Are You Responsible for the Debt If Someone Steals Your Identity?
You’re Protected—But Only If You Act Fast
You’re typically not responsible for debt created by identity thieves. Federal law protects you under the Fair Credit Billing Act and state consumer protection laws, but only if you report the fraud quickly and follow the dispute process correctly.
In December 2024, the CFPB issued an advance notice of proposed rulemaking to address identity theft and coerced debt under Regulation V, with the next regulatory step targeted for May 2026. This could expand protections for domestic violence survivors and others victimized through financial coercion.
Why This Matters to You
If you’ve discovered unauthorized charges, fraudulent accounts opened in your name, or are being contacted by debt collectors for debts you didn’t create, understanding your federal protections could save you thousands of dollars and years of credit damage.
In 2023 alone, 69% of data breaches exposed SSNs, and over 1.4 million identity theft reports were filed with the FTC—many involving unauthorized debt. Identity thieves can open credit cards, take out loans, access your bank accounts, and even file fake tax returns using your information.
Most victims panic when they see collection notices for $10,000, $25,000, or more in fraudulent debt. Banks and debt collectors sometimes pressure victims to “settle” or pay portions of fraudulent balances. But federal law strictly limits what you actually owe—often nothing at all.
What You Came to Know: Your Actual Liability for Identity Theft Debt
Credit Card Fraud: You’re Protected Under the Fair Credit Billing Act
Under federal law, you are only liable for the first $50 in fraudulent charges on your credit card if someone uses your card to make a purchase. If you report the theft before any fraudulent charges occur, you owe $0.
Most credit card companies offer zero-liability policies that go beyond federal law and won’t charge you anything for unauthorized transactions.
The key: Report unauthorized charges to your card issuer within 60 days of receiving your statement showing the fraudulent activity.
Bank Account and Debit Card Fraud: Timing Determines Your Liability
The laws are slightly less in your favor if your debit card is involved. Your liability under the Electronic Funds Transfer Act depends on how quickly you report:
- $0 liability: Report before any unauthorized transactions occur
- $50 cap: Report within 2 business days of discovering the theft
- $500 cap: Report between 2-60 days after your bank statement listing fraudulent activity
- Unlimited liability: Report more than 60 days after your statement was mailed
Bottom line: For debit cards and bank accounts, the 60-day deadline is critical. Miss it, and you could be responsible for all fraudulent withdrawals.
Fraudulent New Accounts: State Law Protects You
Under most state laws you are not liable for any debt incurred on fraudulent new accounts opened in your name and without your permission.
This includes:
- Credit cards you didn’t apply for
- Personal loans taken out using your SSN
- Car loans or mortgages in your name
- Utility accounts or phone contracts
To make certain that you do not become responsible for any debts incurred in your name by an identity thief, you must prove that you didn’t create the debt.
Student Loans and Government Debt: Different Rules Apply
If the loan happens to be with the U.S. government, contact the U.S. Department of Education Inspector General at 1-800-647-8733. Ask them to send you a letter explaining you aren’t responsible for repayment.
For investment accounts, unlike credit cards or bank accounts, investment accounts, including retirement funds, have little federal regulation when it comes to theft. If someone steals from your 401(k) or brokerage account, federal protections are limited—this is where identity theft insurance becomes valuable.
When You Might Actually Be Liable
You could lose your protections and become responsible for fraudulent debt if you:
- Failed to report fraud within required timeframes (especially the 60-day EFTA deadline for bank accounts)
- Were negligent with your personal information (shared passwords, ignored fraud alerts, left SSN unsecured)
- Actually authorized the transactions (then it’s not identity theft)
- Co-signed on the debt or added someone as an authorized user who later committed fraud
- Didn’t follow your bank’s dispute procedures
What You Must Know: Common Mistakes That Cost Victims
Missing the 60-Day Reporting Deadline Destroys Your Protection
Delaying your efforts to clear up fraud can waive your legal rights and make you responsible to repay the fraudulent charges.
The 60-day timeline under the Fair Credit Billing Act and Electronic Funds Transfer Act starts when you receive your statement—not when you discover the fraud. Check your mail and bank statements immediately.
You Must Dispute in Writing
Under the Fair Debt Collection Practices Act you also have protections. Debt collectors are not allowed to collect identity theft or fraudulent debts. You have the burden of properly notifying them of the fraud however.
