(a)
Fulfilling requirements of the red flags rule.
Under
the red flags rule, every financial institution and creditor is required
to establish an “identity theft prevention program” tailored
to its size, complexity, and the nature of its operation. Each program
must contain reasonable policies and procedures to:
(1)
Identify relevant red flags for new and existing covered accounts
and incorporate those red flags into the program;
(2)
Detect red flags that have been incorporated into the program;
(3)
Respond appropriately to any red flags that are detected to prevent
and mitigate identity theft; and
(4)
Ensure the program is updated periodically, to reflect changes in
risks to customers or to the safety and soundness of the creditor
from identity theft.
(b)
Red flags rule definitions used in this program.
(1)
The red flags rule defines “identity theft” as “fraud
committed using the identifying information of another person”
and a “red flag” as “a pattern, practice, or specific
activity that indicates the possible existence of identity theft.”
(2)
According to the rule, a city is a creditor subject to the rule requirements.
The rule defines creditors “to include finance companies, automobile
dealers, mortgage brokers, utility companies, and telecommunications
companies. Where non-profit and government entities defer payment
for goods or services, they, too, are to be considered creditors.”
(3)
City accounts held by customers of the city used mostly for personal,
family, or household purposes, and that involve multiple payments
or transactions are covered by the rule. Under the rule, a “covered
account” is:
(A)
Any account the city offers or maintains primarily for personal,
family or household purposes, that involves multiple payments or transactions;
and
(B)
Any other account the city offers or maintains for which there is
a reasonably foreseeable risk to customers or to the safety and soundness
of the city from identity theft.
(4)
“Identifying information” is defined under the rule as
“any name or number that may be used, alone or in conjunction
with any other information, to identify a specific person,”
including: name, address, telephone number, Social Security number,
date of birth, government issued driver’s license or identification
number, employer or taxpayer identification number, unique electronic
identification number, computer’s internet protocol address,
or routing code.”
(Ordinance 5573 adopted 11/3/08)
The city evaluated the effectiveness of its current procedures
in identifying, detecting, and responding to identity theft. The city
also identified the areas most susceptible to identify theft:
(1)
New
accounts opened in person.
(2)
New
accounts opened via telephone.
(3)
New
accounts opened via fax.
(4)
New
accounts opened via web.
(5)
Account
information accessed in person.
(6)
Account
information accessed via telephone (person).
(7)
Account
information accessed via website.
(8)
Identity
theft occurred in the past from someone falsely opening a city account.
(Ordinance 5573 adopted 11/3/08)
In order to identify relevant red flags, the city considers
the types of accounts that it offers and maintains, the methods it
provides to open its accounts, and the methods it provides to access
its accounts. The city identifies the following red flags, in each
of the listed categories:
(1)
Suspicious documents.
(A)
Identification document or card that appears to be forged, altered
or inauthentic;
(B)
Identification document or card on which a person’s photograph
or physical description is not consistent with the person presenting
the document;
(C)
Other document with information that is not consistent with existing
customer information (such as if a person’s signature on a check
appears forged); and
(D)
Application for service that appears to have been altered or forged.
(2)
Suspicious personal identifying information.
(A)
Identifying information presented that is inconsistent with other
information the customer provides;
(B)
Identifying information presented that is inconsistent with other
sources of information;
(C)
Identifying information that is inconsistent with information on
the customer’s file/account;
(D)
Identifying information presented that is the same as information
shown on other applications or accounts;
(E)
Identifying information presented that is consistent with fraudulent
activity (such as an invalid phone number or fictitious billing address);
(F)
Identification presented that is the same as one given by another
customer; and
(G)
A person fails to provide complete personal identifying information
on an application when reminded to do so (however, by law, Social
Security numbers must not be required).
(3)
Suspicious account activity or unusual use of account.
(A)
Change of address for an account followed by a request to change
the account holder’s name;
(B)
Mail sent to the account holder is repeatedly returned as undeliverable;
(C)
Notice to the city that a customer is not receiving mail sent by
the city;
(D)
Notice to the city that an account has unauthorized activity; and
(E)
Breach in the city’s computer system security.
(Ordinance 5573 adopted 11/3/08)
(a)
New accounts.
In order to detect any of the red flags
identified above associated with the opening of a new account, city
personnel shall take the following steps to obtain and verify the
identity of the person opening the account:
(1)
Require certain identifying information such as name, residential
or business address, principal place of business for an entity, valid
driver’s license or other state issued identification;
(2)
Verify the customer’s identity (for instance, review a driver’s
license or other identification card);
(3)
Review documentation showing the existence of a business entity;
and
(4)
Independently contact the customer.
(b)
Existing accounts.
In order to detect any of the red
flags identified above for an existing account, city personnel shall
take the following steps to monitor transactions with an account:
(Ordinance 5573 adopted 11/3/08)
In the event city personnel detects any identified red flags,
such personnel shall take one or more of the following steps, depending
on the degree of risk posed by the red flag:
(1)
Prevent and mitigate.
