The FACT Act has provisions that encourage lenders to sell off debt that is the product of identity theft. Which statement is true?

• A. True
• B. Not specified in the act
• C. False
• D. Only under certain conditions

Answer: (C)

The main concept is identity theft protections built into the FACT Act. The Act strengthens consumers’ rights when a debt or account results from identity theft. It creates tools to dispute and fix fraudulent activity, such as placing fraud alerts on credit reports, obtaining free annual credit reports, and filing an identity theft report to challenge or remove fraudulent debts. It also requires lenders to follow procedures to detect and respond to identity theft (the Red Flags requirements and related safeguards).

Because of these protections, the Act does not promote or require lenders to sell off debts that come from identity theft. In fact, it aims to prevent unfair treatment of victims, ensuring that fraudulent debts aren’t pursued as the consumer’s responsibility and that fraudulent accounts are corrected promptly. Selling debt is a normal practice for collecting legitimate accounts, but the FACT Act does not encourage doing so for identity-theft–related debt.