The state of Texas has recently passed new legislation to help victims of identity theft overcome at least one of the hurdles that were previously blocking them from making it to the finish line of healing from this horrific ordeal. On March 1, 2008 the Closed Account Notification System, or CANS, was adopted by the Texas Department of Banking. What is CANS and how can it help Texas consumers? Will other states follow?
The numbers of victims of identity theft are rising daily. Identity theft costs victims not only money but also time, as they endeavor to right the wrongs and restore their credit and their good name. Most identity theft crimes involve more than $5,000. Even worse, identity theft cases can require up to 600 hours be resolved.
The state of Texas has recently passed new legislation to help victims of identity theft overcome at least one of the hurdles that were previously blocking them from making it to the finish line of healing from this horrific ordeal.
Previously, identity theft victims would close the compromised accounts at a bank and believe that this action was enough to stop unauthorized use of their identity through the use of a bank account. However, the banks had no way of sharing the information about closed accounts with check verification companies that merchants use to determine if checks are legitimate. Identity thieves could use victim’s checks on an account for weeks, even though the owner had closed the account and merchants believed they had a reliable system for verifying accounts.
On March 1, 2008 the Closed Account Notification System, or CANS, was adopted by the Texas Department of Banking. This system is believed to be the first of its kind in any state. It is the fruit of the labors of Representative Helen Giddings (Dallas) who authored Texas House Bill 2002.
What is Texas House Bill 2002?
House Bill 2002 requires banks and credit unions in Texas to submit information concerning suspected compromised bank accounts to a secure electronic notification system at a customer’s request. This notification then alerts companies who offer check verification to the potential identity theft and fraudulent use of checks from a specific account.
The use of House Bill 2002 establishes a secure electronic notification system for consumers, banks, and check verification systems. According to Representative Giddings, “Notification happens by the second business day so that thieves are stopped in their tracks. No longer will identity thieves be able to profit from their crimes by passing bad checks for weeks. Millions of dollars will be saved, but most importantly, stopping identity theft early will help victims restore their credit and good name.”
The new law gives financial institutions additional options to help customers when identity theft or fraud has compromised their accounts. In addition to closing any compromised deposit accounts, the customer may ask the financial institution to send a notice to all major check verification companies.
It is important to note that this action does not happen automatically. The customer must request the action and provide their financial institutions with:
1. A copy of the incident report or police report case number.
2. A sworn, signed statement that the customer has been a victim of identity theft.
3. A written, signed authorization allowing the financial institution to submit the account information to CANS.
This service is provided to financial institutions at no cost. Banks can register and begin using the service to help protect customers through a secure web page provided by the Texas Department of Banking. So it is not only important for consumers to request these services, but it is important that your banking institution is participating in this service.
When an identity theft occurs, every transaction adds to the burden of the victim. Each fraudulent check passed is another nightmare for the victim to catch and clear up. This new law will help consumers to stop identity thieves sooner. This will not only relieve headaches of identity theft victims but will also stop the cycle of future crimes.
What should you do if you believe you’re the victim of identity theft?
1. File a police report. It is a crime!
2. Contact your bank and immediately close all deposit accounts.
3. If you’re in Texas, request a CANS notification.
Remember, this law provides a service but, the consumer has to ask for this service, it does not happen automatically.
It will be interesting to see if other states follow suit and provide protections from identity theft for their constituents, as Texas has with House Bill 2002.