The conference included panel discussions on how identity thieves acquire and use consumer information , how websites trade in stolen consumer information , the impact of identity theft on financial services , health care and other sectors , the challenges identity theft victims face , and resources available to them . FTC technical experts described how consumer data available online is used by malicious actors .
State Developments
The attorneys general for Massachusetts and Delaware have settled charges against a major finance company arising from the company ' s subprime auto financing operations . The AGs had alleged that the company funded auto loans ( both AGs used the term " loans " to refer to what were undoubtedly retail installment contracts ) without having a reasonable basis to believe that the borrowers could afford them and knew that the reported incomes used to support credit applications submitted to the company by car dealers were incorrect and often inflated . The Massachusetts AG ' s Office found that the company ' s own internal audit concluded that the company ' s oversight of auto dealer conduct when making subprime loans was inadequate . Despite identifying a group of dealers that had extremely high default and delinquency rates and other problems , the company continued to fund loans through these dealers . The company also allegedly identified a group of dealers it called the " fraud dealers ," but continued to fund loans through them .
The Delaware settlement requires business reforms by the company , including procedures to screen contracts originated by Delaware dealers to ensure that they comply with Delaware law and meet minimum documentation requirements . The company also agreed to prospectively identify and repurchase subprime loans sold to third parties that it later determines do not comply with Delaware law .
The Massachusetts settlement requires $ 16 million in payments to more than 2,000 consumers and a $ 5 million payment to the state . The Delaware settlement requires the company to pay $ 2.875 million into a trust to benefit hundreds of harmed Delaware consumers . The company will also pay just over $ 1 million to the Delaware Consumer Protection Fund . Under the terms of the settlements , the company neither admitted nor denied either state ' s allegations .
These enforcement actions are likely to have far-reaching consequences . This finance company will be tightening its procedures to eliminate dealer fraud , but you can expect that every finance company hearing about the Delaware and Massachusetts action will be doing so , as well .
Case of the Month
Justin Bare bought a car with an anti-theft system manufactured by Innovative Aftermarket Systems , LP . As part of the sale , Bare bought Innovative ’ s “ Protection Plus ” policy , which included a promise to pay Bare $ 2,500 in the event the anti-theft system did not deter theft and Bare ’ s car was not recovered .
Subsequently , Bare ’ s car was stolen and not recovered . Bare made a claim under Innovative ’ s policy , but Innovative denied his claim as untimely . Bare , on behalf of a similarly situated class of plaintiffs , sued Innovative , alleging various causes of action for violations of West Virginia insurance law . Innovative moved to dismiss , arguing that the anti-theft system ’ s policy was not insurance .
The federal trial court granted Innovative ’ s motion . Innovative argued that because the policy was not insurance , Bare ’ s claims that it violated West Virginia ’ s insurance law must fail . West Virginia insurance law exempts warranties . A warranty includes , “ in relation to a product [,] . . . an undertaking that guarantees indemnity for defective parts ... or other remedial measures ... and that is made solely by the manufacturer , importer or seller of the product ... without payment of additional consideration , not negotiated or separated from the sale of the product ... and incidental to the sale .”