The national trade group that represents credit reporting agencies is taking its fight against a 2010 New Mexico law to a federal appeals court, claiming the legislation will let consumers load their credit reports with inaccurate information.
But Rep. Bill Rehm, an Albuquerque Republican who co-sponsored the measure, said the law merely makes it easier for victims of identity theft to keep their credit from being ruined by thieves. According to the Attorney General’s Office, New Mexico has the seventh worst rate of identity theft in the nation.
Rehm said the industry has dug in for a legal battle because it fears New Mexico’s new law will become the national standard.
| Removing false information Victims of identity theft can remove false information in their credit reports by filing a “declaration of removal” with the credit reporting agency, provided the agency operates in New Mexico. According to the law enacted last year, that declaration must include: 1. A written statement from the consumer that he or she is a victim of identity theft, and that the information in the agency’s report is wrong as a result of the identity theft. 2. Information “by which the consumer may be identified by the consumer reporting agency.” 3. A declaration that the consumer “is available for service of process at a conclusively valid designated address for at least 30 days.” 4. A copy of an identity theft report from a law enforcement agency. The declaration can be sent by mail, fax or electronically. The credit reporting agency has five days to remove the information the consumer says is incorrect. |
The law took effect last year. A U.S. District Court judge in Albuquerque in late March lifted an injunction that kept the state from enforcing the law.
A Washington, D.C.-based spokesman for the Consumer Data Industry Association declined to discuss the law because it is before the courts.
In a letter to business organizations asking them to join its appeal, the association said the New Mexico law will permit consumers and credit repair clinics to manipulate consumer report information “and undermine the accuracy and integrity of the nationwide consumer reporting system.”
Rehm said victims of identity theft can demand a change to a credit report only if they can provide a police report of identity theft and file a sworn affidavit with the credit reporting agency.
Rehm reasons that since providing a false sworn affidavit is fraud and sticking one in the mail to a credit agency is mail fraud, the risks of lying to a credit agency are too great for most people.
The industry contends the legislation, co-sponsored by Albuquerque Democrat Bill O’Neill, would allow a consumer to obtain “the removal of accurate, but negative, consumer report information by submitting a declaration of removal” to a credit reporting agency.
The association said the agency must remove the information within five days and cannot put it back in the file even if it learns the information is true, unless the consumer allows it or a creditor who provided the information in the first place obtains a judgment from a court to recover the debt, the letter said.
According to Rehm, it takes a victim of identity theft up to 200 hours “to prove you are a victim or you’re innocent.”
Providing a police report and a sworn affidavit will speed up the process and stop forcing victims to convince credit agencies of their innocence, he said.
The primary legal issue in the case is the association’s argument that federal law already exists to protect consumers. The industry wants a court ruling that state law is pre-empted by the federal government.
Rehm says the federal law is toothless.
If an agency won’t change inaccurate information, Rehm said, there is little the consumer can do. The New Mexico law allows consumers or the Attorney General’s Office to bring suit against an agency that won’t change a report.
The state Attorney General’s Office supported the bill in 2010 and is defending it against the association’s lawsuit.
U.S. District Judge Christina Armijo had barred enforcement of the law, but dissolved her order. She found that the potential threat of a lawsuit filed by a consumer against a credit reporting agency under the new state law wasn’t a sufficient basis to keep it on hold.
The association plans to appeal Armijo’s ruling to the U.S. Circuit Court of Appeals in Denver.
— This article appeared on page A1 of the Albuquerque Journal
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