The city developed this identity theft prevention program (“program”)
pursuant to the Federal Trade Commission’s red flags rule (“rule”),
which implements Section 114 of the Fair and Accurate Credit Transactions
Act of 2003. 16 C.F.R. Section 681.2. This program was developed for
the utility department of the city (“utility”) with oversight
and approval of the city council. After consideration of the size
and complexity of the utility’s operations and account systems,
and the nature and scope of the utility’s activities, the city
council determined that this program was appropriate for the city’s
utility, and therefore approved this program on October 21, 2008.
(Ordinance O2008-10-10 adopted 10/21/08)
(a) Establish
an Identity Theft Prevention Program.
To establish an
identity theft prevention program designed to detect, prevent and
mitigate identity theft in connection with the opening of a covered
account or an existing covered account and to provide for continued
administration of the program in compliance with Part 681 of Title
16 of the Code of Federal Regulations implementing Sections 114 and
315 of the Fair and Accurate Credit Transactions Act (FACTA) of 2003.
(b) Establishing
and Fulfilling Requirements of the Red Flags Rule.
(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) Under
the 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. The program must contain
reasonable policies and procedures to:
(A) Identify relevant red flags for new and existing covered accounts
and incorporate those red flags into the program;
(B) Detect red flags that have been incorporated into the program;
(C) Respond appropriately to any red flags that are detected to prevent
and mitigate identity theft; and
(D) 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.
(c) Red Flags
Rule Definitions Used in this Program.
City.
The City of Hillsboro, Texas.
Covered Account.
Under the rule, a covered account is:
(1)
Any account the utility offers or maintains primarily for personal,
family or household purposes, that involves multiple payments or transactions;
and
(2)
Any other account the utility offers or maintains for which
there is a reasonably foreseeable risk to customers or to the safety
and soundness of the utility from identity theft.
Creditors.
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.
Identifying Information.
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, alien registration number, government
passport number, employer or taxpayer identification number, unique
electronic identification number, computer’s internet protocol
address, or routing code.
Program.
The identity theft prevention program for the city.
Utility.
The utility is the utility department for the city.
(Ordinance O2008-10-10 adopted 10/21/08)
In order to identify relevant red flags, the utility considers
the types of accounts that it offers and maintains, the methods it
provides to open its accounts, the methods it provides to access its
accounts, and its previous experiences with identity theft. The utility
identifies the following red flags, in each of the listed categories:
(1) Notifications
and Warnings from Consumer Credit Reporting Agencies.
(A) Report
of fraud accompanying a consumer credit report;
(B) Notice
or report from a consumer credit agency of a credit freeze on a customer
or applicant;
(C) Notice
or report from a consumer credit agency of an active duty alert for
an applicant; and
(D) Indication
from a consumer credit report of activity that is inconsistent with
a customer’s usual pattern or activity, including but not limited
to:
(i) Recent and significant increase in volume of inquiries.
(ii) Unusual number of recent credit applications.
(iii) A material change in use of credit.
(iv) Accounts closed for cause or abuse.
(2) 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.
(3) Suspicious
Personal Identifying Information.
(A) Identifying
information presented that is inconsistent with other information
the customer provides (example: inconsistent birth dates, lack of
correlation between Social Security number range and date of birth);
(B) Identifying
information presented that is inconsistent with other sources of information
(for instance, Social Security number or an address not matching an
address on a credit report);
(C) Identifying
information presented that is the same as information shown on other
applications that were found to be fraudulent;
(D) Identifying
information presented that is consistent with fraudulent activity
(such as an invalid phone number or fictitious billing address);
(E) Social
Security number presented that is the same as one given by another
customer;
(F) An
address or phone number presented that is the same as that of another
person;
(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) or an applicant cannot provide information requested
beyond what could commonly be found in a purse or wallet; and
(H) A person’s
identifying information is not consistent with the information that
is on file for the customer.
(4) 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) Payments
stop on an otherwise consistently up-to-date account;
(C) Account
used in a way that is not consistent with prior use (example: very
high activity);
(D) Mail
sent to the account holder is repeatedly returned as undeliverable;
(E) Notice
to the utility that a customer is not receiving mail sent by the utility;
(F) Notice
to the utility that an account has unauthorized activity;
(G) Breach
in the utility’s computer system security; and
(H) Unauthorized
access to or use of customer account information.
(5) Alerts
from Others.
Notice to the utility from a customer, identity
theft victim, fraud detection service, law enforcement or other person
that it has opened or is maintaining a fraudulent account for a person
engaged in identity theft.
(Ordinance O2008-10-10 adopted 10/21/08)
(a) New Accounts.