Phone calls aren’t enough. Send written dispute letters to:
- Your bank or credit card issuer
- Debt collectors contacting you
- Credit bureaus (Equifax, Experian, TransUnion)
The CFPB’s 2026 Rulemaking Could Expand Protections
The CFPB’s regulatory agenda targets May 2026 as the timeframe for the next step in the rulemaking on coerced debt and identity theft. If finalized, this could provide stronger protections for domestic violence survivors and others forced into debt through coercion rather than traditional identity theft.
What to Do Next
Step 1: Report Immediately to Your Financial Institutions
Call your bank’s fraud department today if you discovered unauthorized charges or accounts. Don’t wait.
For ongoing identity theft issues beyond simple fraud, learn How To Tell If Someone Is Using Your SSN to monitor for unauthorized activity.
Step 2: File an Identity Theft Report with the FTC
Go to IdentityTheft.gov and create your Identity Theft Report. This official document is required to:
- Dispute fraudulent accounts with creditors
- Block fraudulent information from your credit reports
- Stop debt collectors from pursuing you
The FTC (consumer.ftc.gov) provides free recovery plans and sample dispute letters.
Step 3: Freeze Your Credit and Monitor Your Accounts
Place a credit freeze with all three bureaus (Equifax, Experian, TransUnion) to prevent new fraudulent accounts from being opened.
Check if you qualify to Can You Get A New SSN After Identity Theft if fraud continues despite credit freezes and police reports.
Review How To See All Accounts Associated With Your SSN to identify all fraudulent accounts tied to your Social Security number.
💡 Pro Tip
The 2-day reporting deadline for debit card fraud under the Electronic Funds Transfer Act counts business days, not calendar days. If you discover fraudulent charges on Saturday, you have until close of business Tuesday to report and maintain the $50 liability cap. Don’t let weekends cost you $450 in additional liability.
FAQs
Am I liable for credit card charges I didn’t make?
No. Your maximum liability is $50 under the Fair Credit Billing Act, and most card issuers offer zero-liability policies. Report unauthorized charges within 60 days of your statement date.
What happens if someone opens a credit card in my name?
You’re not responsible for fraudulent accounts opened without your permission under most state laws. Dispute the account with the credit card company and credit bureaus using your FTC Identity Theft Report.
Can debt collectors force me to pay fraudulent debt?
Debt collectors are not allowed to collect identity theft or fraudulent debts once you properly notify them. Send a written dispute letter within 30 days of their first contact, include your Identity Theft Report, and ask for debt verification.
How long do I have to dispute fraudulent charges?
For credit cards: 60 days from your statement date under the Fair Credit Billing Act. For bank accounts: Report within 2 business days for $50 cap, within 60 days for $500 cap, or face unlimited liability after 60 days.
What if someone used my SSN to get a loan?
Report it to the lender immediately with your Identity Theft Report from the FTC. Under most state laws, you’re not liable for loans taken out fraudulently in your name. For federal student loans, contact the Department of Education Inspector General.
Do I need a police report to dispute identity theft?
Not always, but it strengthens your case. Your FTC Identity Theft Report combined with a police report creates an official “Identity Theft Report” that creditors must accept under federal law.
Will fraudulent debt affect my credit score?
Temporarily, yes—until you dispute it. Credit bureaus must block fraudulent accounts from your credit report once you provide an Identity Theft Report. This process takes 4 business days after they receive your documentation.
Disclaimer: This article about identity theft and debt liability is provided for informational purposes only and does not constitute legal advice. Identity theft protections and debt liability laws vary by state and change over time. AllAboutLawyer.com does not provide legal services, representation, or consultations. If you believe you are a victim of identity theft or have questions about your liability for specific debts in your situation, consult a qualified attorney licensed in your state or contact the Federal Trade Commission (FTC) at IdentityTheft.gov, the Consumer Financial Protection Bureau (CFPB), or your state attorney general’s office.
What to Do Next: File your Identity Theft Report at IdentityTheft.gov for a personalized recovery plan and official documentation to dispute fraudulent accounts.
Stay informed, stay protected. — AllAboutLawyer.com
Last Updated: February 11, 2026 — We keep this current with the latest legal developments
This article provides general information about identity theft and debt liability. This is not legal advice. Consult a qualified attorney licensed in your state for specific legal guidance about your situation.
About the Author
Sarah Klein, JD, is a former consumer rights attorney who spent years helping clients with issues like unfair billing, product disputes, and debt collection practices. At All About Lawyer, she simplifies consumer protection laws so readers can defend their rights and resolve problems with confidence.
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