Cheryl Jacques

Continuing her fight on behalf of victims of identity fraud, Sen. Cheryl Jacques, D-Needham, has filed a bill that would allow businesses to be included as potential victims in cases where good credit is damaged.

Among the bill’s leading sponsors are Attorney General Thomas Reilly, Jacques and Rep. Cheryl A. Rivera, D-Springfield. It is a continuation of Jacques’ original legislation to make identity theft a crime in Massachusetts.

It really does four very important things to protect consumers, said Jacques. First, she noted, it requires that a consumer’s credit score be listed on the credit report they receive as well as an explanation of techniques by which a company rates a consumer’s credit worthiness.

In addition, we add businesses to the definition of victims for the purposes of identity theft because sometimes people do take on the identification of a business and procure services or goods in their name. We want them to have the same rights and remedies as any victim of identity theft, she said.

In response to comments and requests from law enforcement officials, Jacques’ bill proposes an increase in the penalties for a second offense in identity fraud. First-time offenders face up to $5,000 in fines and a misdemeanor penalty. For second and subsequent offenses, the penalty becomes a felony and the fines go up to $25,000.

Finally, it allows consumers to put a freeze on their credit information while they are straightening out an identity theft problem – it stops the bleeding, she said. The bill allows consumers to effectively close access to their credit file by anyone seeking a credit report. The consumer must write a statement which acknowledges they realize that because the file is closed, they may not be able to obtain a checking account, credit, employment, insurance, housing or a license required by a government agency. But freezing the file would also allow the person time to straighten out false reports before it affects their credit record.

Credit is a critical piece of people’s lives and when it is destroyed or tampered with, as in the instance of someone stealing it through identity theft, it is incumbent upon business institutions, credit institutions and policy makers to do everything we can to help the innocent victim of that nightmare, said Jacques.

While the law does not allow a consumer’s credit to be closed in response to a court order, it does require that – at the consumer’s request – any application for credit must be cleared through the consumer via oral communication.

That [component of the bill] is part of the larger, stop-the-bleeding component of the bill. If you are having problems, you can shut off the credit as an alternative … It would be permanently in [your file] that there have been problems with this account and they should check that this is a legitimate request for credit, said Joel Barrera, director of the Senate Post Audit and Oversight Bureau.

What you’re trying to prevent is the kind of written fraud that has been perpetrated up until now. This is basically a kind of backstop to say, ‘let’s double-check that this is an actual request for credit,’ he said.

Jacques said she has heard numerous tales of havoc wreaked by identity theft, including a woman convinced that her husband’s heart attack was brought on by stress caused by years of trying to reclaim their good credit destroyed by a criminal.

I really think they are the most innocent of victims. We’ve got to make the consumer protection laws bend over backwards to help them get out of these messes, she said.

Consumer access to credit scores has been a hot-button issue between the banking industry and consumer advocate groups. Advocates point the finger at both the credit reporting agencies and financial services institutions as the party responsible for educating consumers. Financial institutions say it is both the responsibility of the consumer to educate himself and the credit agencies that generate the scores to explain how they are created and what they mean.

Recently, a law was passed in California which would give consumers both access to and an explanation of their credit scores and what their bearing is on credit requests.

After hearing of the California legislation, Jacques investigated Massachusetts laws to see if consumers had similar rights here, and they didn’t, said Jacques’ chief of staff, Angus G. McQuilken. As a result, Jacques drafted the legislation.

The problem of identity fraud and the subsequent damage it causes to good credit has long been a concern to Jacques, according to Barrera. Jacques was first to file a bill making identity theft a crime in the commonwealth.

As we went forward and heard cases [about identity fraud], we continued to make improvements. Last year, as part of our overall warrants bill, for example, there was an amendment that allows police to, at times, arrest people without an arrest warrant … in identity fraud cases, said Barrera. The amendment was motivated by anecdotes about people who produce false identification to a business, for example, and cannot be arrested until police gain a warrant. Oftentimes, the person would disappear.

I think these provisions mostly come out of real requests from people dealing with this law. For example, part of it comes from the attorney general’s office which found one loophole in the original law-that businesses could not be victims of identity fraud. We’ve closed that loophole, said Barrera.

We did some good reform in 1998 to go after bad guys, but we need to give consumers the tools for them to stop the hemorrhaging on their own credit reports, he added.

Jacques described the bill as a comprehensive consumer protection initiative that enhances identity theft [laws] and provides additional protections for consumers.

Jacques Bill Would Help Protect Businesses From Identity Fraud

by Banker & Tradesman time to read: 4 min