When Someone Allows Your Identity To Be Stolen, Are They Liable?

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Imagine this: you go to the car dealership, financial information in hand, ready to buy a car. A few weeks later you discover that someone has stolen your identity. Based on the information stolen, you realize that it was taken from the car dealership. Maybe you get some of the damage undone, maybe not. Aside from the actual thief, who you may never be able to identify, can anyone else be held responsible?

Possibly. This exact scenario recently happened to an HG.org reader who asked for referral to legal assistance. In that reader's case, a car dealership's records were raided and the credit files of a number of customers were taken. This allowed the thieves to apply for duplicate driver's licenses, bank checks, and commit other forms of identity theft. All together, the reader reported about $25,000 taken from his wife's checking account, and the attempted opening of numerous other credit accounts. He was asking whether HG.org could refer him to someone that could assist him with any possible claims, who those claims might be against, and what for.

Fortunately, in our reader's case, he reported that the $25,000 was restored by the bank, but not everyone is so fortunate. In most cases, banks and credit card companies are only obligated to refund any stolen funds or illegal charges if reported within a short time frame, sometimes limited by contract and sometimes by federal law. These time frames can be as short as a few days, so it is important to remain vigilant about activity on any financial accounts. Should the bank or credit company fail to abide by its refund policies or federal laws, you may have a basis for recovery against that institution. That liability can be enforced through either administrative proceedings in some cases, or arbitration or legal proceedings in others.

Of course, the financial institutions are only the last link in the chain. The person or entity responsible for allowing the confidential information to get into the hands of the identity thieves may also have some liability, as well. There are a number of laws and federal regulations regarding keeping credit and personally identifying information, like driver's license and social security numbers, confidential and safe from third parties. Additionally, there is a duty to protect customers from the reasonably foreseeable harm that thieves may want to access those confidential records in order to steal one's identity. That means the car dealer could be liable for any financial harm suffered by the victim of identity theft if the car dealer's actions or inactions allowed the theft to occur, such as an inadequate security system, hiring untrustworthy employees, or leaving the materials where they were easily accessible to others.

And, the most liable person in the whole chain is the thief him- or herself. If the person can be identified, they will, of course, face criminal charges for their actions and, to the extent possible, any losses suffered might be recovered for you by the state during that criminal prosecution. A victim may also have personal, civil claims, like civil theft, fraud, and conversion. While a separate civil judgment may be redundant, it can also provide a victim with a means of ensuring repayment that is not subject to a plea agreement and will allow the victim to prosecute the collection efforts personally.

If you have been the victim of identity theft, you should contact local law enforcement first. After that, you may wish to contact an attorney in your jurisdiction that has experience in dealing with cyber-crimes and identity theft. You can find an attorney in your area by visiting the Law Firms page of our website.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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