collectors can’t chase identity theft debt

The text as introduced · 686 words

89R13500 MLH-F

By: Meyer
H.B. No. 4238

A BILL TO BE ENTITLED

AN ACT

relating to the collection of consumer debt incurred by certain

individuals as a result of identity theft.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter D, Chapter 392, Finance Code, is

amended by adding Section 392.308 to read as follows:

Sec. 392.308. CONSUMER VICTIM OF IDENTITY THEFT. (a) In

this section, "identity theft" means:

(1) a violation of Section 521.051, Business &

Commerce Code, or a substantially similar federal law or law in

another state; or

(2) a criminal offense described by Section 32.51,

Penal Code, or a substantially similar federal law or law in another

state.

(b) This section does not apply to consumer debt that is a

home loan, as defined by Chapter 343, or to the collection of a

judgment already obtained.

(c) A creditor, debt collector, or third-party debt

collector may not attempt to collect a consumer debt or a portion of

a consumer debt from a consumer if the consumer provides:

(1) a criminal complaint alleging the commission of an

offense under Section 32.51, Penal Code, or a substantially similar

federal law or law in another state, for which the consumer was a

victim, accompanied by a statement identifying the consumer debt or

the portion of consumer debt that resulted from the offense;

(2) a court order issued under Section 521.103,

Business & Commerce Code, or a substantially similar federal law or

law in another state, declaring the consumer a victim of identity

theft; or

(3) a copy of a Federal Trade Commission identity

theft victim's report, completed, signed, and filed by the

consumer:

(A) affirming that the consumer is a victim of

identity theft; and

(B) identifying the consumer debt or affected

portion of the consumer debt incurred as a result of identity theft.

(d) A creditor, debt collector, or third-party debt

collector who receives notice that a consumer debt is a result of

identity theft from a victim of identity theft in accordance with

Subsection (c):

(1) shall immediately cease efforts to collect the

disputed debt or disputed portion of the debt from the victim of

identity theft;

(2) shall send to each person who has previously

received a report relating to that debt from the creditor, debt

collector, or third-party debt collector notice that the debt is

disputed under this section and not collectible from the victim of

identity theft;

(3) may not sell the debt or transfer it for

consideration, except to collect the debt from the alleged

perpetrator of identity theft or from a responsible person other

than the victim of identity theft; and

(4) may, if the disputed debt or disputed portion of

the debt is secured by tangible personal property, enforce the

security interest under Chapter 9, Business & Commerce Code, but

may not collect or seek to collect any deficiency from the victim of

identity theft.

(e) If a creditor, debt collector, or third-party debt

collector has a good faith reason to believe that a consumer has

disputed a consumer debt or portion of a consumer debt under this

section based on a material misrepresentation that the consumer is

a victim of identity theft, the creditor, debt collector, or

third-party debt collector may file suit in a court of competent

jurisdiction to collect the debt from the consumer.

(f) In a suit under Subsection (e), the creditor, debt

collector, or third-party debt collector must show by a

preponderance of the evidence that the consumer is not a victim of

identity theft.

(g) A creditor, debt collector, or third-party debt

collector has standing to bring and may bring an action to exercise

any right, seek any remedy, or use any lawful means to collect a

consumer debt or a portion of consumer debt that is disputed under

this section from an alleged perpetrator of identity theft who by

means of identity theft obtained, used, or possessed the money,

goods, services, or property of the consumer who is a victim of the

alleged perpetrator's identity theft.

SECTION 2. This Act takes effect September 1, 2025.