[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1749 Introduced in Senate (IS)]







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--
            ``(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 filed 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,
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--
            ``(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 filed 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,
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.''.
    (b) State Enforcement Authority.--Section 814 of the Fair Debt 
Collection Practices Act (15 U.S.C. 1692l) is amended by adding at the 
end the following new subsection:
    ``(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--
            ``(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 
        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;
            ``(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.
    ``(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.
            ``(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 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.--
            ``(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 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.--
                    ``(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.''.

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.''.
                                 <all>