This bill adds a new subtitle to Maryland's Commercial Law defining “identity theft debt” and creating a statutory process for consumers to challenge charges incurred by another person. It lets a consumer send a written notice with supporting evidence to a creditor, requires the creditor to pause collection and complete a timely investigation, and prescribes outcomes depending on the investigation’s result.
The statute also creates a private right of action with declaratory and injunctive relief, damages, and fee-shifting; a heightened remedy (double damages) if a creditor knowingly violates the investigation duty; an affirmative defense for consumers who agreed to or benefited from the debt; and a rebuttable presumption where a criminal conviction or plea establishes the theft. The measure adds tolling for limitations periods while collection is barred and preserves a creditor’s ability to pursue the actual perpetrator.
At a Glance
What It Does
The bill authorizes a consumer to send certified written notice with evidence alleging that a debt is identity-theft debt; the creditor must stop collection activity, conduct and conclude a reasonable investigation within 30 days, and then either permanently cease collection or provide the investigatory basis. If unresolved, the consumer can sue (after the 30‑day period) for declaratory relief, injunctions, damages, and fees.
Who It Affects
Creditors (including third‑party collectors and assignees), consumers whose names were used to incur debts, consumer reporting agencies that house disputed tradelines, and Maryland circuit courts that will adjudicate new private-rights claims—plus any entity that contracts for debt collection services.
Why It Matters
This creates a state-level statutory pathway specifically targeted at debts arising from identity theft — rather than relying only on federal tools — shifting operational burdens onto creditors to investigate and correct records quickly and exposing them to monetary liability for failures to comply.
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What This Bill Actually Does
The new subtitle creates a defined process for a consumer to contest a debt they say was incurred by someone else. A consumer must send written notice (certified mail or any method sufficient under Maryland Rules) and include supporting evidence such as a police report, FTC identity-theft report, an identity-theft passport, or other specified records.
Once the creditor receives that notice, the bill requires the creditor to stop collection activity immediately and prohibits selling the debt for a limited period tied to the creditor’s notice obligations.
The creditor must then conduct a “reasonable investigation” and conclude it within 30 days. The statute lists what must be considered — evidence provided by the consumer and any relevant materials the creditor already has — and creates distinct obligations depending on the outcome.
If the creditor determines the debt is identity-theft debt, it must permanently cease collection, withdraw pending litigation, terminate collection contracts for that debt, and notify consumer reporting agencies to delete or modify records. If the creditor determines the debt is not identity-theft debt, it must give the consumer a written explanation and provide copies of records that formed the basis for the conclusion.If the consumer remains unsatisfied, they may file a civil action in the circuit court where they live or where the debt arose, but not during the 30‑day investigatory period.
The complaint must attach the original notice and evidence and identify the accounts at issue. During the pendency of that action, the creditor is barred from attempting to collect the disputed debt.
Remedies include declaratory judgments, injunctions forbidding enforcement or assignment of the debt, damages, court costs, and reasonable attorney’s fees; the bill doubles damages where the creditor knowingly failed to follow its investigation and notice obligations.The statute also draws several limiting lines: the consumer may not waive protections, any applicable statute of limitations is tolled while collection is prohibited, creditors retain the affirmative defense that the consumer agreed to or knowingly benefited from the debt, and a rebuttable presumption that the debt is identity-theft debt arises if the underlying perpetrator is convicted, pleads guilty, or receives probation before judgment for the relevant crime. Finally, creditors retain a separate cause of action against the person who actually caused the identity-theft debt.
The Five Things You Need to Know
The consumer’s written notice must be sent by certified mail or by a method sufficient for service under Maryland Rules and must include supporting evidence (police report, FTC report, identity‑theft passport, conviction record, etc.).
On receipt of notice the creditor must cease collection activity until at least 10 days after the creditor sends the notice required under subsection (e), and it may not sell the subject debt earlier than 10 days after the creditor sends the subsection (f) notice.
The creditor must complete a reasonable investigation within 30 days of receiving the consumer’s notice and either permanently cease collection and notify consumer reporting agencies if it concludes the debt is identity‑theft debt, or provide a written explanation plus copies of the records that supported a finding that the debt is not identity‑theft debt.
A consumer may not sue during the 30‑day investigatory period, but after that period may file in circuit court (consumer’s residence or place debt incurred), attach the original notice and evidence, demand a jury trial, and obtain injunctive and declaratory relief plus damages, costs, and attorneys’ fees.
If a creditor ‘knowingly’ fails to comply with the investigatory/notice duties the consumer is entitled to double damages in addition to costs and reasonable attorneys’ fees; the statute also creates a rebuttable presumption that a debt is identity‑theft debt when an individual is convicted, pleads guilty, or receives probation before judgment under Criminal Law §8‑301 for the act that produced the debt.
Section-by-Section Breakdown
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Definitions and evidentiary baseline
This section defines the key terms the rest of the subtitle uses: consumer, creditor (broadly including successors, assignees, and collectors), identity theft debt, subject debt, and what counts as evidence (police reports, FTC reports, identity‑theft passports, conviction records, and certain agency reports). Practically, this narrows disputes to whether some or all of a debt was incurred by an unauthorized person and fixes a non‑exhaustive list of documents creditors must consider when investigating.
