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 ?
If you could show that the lender had obtained your credit
report, would the lender have obtained your credit report without a proper
purpose, and would it therefore be liable?.
Often the lender will indeed have a reason to think that you
are the person applying for credit, but could consumers argue for the creation
of a new claim, such as negligent enablement of imposter fraud.
Whether this would be possible in the UK,
I don’t know, but a court ruling in the US
seems to make this a possibility, certainly in Tennessee.
In Wolfe v. MBNA America Bank, 485
F.Supp.2d 874 (W.D.Tn. 2007), plaintiff (Wolfe) alleged that the defendant (MBNA)
had issued a credit card to an identity thief using the plaintiff’s name
without verifying the accuracy of the information in the identity thief’s
application. The court refused to dismiss plaintiff’s negligence claim,
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 DENIED.
court also found that plaintiff’s allegations stated a claim under the
Tennessee UDAP statute and were not preempted by the FCRA.
Whilst I understand that there are fundamental differences
between US and UK
credit and consumer law, is this something that we should be petitioning
government for so that this could possibly happen in England