[SIG-IDtheft] May an ID Theft Victim sue the Lender that allowed the account?
Mari J. Frank
Mari at MariFrank.com
Fri Aug 17 14:04:09 EDT 2007
This case will be of interest to you.- best to all- have a great weekend.
Thursday, August 02, 2007
May an Identity Theft Victim Sue the Lender that Allowed the Thief to Open
Suppose an identity thief takes out a loan in your name with a lender,
defaults, and so blemishes your credit record. Do you have a claim against
the lender for opening the account ? (The question of what the lender's
obligations in its role as a furnisher of information is dealt with by the
FCRA in § 1681s-2 and I won't address that in this post.) Up to now, the
answer has usually been no. If you could show that the lender had obtained
your credit report and that it lacked a reason to believe that the imposter
was in fact you, then under FCRA § 1681b the lender would have obtained your
credit report without a proper purpose, and it would be liable. See Andrews
v. TRW, Inc., 225 F.3d 1063 (9th Cir. 2000), rev'd on other grounds sub nom.
TRW Inc. v. Andrews, 534 U.S. 19 (2001). But often the lender will indeed
have a reason to think that you are the person applying for credit. Many
common law claims are preempted by FCRA § 1681h(e) and courts have generally
rebuffed consumers arguing for creation of a new claim, such as negligent
enablement of imposter fraud. See, e.g., Polzer v. TRW, 256 A.D.2d 248, 682
N.Y.S.2d 194 (1st Dept. 1998). But a new case offers more hope to identity
theft victims. In Wolfe v. MBNA America Bank, 485 F.Supp.2d 874 (W.D.Tn.
2007), plaintiff alleged that the defendant had issued a credit card to an
identity thief using the plaintiffs name without verifying the accuracy of
the information in the identity thiefs application. The court refused to
dismiss plaintiffs negligence claim, saying:
With the alarming increase in identity theft in recent years, commercial
banks and credit card issuers have become the first, and often last, line of
defense in preventing the devastating damage that identity theft inflicts.
Because the injury resulting from the negligent issuance of a credit card is
foreseeable and preventable, the Court finds that under Tennessee negligence
law, Defendant has a duty to verify the authenticity and accuracy of a
credit account application before issuing a credit card. The Court, however,
emphasizes that this duty to verify does not impose upon Defendant a duty to
prevent all identity theft. The Court recognizes that despite banks
utilizing the most reasonable and vigilant verification methods, some
criminals will still be able to obtain enough personal information to secure
a credit card with a stolen identity. Rather, this duty to verify merely
requires Defendant to implement reasonable and cost-effective verification
methods that can prevent criminals, in some instances, from obtaining a
credit card with a stolen identity. Whether Defendant complied with this
duty before issuing a credit card in Plaintiff's name is an issue for the
trier of fact. Accordingly, Defendant's motion to dismiss Plaintiff's
negligence and gross negligence claims in the first factual context is
The court also found that plaintiffs allegations stated a claim under the
Tennessee UDAP statute and were not preempted by the FCRA.
Mari J. Frank, Esq.
Certified Information Privacy Professional
Radio Host, Privacy Piracy 88.9 FM in Irvine, Ca.
28202 Cabot Road, Suite 300
Laguna Niguel, Ca. 92677
E-mail contact at identitytheft.org
Mari at MariFrank.com
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