(A)
Continue to monitor an account for evidence of identity theft;
(B)
Contact the customer and/or property owner;
(C)
Change any passwords or other security devices that permit access
to accounts;
(D)
Not open a new account;
(E)
Close an existing account;
(F)
Reopen an account with a new number;
(G)
Notify the program administrator for determination of the appropriate
step(s) to take;
(H)
Notify law enforcement; or
(I)
Determine that no response is warranted under the particular circumstances.
(2)
Protect customer identifying information.
In order to further prevent the likelihood of
identity theft occurring with respect to city accounts, the city shall
take the following steps with respect to its internal operating procedures
to protect customer identifying information:
(A)
Only specially identified employees with a legitimate need shall
have access to secured areas/cabinets.
(B)
Files containing personally identifiable information shall be kept
in a locked area/cabinet except when an employee is working on the
file.
(C)
Employees shall not leave sensitive papers out on their desks when
they are away from their workstations.
(D)
Access to off-site storage facilities shall be limited to employees
with a legitimate business need.
(E)
Visitors who must enter areas where sensitive files are kept shall
be escorted by an employee of the city/department.
(F)
No visitor shall be given any entry codes or allowed unescorted access
to the office.
(G)
Access to sensitive information shall be controlled using “strong”
passwords. Employees shall choose passwords with a mix of letters,
numbers, and characters. User names and passwords shall be different.
Passwords shall be changed every 90 days.
(H)
Individual passwords shall not be shared; system passwords shall
not be posted near workstations.
(I)
Password-activated screen savers shall be used to lock employee computers
after a period of inactivity.
(J)
When installing new software, vendor-supplied default passwords shall
be changed to a more secure strong password.
(K)
Sensitive information that is sent to third parties over public networks
shall be encrypted.
(L)
Anti-virus programs shall be run on individual computers and on servers
daily.
(M)
Personal identification information shall not be sent via email.
(N)
When sensitive data is received or transmitted, secure connections
shall be used.
(O)
Laptop users shall not store sensitive information on their laptops.
(P)
The computer network shall have a firewall where the laptop user’s
network connects to the internet.
(Q)
Any wireless network in use shall be secured.
(R)
Before employees are hired who will have access to sensitive data,
references and background checks will be performed.
(S)
New employees shall sign an agreement to follow the company’s
confidentiality and security standards for handling sensitive data.
(T)
Access to customer’s personal identity information shall be
limited to employees with a “need to know.”
(U)
When an employee leaves or transfers to another department, access
to systems and sensitive information shall be immediately disabled.
(V)
Employees shall be trained on identifying and responding to red flags.
(W)
Employees shall be alert to attempts at phone phishing.
(X)
Employees shall be required to notify the program administrator immediately
if there is a potential security breach.
(Y)
Employees who violate security policy shall be subjected to discipline,
up to and including dismissal.
(Z)
Service providers shall notify the employee of any security incidents
they experience, even if the incidents may not have led to an actual
compromise of the city’s data.
(AA)
Paper records shall be shredded before being placed into the trash.
(BB)
Any data storage media shall be disposed of by shredding, punching
holes in, or incineration.
(Ordinance 5573 adopted 11/3/08)
The program administrator shall periodically review and update
this program to reflect changes in risks to customers and the soundness
of the city from identity theft. In doing so, the program administrator
shall consider the city’s experiences with identity theft situations,
changes in identity theft methods, changes in identity theft detection
and prevention methods, and changes in the city’s business arrangements
with other entities. After considering these factors, the program
administrator shall determine whether changes to the program, including
the listing of red flags, are warranted. If warranted, the program
administrator shall update the program or present the city council
with his or her recommended changes; and the city council will make
a determination of whether to accept, modify, or reject those changes
to the program.
(Ordinance 5573 adopted 11/3/08)
(a)
Oversight.
Responsibility for developing, implementing,
and updating this program shall lie with an identity theft committee
for the city, headed by a program administrator. The program administrator
shall be responsible for the program administration, for ensuring
appropriate training of city staff on the program, for reviewing any
staff reports regarding the detection of red flags and the steps for
preventing and mitigating identity theft, for determining which steps
of prevention and mitigation should be taken in particular circumstances,
and for considering periodic changes to the program.
(b)
Staff training and reports.
City staff responsible for
implementing the program shall be trained either by or under the direction
of the program administrator in the detection of red flags and the
responsive steps to be taken when a red flag is detected.
(c)
Service provider arrangements.
In the event the city
engages a service provider to perform an activity in connection with
one or more accounts, the city shall take the following steps to ensure
the service provider performs its activity in accordance with reasonable
policies and procedures designed to detect, prevent, and mitigate
the risk of identity theft.
(Ordinance 5573 adopted 11/3/08)