Consumer notice and creditor’s immediate duties
This is the procedural core: a consumer sends written notice with supporting evidence (certified mail or service‑equivalent), which triggers an obligation for the creditor to cease collection activity promptly and places a short hold on selling the account. The creditor must investigate and finish within 30 days, considering both consumer‑provided evidence and its own records. If the creditor finds the account is identity‑theft debt it must permanently stop collection, withdraw pending litigation, terminate collection contracts for that debt, and notify consumer reporting agencies to delete or change tradelines; if not, the creditor must provide a written explanation and copies of the records relied on.
Civil action: timing, venue and pleading requirements
This section governs litigating disputes. Consumers may sue in the circuit court where they live or where the debt was incurred, but not until the 30‑day investigation window closes. Complaints must include the original notice and evidence and identify the accounts. The creditor is barred from collecting the disputed debt while the lawsuit is pending, and the consumer can demand a jury trial—heightening the stakes for both sides and adding procedural clarity about where and how disputes proceed.
Remedies and enhanced penalties for knowing violations
If the consumer prevails by a preponderance, the court must be able to issue declaratory relief that the debt (in whole or part) is identity‑theft debt and an injunction stopping enforcement, assignment, or attempts to hold the consumer liable. The statute authorizes damages, costs, and attorneys’ fees; it then escalates to double damages (plus fees and costs) when a creditor ‘knowingly’ violated the investigatory and notice duties, which creates a meaningful financial incentive for creditors to follow the process.
Affirmative defenses for creditors
The statute provides an affirmative defense where the consumer agreed to incur the debt (either before or after it was incurred) or knowingly received the benefit of the debt. That keeps straightforward disputed‑liability cases—where the consumer voluntarily used or accepted funds—outside the identity‑theft framework, shifting the evidentiary burden to the consumer to overcome that defense.
Criminal‑conviction presumption
A rebuttable presumption that a debt is identity‑theft debt arises if an individual was convicted, pleaded guilty, or received probation before judgment under Criminal Law §8‑301 for the act that produced the debt. That provision compresses proof for consumers in cases with a recorded criminal outcome, while still allowing creditors to contest the presumption with counterevidence.
Tolling of limitations
This section tolls any statute‑of‑limitations for debt collection for the period during which the creditor is barred from collecting under the subtitle. Operationally, tolling protects consumers from having claims expire while litigation or an administrative hold is in place, but it also extends the recruitment window creditors have to pursue time‑barred claims once the bar lifts.
Non‑waivable protections and reservation of other remedies
Consumers may not contract away the protections in this subtitle, and the statute explicitly preserves other legal remedies. This prevents creditors from neutralizing the statute via contract terms and leaves intact parallel federal or state claims a consumer might bring.
Creditor recovery against the perpetrator
The final section preserves a creditor’s ability to pursue the person who actually caused the identity‑theft debt. That gives creditors an affirmative path to recoup losses from the wrongdoer, but it is a separate claim—distinct in burden and process from the consumer’s statutory remedy.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Victims of identity theft in Maryland: They gain a statutory pathway to stop collection, force record correction with consumer reporting agencies, and access money damages and attorneys’ fees if a creditor fails to follow the process.
- Consumers with criminally proven identity theft: When a perpetrator is convicted or pleads guilty under §8‑301, the bill creates a rebuttable presumption in favor of the consumer, simplifying proof in civil disputes.
- Consumer protection attorneys and legal aid organizations: The statute’s private right of action, fee‑shifting, and clear pleading requirements create a viable enforcement clamp for counsel representing victims.
Who Bears the Cost
- Banks, card issuers, and original creditors: They must implement intake procedures for certified notices, run 30‑day investigations, freeze or withdraw collection actions, update reporting practices, and face statutory damages and double damages for knowing violations.
- Debt buyers and third‑party collectors: Firms that purchase or service distressed portfolios will face operational limits on selling accounts and potential contractual churn when creditors must terminate collection contracts for accounts found to be identity‑theft debt.
- State and local courts: Circuit courts will receive new private‑rights litigation (including jury trials), which could increase docket pressure and require judges to resolve contested factual inquiries about identity theft and investigatory adequacy.
Key Issues
The Core Tension
The bill balances two legitimate aims—protecting victims from being held liable for debts they did not incur and ensuring creditors can collect valid obligations—but the mechanisms favor immediate consumer protection (collection freezes, record deletion, affirmative remedies) at the cost of imposing fast, potentially burdensome investigatory duties and substantial monetary exposure on creditors; reasonable people will disagree about where the balance between rapid consumer relief and protecting creditors from frivolous or obstructive claims should fall.
The bill shifts the front‑line evidentiary and operational burden onto creditors without specifying a detailed investigatory protocol or evidentiary standard beyond “reasonable investigation.” That opens two practical friction points: first, creditors must decide operationally what investigatory steps satisfy reasonableness within 30 days (data pulls, vendor checks, review of police reports), and second, courts will have to define the outer bounds of ‘knowingly’ failing to comply for double damages. Both create litigation risk and variation across creditors of different sizes.
A second tension concerns misuse and delay. The statute pauses collection and bars sales and collection during investigations and lawsuits, and while the intent is consumer protection, these mechanics can be used maliciously or strategically to delay collection of legitimate debts.
The affirmative defense (consumer agreed or received benefit) and the 30‑day investigatory window are the bill’s counterweights, but proving those defenses may itself require contested discovery, creating procedural complexity and cost. Finally, the practical ability of creditors to recover from the actual perpetrator is limited by the perpetrator’s solvency and enforceability—so the statute shifts loss‑bearing toward creditors and, indirectly, potentially toward consumers generally through pricing or credit availability.
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