In order to detect any of the red flags identified above associated
with the opening of a new account, utility personnel will take the
following steps to obtain and verify the identity of the person opening
the account:
(1) Require
certain identifying information such as name, date of birth, residential
or business address, principal place of business for an entity, driver’s
license or other 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;
(4) Request
additional documentation to establish identity; and
(5) Independently
contact the customer or business.
(b) Existing
Accounts.
In order to detect any of the red flags identified
above for an existing account, utility personnel will take the following
steps to monitor transactions with an account:
(1) Verify
the identification of customers if they request information (in person,
via telephone, via facsimile, via email);
(2) Verify
the validity of requests to close accounts or change billing addresses;
and
(3) Verify
changes in banking information given for billing and payment purposes.
(Ordinance O2008-10-10 adopted 10/21/08)
In the event utility personnel detect 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, sometimes through multiple methods;
(C) Change
any passwords or other security devices that permit access to accounts;
(E) Close
an existing account;
(F) Do
not close the account, but monitor or contact authorities;
(G) Reopen
an account with a new number;
(H) Notify
the program administrator for determination of the appropriate step(s)
to take;
(I) Notify
law enforcement; or
(J) 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
utility accounts, the utility will take the following steps with respect
to its internal operating procedures to protect customer identifying
information:
(A) Ensure
that its website is secure or provide clear notice that the website
is not secure;
(B) Where
and when allowed, ensure complete and secure destruction of paper
documents and computer files containing customer information;
(C) Ensure
that office computers are password protected and that computer screens
lock after a set period of time;
(D) Change
passwords on office computers on a regular basis;
(E) Ensure
all computers are backed up properly and any backup information is
secured;
(F) Keep
offices clear of papers containing customer information;
(G) Request
only the last 4 digits of Social Security numbers (if any);
(H) Ensure
computer virus protection is up to date; and
(I) Require
and keep only the kinds of customer information that are necessary
for utility purposes.
(Ordinance O2008-10-10 adopted 10/21/08)
This program will be periodically reviewed and updated to reflect
changes in risks to customers and the soundness of the utility from
identity theft. At least annually, the program administrator will
consider the utility’s experiences with identity theft situation,
changes in identity theft methods, changes in identity theft detection
and prevention methods, changes in types of accounts the utility maintains
and changes in the utility’s business arrangements with other
entities, consult with law enforcement authorities, and consult with
other city personnel. After considering these factors, the program
administrator will determine whether changes to the program, including
the listing of red flags, are warranted. If warranted, the program
administrator will 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 O2008-10-10 adopted 10/21/08)
(a) Oversight.
Responsibility for developing, implementing and updating this
program lies with an identity theft committee for the utility. The
committee is headed by a program administrator who may be the head
of the utility or his or her appointee. Two or more other individuals
appointed by the head of the utility or the program administrator
comprise the remainder of the committee membership. The program administrator
will be responsible for the program administration, for ensuring appropriate
training of utility staff on the program, for reviewing any staff
reports regarding the detection of red flags and the steps for preventing
and mitigating identity theft, determining which steps of prevention
and mitigation should be taken in particular circumstances and considering
periodic changes to the program.
(b) Staff
Training and Reports.
(1) Initially,
all utility staff 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. Thereafter,
all utility staff shall undergo update training not less than annually.
Additionally, all new utility employees shall undergo training.
(2) All
utility staff shall submit reports monthly concerning the utility’s
compliance with the program, the training that has been given and
the effectiveness of the policies and procedures in addressing the
risk of identity theft, including recommendations for changes to the
program. While incidents of identity theft are to be reported immediately
to the program administrator, the monthly reports shall contain a
recap of the incident and include the steps taken to assist with resolution
of the incident.
(c) Service
Provider Arrangements.
In the event the utility engages
a service provider to perform an activity in connection with one or
more accounts, including but not limited to franchise utility providers,
the utility will 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.
(1) Require,
by contract or contract amendment, that service providers have such
policies and procedures in place; and
(2) Require,
by contract or contract amendment, that service providers review the
utility’s program and report any red flags to the program administrator.
(d) Specific
Program Elements and Confidentiality.
For the effectiveness
of identity theft prevention programs, the red flag rule envisions
a degree of confidentiality regarding the utility’s specific
practices relating to identity theft detection, prevention and mitigation.
Therefore, under this program, knowledge of such specific practices
are to be limited to the identity theft committee and those employees
who need to know them for purposes of preventing identity theft. Because
this program is to be adopted by a public body and thus publicly available,
it would be counterproductive to list these specific practices here.
Therefore, only the program’s general red flag detection, implementation
and prevention practices are listed in this document.
(Ordinance O2008-10-10 adopted 10/21/08)