This policy is effective for allegations of identity theft presented to the guarantor on or after July 1, 2006, on loans disbursed in whole or in part on or after Jan. 1, 1986. For allegations presented prior to July 1, 2006, USA Funds®' forgery policy provides relief to the entity named on the loan documents.
An individual may allege identity theft on FFELP documents that list that individual's name as borrower and may qualify to have his or her loan discharged on that basis if the individual can provide certain documentation. Identity theft in this context means that an individual other than the borrower named on the loan documents signed the FFELP documents without the appropriate legal authorizations and that the individual named on the note did not receive benefit of the loan funds. Identity theft may be perpetrated through either written (ink) signatures or electronic signatures. Identity theft may also occur when there is a missing or improper endorsement on a disbursement document (the disbursement check or EFT/master-check authorization).
To qualify for loan discharge due to identity theft, the borrower must fulfill each of the following requirements:
- Certify the borrower did not sign the promissory note or that other means of identification used to obtain the loan were used without the borrower's authorization.
- Certify the borrower did not receive or benefit from the proceeds of the loan with knowledge that the loan had been made without authorization.
- Provide evidence of a judicial verdict naming the perpetrator and stating that the FFELP loan was obtained as a result of identity theft.
- Provide samples of signatures and statements of the facts that demonstrate that eligibility for the loan was falsely certified as a result of identity theft, if the judicial verdict does not expressly state that the FFELP loan(s) was obtained as a result of identity thief.
These certifications are included in the affidavits that USA Funds has constructed to assist in documenting an assertion of identity theft.
Upon receipt of the required documentation and signed affidavit from the borrower, the lender may file an identity theft claim with USA Funds. Until the common Claim Form is revised to reflect a unique identifier for identity theft claims, the lender may file the claim as a false certification claim type.
Federal regulations provide for payment of an identify theft claim only when a court has made a legal determination in the case. If the borrower does not provide documentation of a court verdict or judgment, the borrower's loans cannot be discharged on the basis of identity theft. If the borrower continues to challenge the validity of the debt, the lender must be able to prove the enforceability of the loan. If the lender cannot obtain documentation that the borrower named on the loan was aware of the debt or had use of the loan funds, the loans on which the borrower is asserting identity theft are not considered enforceable against the borrower named on the note. USA Funds will work with lenders to attempt to verify whether a borrower ratified the note in any way or had use of the loan funds.
Regardless of the status of any judicial action, if the loan was made as a result of a crime of identity theft perpetrated by an employee of the lender or if an employee or agent of the lender knew of the identity theft, the loan is not insured, and the lender is required by regulation to refund to the Department all interest subsidies and special allowance payments made on that loan.
For More Information
If you have questions about the provisions of the identity theft and forgery policy for USA Funds-guaranteed loans, please contact USA Funds' policy department