FACTA Preemption Affecting ID Theft

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FACTA Preemption Affecting ID Theft

Postby Administrator » Sun Oct 02, 2005 6:58 pm

Preemptions’ effects on state laws targeting identity theft.

State laws with “requirements and prohibitions” with respect to the conduct required by the specific preemptions enumerated above are thus preempted. However this limitation, in addition to the language added to the general section of §625 (formerly §624) strongly suggest that states may enact other identity theft laws, so long as they are not inconsistent with other provisions of the FCRA, including laws which may be stronger than the provisions found in FACTA and other parts of the FCRA. By adding the language stating, “or for the prevention or mitigation of identity theft,” to subsection (a) of §625 [§1681t] it can be argued that Congress did not intend to preempt the entire field of identity theft, but only those areas specifically addressed. Any other interpretation would render the new language superfluous, a conclusion not likely to be adopted by the courts.

Where a statute expressly preempts some areas, but not others, a reasonable inference can be made that Congress did not intend to preempt others by implication. Thus in the area of identity theft, where FACTA expressly preempts specifically enumerated conduct, but not others, it is reasonable to infer that the other areas are not preempted. Where preemption is of concern, careful pleading may avoid it. If a UDAP or other identity theft related claim focuses on aspects of the conduct other than those regulated by FACTA, preemption may be avoided. For example, in a negligent enablement claim, if the focus of the conduct relates to a failure to properly identify the identity thief, rather than the fact that a fraud alert was not placed on a consumer file, the claim may not be preempted.

State laws in effect prior to FACTA and not previously preempted by the 1996 amendments to the FCRA should not be affected by FACTA, unless of course they relate to the specific conduct contained in the new FACTA provisions. For example, any state laws that provided for a type of “fraud alert” are likely to be preempted.

Return to “FCRA Statute And Amendments: 15 U.S.C. 1681, et. seq.”

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