debt collection agencies in California are going to want to understand all of the details. They are also going to want to have a plan in place to make sure that they can handle any claims of identity theft in the 10 day time period the bill specifies.
Be Prepared for Identity Theft Claims
The first step in cooperating with this new law is going to be for debt collection agencies to be prepared for claims of identity theft to happen more often. As identity theft continues to grow as a problem for consumers, more and more debts are going to be created as a result of it, and we all need to be prepared for that possibility.
Avoid Focusing on Technicalities
The Identity Theft Resolution Act states the exact information that a debtor must include in a written statement that must be filed with a police report in order to contest a debt’s legitimacy. This will, not doubt, lead to a number of unethical collection agencies attempting to disqualify claims of identity theft based on missing information in this written statement.
The most legitimate collection agencies will likely take a different approach and focus on whether or not the debt was a result of identity theft, rather than whether or not the debtor followed all of the rules.
Have an Investigation Plan in Place
One of the requirements of the new law is that a collection agency must complete their investigation into a claim of identity theft within 10 business days. If your agency doesn’t have a plan in place, those 10 days aren’t going to be nearly enough time to even get an investigation started.
On the other hand, agencies that have their ducks in a row well before they receive a claim of identity theft will have a plan in place that they simply need to execute. This will make those 10 days seem like plenty of time to handle the situation.
Proceed Immediately Following the Investigation
No matter what results your investigation returns, your agency will want to proceed with the next step in your plan immediately. If you determine that identity theft was indeed the cause of the debt, you will have to let the debtor know and proceed without bothering them any further.
If you determine that there was no identity theft with respect to the debt, then you are going to want to proceed directly into your normal collection strategy.
Exercise Caution With Third Party Debts
Another aspect of identity theft that the new bill addresses is purchasing third party debts that might be the result of identity theft. If you are in the business of purchasing third party debts, you are going to want to make sure that you are only dealing with the most reputable sources for those debts.
As debt collection agencies, we all want to return positive results for our clients. And most of us only get paid when we deliver those results.
But we also have to be aware of the growing identity theft problem and be respectful when we encounter debtors who honestly had nothing to do with creating their debts. As always, treating everyone we encounter with respect and dignity is always going to yield the best results in the long run.